Case Name: Rhodes vs. Risley
Court: Vermont Supreme Court
Jurisdiction: Vermont
Decision Date: 1791-08
Citations: 1 D. Chip. 52
Docket Number: 
Parties: Rhodes vs. Risley.
Judges: 
Reporter: Chipman, D.
Volume: 1
Pages: 52–55

Head Matter:
Rhodes vs. Risley.
In an action by til©'endorsee of a promissory note against the payee as endorser... parol evidence is admissible on the part of the defendant, to prove that he placed his name on the note in blank for the purpose of enabling A. to whom ' he delivered the note, to collect the note for his, the defendant’s use, although A. sell the note to the plaintiff, and be fill up the endorsement to himself.
Rutland,
August, 1791.
ACTION on the case, for that on the 24th day of May, 1774, one I. Parker made his note to Risley, for the sum of ¿£53,12s. 2d-payable in beef, pork, &c. That afterwards, to wit, on the same 24th day of May, the said Risley did by his endorsement on the said note, order the said I. Parker, for value received, to pay to the plaintiff, the said sum of ¿£53,12s. 2d. &c. in due form.
The note, with the endorsement, was produced and read, and it was proved, that Parker died insolvent, about the year 1778.
The defendant’s counsel stated,
and offered to prove, that in the year 1781, the defendant employed one Pomroy, to bring an action on the note, against one Grant, as executor in his own wrong, on the estate of Parker — Grant having married Parker’s widow, and taken the estate without administering; and that Risley’s name was then put on the note for the purpose of filling a power of attorney — that a suit was commenced against Grant, who, afterwards settled — -paid Risley a certain sum, about £20, and took up his note. — That Grant put off the note to J. G., and J. G. to the plaintiff, who filled up the endorsement to himself and brought this action. — And stated that the defendant had never heard of the note, since the year 1781, when Grant took it up.
It was objected, that, if a note be endorsed blank, the endorser shall never be allowed to prove that it was for some other purpose, and not to make him liable; especially when it comes into the hands of a third person. Kirby’s Rep. 393. Hungerford vs, Thompson.

Opinion:
Chipman, Ch. J.
I have never been satisfied with those decisions which introduce an arbitrary custom, to bind a man contrary to his express agreement, and the real equity of the case. If, however, such custom have generally prevailed in a State — have been authorised by judicial decisions, and property be involved in its continuance, it ought not rashly to be shaken. In this State, I apprehend, such custom as here contended for, has not generally prevailed. There have been no leading decisions in the Courts of law on the point. The matter, therefore, lies open to investigation. It is said if a man sign his name blank on a note, which he transfers, the endorsee may fill it up with a power, or a general endorsement, for value received; and from the nature of the transaction, the endorser shall be bound, and that he shall never controvert the right, notwithstanding any agreement made at the time of the transfer. We lay aside custom, and go on the footing of common justice between parties. A. sells, a note to B., and to enable B. to recover of the maker, endorses his name blank on the note. At the same time it is fairly agreed, that B. . shall risk the ability of the maker of the note, and shall, on his failure, have no demand on A. In this case, A. is in common justice and honesty, under no obligation to B. on failure of the maker. Nay, B. cannot, with a good conscience, demand any thing of A. The endorsement, though filled up by the endorsee, may be, prima facie, evidence of an obligation on the endorser, but it is only prima facie evidence, and injustice, should be allowed to be controverted. What ought to be decisive in this case, is, that if the endorser make use of the endorsement contrary to agreement, to the damage of the endorser, he is answerable in damages. This has been clearly decided in Great Britain, where the negociation of notes is carried to its greatest length. This was the great point decided in Moses vs. Macpherlan. — 2 Bur. 1005. 1 Blac. 219• Moses endorsed four notes to Macpherlan, under a special agreement, (in a separate memorandum) that Macpherlan should indemnify him against all the consequences of such endorsement. Macpherlan brought his actions, on the several endorsements, against Moses before an inferior Court. The Court refused to hear the evidence of the agreement, and gave judgment against Moses, who, thereupon, brought his action against Macpherlan to recover back the money so unjustly recovered. And it was solemnly determined that an action would lie. This is to say, the endorser is in such case holden, and is not holden. The evidence which could not be admitted, to save him from an unjust payment, could be admitted and thought amply sufficient, in another action, to recover back the identical money. However, it was observed by Lord Mansfield, in that action, that the inferior Court did right in not going into the collateral agreement, otherwise they might have gone into matters, which exceeded their jurisdiction. This reason seems to imply, that a superior Court might and would have gone into the whole matter.
Let us now consider the nature of the transaction, as it stands between the original endorser and the subsequent endorsee. And in considering this point, I shall not feci myself bound by foreign precedents, but by the principles of common law, which are, the principles of common justice, as they apply to the general circumstances and situation of this State.
In Great Britain, they consider the endorsee as giving credit, as much to every prior, as to his immediate endorser. This, it is said, is established by the course of trade, and is for the benefit of commerce. This is at least problematical. But as this State is not, and from its local situation cannot be greatly commercial, this ma.y be laid out of the question. The case will then stand thus : — A. sells a note to B. at the risk of the purchaser, and endorses it blank. In this case it is unconscionable in B. on the failure of the maker of the note, to demand the money of A. But B. has sold the same note, still endorsed blank to C. The question is, whether B. can give a greater right than he had himself. A's name is on the note j this may prove that B., the possessor, has a right to use, or sell, and nothing more, independent of the custom. C. contracts with B.— to B. he ought to look for the right which he purchases, whether it be a right against the maker only, or whether A. is to warrant in case the maker shall fail. If B. deceive C., he alone shall be answerable. The fraud of B. ought not to injure A. Let each trust where he contracts. Caveat emptor may with great justice be applied in this case. The same hard, technical reasoning has prevailed, in some laws against the makers of a negociable note in the hands of an endorser, where a payment not minuted on the note, has been made before the transfer. But in some of the neighbouring States, the same principles of common justice, which I now go upon, have prevailed in this point. The Courts have made it a rule to allow all payments bona fide made before the transfer, or rather, before notice, and the endorsee must look to the endorser for so much.
This differs only in name: the reasons go the whole length of the present case. The evidence ought to be admitted.
As to the other point, of a long time having elapsed, without notice given to the endorser, it is on the part of the plaintiff to prove due diligence', and reasonable notice of failure, it is not in the present question.
Verdict for the defendant.