Case Name: McLaren v. Watson's Executors
Court: New York Supreme Court of Judicature
Jurisdiction: New York
Decision Date: 1841
Citations: 26 Wend. 425
Docket Number: 
Parties: McLaren v. Watson’s Executors.
Judges: 
Reporter: Wendell's Reports
Volume: 26
Pages: 425–451

Head Matter:
McLaren v. Watson’s Executors.
1841.
A general guaranty of payment of a note, without naming any person as the party guarantied is a valid instrument, and may be enforced by any one who advances money upon it, declaring upon it as upon a promise to himself; but such guaranty is not negotiable, and consequently an action can be brought upon it only in the name of the person in whose hands it first became avail&ble, unless it be written upon the note the payment of which it guarantees or is attached thereto; in which case it may be treated as an endorsement having the quality of negotiability, with the further benefit of a waiver of demand and notice.
ERROR from the Supreme Court. This was an action of assumpsit brought in the superior court of the city of New-York by Daniel McLaren, on an instrument bearing date 28th August, 1828, executed by Joseph Watson, whereby the latter guarantied the payment of a promissory note for $300, drawn by W. A. and E. C. Blackney, payable to the order of William Watson. The note endorsed by the payee and by two other person's was transferred, by one Daniel M. Frye, to the plaintiff, together with the guaranty: which guaranty was a separate and distinct instrument, not written on the note or on a paper attached to it.- It was originally delivered to Frye, and was in these words: “ I hereby guarantee the payment of a note at 60 days, drawn by William A. Blackney and Edgar C. Blackney, payable to the order of William Watson, (New-Milford, Connecticut,) William Watson, (393 Pearl-street,) and Daniel S. Tuthill, (13 Christopher-street,) for $300 for value received, dated April 28, 1828The plaintiff declared upon the guaranty, and the defendant pleaded non-assumpsit. No objection was taken on the trial to the variance between the note and its description in the guaranty, and besides it was shown that the defendant fiad admitted the validity of tfié' guaranty. It was objected, however, that it being a separate and distinct instrument was not negotiable, and consequently an action1 could hot bé rnaintairied upon it in the name of the plaintiff, áiid could be maintained' only in the name of the person' to whom it was originally delivered. This objection whs overfuled by the presiding judge,' and the jury under his direction found a verdict for the plaintiff. There were various other objections raised and disposed of on the trial, hot déeined important to be hére noticed. Judgment Was entered rip on the vérdict, and the defendant removed tfié fecórd into’ the supreme court, where thé' judgment was reversed, and a venire de ñovo ordered: See the case and the' opinion' delivered in the supreme court by Mr. Justice Cowén in 19 Wendell, 557, ét seq. After the suing out of the writ of error the defendant died, arid his execúttirs were substituted as plaintiffs in error. The plaintiff súéd out a writ of error. The case whs argued here fiy
W. Kent, for the plaintiff in error.
C. O'Connor, for the defendants in error.
Points sübmitted and argued on the part of the plaintiff in error:
I. Fryé was a competent witness, free from interest. Being iridefitéd to the plaintiff, as endorser of certain notes, he passes the note and guaranty to the plaintiff, who receives them u with full knowledge of the dispute concerning witness’ title to them,” and receives them Ci as cash, tiUd (it his ÓÜhi físlc,” and surrenders Up to witness' thé notes, on which fie was endorser. It is impossible to supjfoSé 3 chSé bf á witüéss íhófé freé froin the objection df interest.
II. There were only two witnesses examined on the trial, viz: Daniel M. Frye, for the plaintiff, and Edgar C: Blackney, for the defendant. On this testimony .the parties went to the jury, and the verdict was rendered for the plaintiff". Wherever, therefore, the testimony of the two witnesses is in opposition, Frye’s must be assumed as the truth.
III. The case shows the following facts: A note, dated April 28, 1828, payable in sixty days, for $>300, is guarantied by the testator, Joseph Watson. This note and guaranty were accommodation paper, and were not negotiated until 29th April, 1828. On the 29th of April, 1828, Daniel M. Frye receives the note and guaranty, bona fide, and advances on them a full and valuable consideration. Frye subsequently passes the pote and guaranty for a valuable consideration to the plaintiff, who thus becomes entitled to .all the rights of Frye on the note and guaranty.
IV. As to the character .of the guaranty. It is an absolute promise to pay at the maturity of the note, waiving demand and notice of non-payment. Allen v. Rightmere, 20 Johns. R. 365. Breed v. Hillhouse, 7 Connecticut R. And is distinguishable in its nature, therefore, from the guaranty of the collection of a debt.
V. This guaranty is appurtenant to the note, and negotiable with it. 1st. Its being on a separate piece of paper is no objection. Chitty on Bills, 222. Bayley on Bills, 102. Goodrich v. Goodwin, 15 Johns. R. 6. 1 R. S. 757. 2d. This being the case, inasmuch as the engagement is in all respects tantamount to an endorsement, there can be no valid objection to its negotiability. It must be recovered on as an endorsement. 3d. There is nothing restrictive in it; on the contrary, in its terms, it was plainly meant to be negotiable. Chitty on Bills, 141. Minch v. Gibson, 3 T. R. 481 1 H. Bl. 56.
Points submitted and argued on the part of the defendants in error:
I. The guaranty on which the original suit in the superior court was founded, was a special contract between Joseph Watson and Daniel M. Frye, and was not negotiable. 1. It is an inflexible rule of the common law, founded on the soundest policy, that choses in action are not negotiable. Piggott v. Thompson, 3 Bos. & Puller, 150. Stat. Champerty, 2 R. S. 691, § 6. Gardner v. Adams, 12 Wendell, 299. Stedman v. Riddick, 4 Hawks’ N. C. Rep. 29, 3 Hawks, 560. Chitty on Bills, 7, 8. Baldwin v. Calkins, 10 Wend. 178. 2. Promissory notes are negotiable only by force of an express statute, which defines with the utmost precision the requisites to negotiability. 1 R. L. of 1813, 151, § 1. 1 R. S. 768, § 1, still more precise. Thompson v. Sloan & al. 23 Wend. 71. De Forest v. Frary, 6 Cow. 151. 3. A promise in writing, not expressed to be payable to bearer, and naming no promisee, is not void for that reason, but takes effect as a special contract with the person to whom it is first delivered. Oral proof may be given to supply the name of the promisee. Brown v. Gilman, 13 Mass. R. 158. See 6 Wend. 644; Cases cited in 19 Wend. 566. 4. A distinct and independent promise, guaranteeing payment of a promissory note, or otherwise relating to it, made by one who is neither a maker nor endorser, is not within the statute, and cannot be made negotiable. 5. There is no method by which a person can become a maker or endorser of a negotiable note within the statute, except by writing his name upon it. See cases cited by supreme court, 19 Wend. 567. Douglass v. Wilkeson, 6 Wend. 639. Per Sewell, J., Tyler v. Binney, 7 Massachusetts R. 481. Upham v. Prince, 12 Mass. R. 14. Per Eyre, Ch. J. Gibson v. Minet, 1 H. Blackstone, 605. Chitty on Bills, American ed. of 1836, 30, 272, 326. Lamoureaux v. Hewitt, 5 Wendell, 307. See also Wilmington Bank v. Houston, 1 Harrington Delaware R. 225. Burdick v. Green, 15 Johns. R. 249. 3 Howard’s Miss. R. 193. Billy Jones v. Witter, 13 Mass. R. 307. Calder v. Billington, 15 Maine R. or 3d Shepley, 399. 2 Fairf. 354. Estes v. Hirston, 1 Devereaux N. C. Rep. 356. In the matter of Barrington & al. 2 Sho. & Lefroy, 113. Williams v. Granger, 4 Day, 445. Blanchard v. Bartlett, 14 Mass. R. 280; 3 T. R. 760. 6. The present case is not one in which the court will strain a point to sustain the plaintiff. Devices by which an attorney evading the statute can shave notes, and, evading the common law, can make himself a witness in his own case, are not entitled to encouragement.
II. The guaranty, in fact, as appears by the oral proof, and according to the literal and the legal import of its terms, was an undertaking that the makers would perform their contract expressed in the note, or that some one of the endorsers would perform the contract implied in his endorsement. Joseph Watson was, therefore, merely a surety, as to whom the maker and all the endorsers stood in the relation of principals; and the plaintiff below, having, by omitting to make demand and give notice, discharged some of those principals, i. e. the endorsers, was not entitled to recover against the surety, Joseph Watson. Astley v. Ray, 2 Taunton, 212. Brown v. Williams, 4 Wend. 360.
III. The note and guaranty were both void, because purchased by Daniel M. Frye, the only witness, and the real plaintiff in the cause, contrary to the statute to prevent abuses in the practice of the law. 41st Sess. ch. 259. Laws of 1818, 278. People v. Walbridge, 3 Wend. 120.
IV. The witness, Daniel M. Frye, was interested in the event of the suit, and, therefore, incompetent. Stedman v. Gooch, 3 Esp. N. P. Cases, 3. Manufacturer’s Bank v. Gore, 15 Mass. 80.
V. The guaranty was void, acccording to the statute of frauds, for want of a consideration being expressed therein.
Senator Vebplaítck, who delivered an opinion for reversal, holds that according to the well settled principles of the common law, as well as the law-merchant prevailing on the continent of Europe, and in this state, a general guaranty for the payment of a note not made to any person by name, or for a specific purpose, may be enforced by action in his own name not only by the party to whom it is originally delivered, but by a subsequent holder of the note and guaranty, whether the guaranty be written on the note, on a paper annexed, or on a separate paper.

Opinion:
After advisement, the following opinions were delivered:
By the Chancellor.
The testator in .this case, by a sepa.rate.and distinct instrument, which contained no words 0f negotiability, and was not endorsed or written upon the note, guarantied the payment of a note at sixty days, .drawn by W. A. Biackney and E. ,0. Biackney, payable to the order of W. Watson.of New-Milford, W- Watson of Pearl-street, and D. S. Tuthill, for $300: which guaranty, as .the plaintiff alleges, was executed for the purpose of enabling one of the endorsers of the note to raise money thereon from D. M. Frye. Frye, who held the note and guaranty when the note became due and payable, or rather the guaranty and a note not correctly .described in such guaranty, finding that the validity of his title to the note would be disputed, transferred the note and the guaranty to the plaintiff McLaren, who .sued the personal representatives of the guarantor, in his own name, to enable him to use Frye as a witness to disprove the .defence which ft was anticipated would be .set -up.
Several questions were raised upon the argument, which I have not thought necessary to notice, as I am perfectly well satisfied that the objection that this separate guaranty Was not negotiable, so as to authorize the assignee to bring a suit thereon in his own name, is well taken. A guaranty endorsed upon a negotiable .note, whereby the guarantor agrees with the holder of the note that he will .be answerable .that the note shall be paid to him or to his.order, or the bearer thereof, when it becomes due, is probably negotiable by the transfer of the note upon which it is written; -for it .is in fact a special endorsement of the note, or more properly a negotiable .note in itself. But to make a guaranty negotiable as a part of the note to which it relates, it must be on the note itself, or at le.ast it must be annexed to it: in.the nature of ,un.allonge qr ekeing out of the-paper upon which the note is written.
There is a mercantile guaranty, recognized by the codes of commerce, both of France and Spain, called an aval, by which the payment, of a bill of exchange may be guaran tiéd. When the form of the aval is such that it cari opérate as a general endorsement, it will páss ta any subsequent éndorsee or holder of the bill, in thé same márinér as if it was an endorsement ón the bill itself; but wheil it is restricted in its terms,- as in case of an endorsement filled up without words of negotiability, it can only be sued by the person to whom it is given. Code of Com. of France, Rod. Trausl., B. 1, art. 142. Code of Com. of Spain, in French, by FoucKer,p. 165, tit. 1, § 6, art. 477, 478. But to make thé guarantor liable in those cases the same protests arid notices are necessary as in the case of a real endorser. Crivelli's Diet. Du Droit, tit. Aval. That species of negotiable mercantile guaranty, is not even co-extensive with those countries where the civil law prevails; for in the case of Cooley v. Lawrence, 4 Martins' Rep. 640, the supreme court of Louisiana held that a guáranty of that nature was not known to the laws of that state, but must be governed by the rules of other special contracts. See also, 3 Martin's Rep. N. S. 659. 10 Louis R. 374. Arid Mr. Bell, the distinguished commentator on the cominercial law of Scotland, where the civil law also prevails, distinctly expresses the opinion that the sepárate guaranty of a bill or note is not negotiable so as to authorize a subsequent holder to sue on it in his own riame. 1 Bell's Cdmm. on Com; Law of Scotland 376.
There is nothing in the particular circumstances of this case, which can justify the court in overturning the established principles of law relative to the negotiability of written instruments, for the purpose of enabling the real party to the litigation to sell his iriterest to a third person, and to become a witness to support the claim. And as I have ho doubt as to the correctness of the decision of the court below, upon the question I have thus examined, I ¿hall vote to affirm the judgment.