Case Name: Lawrence County Bank v. Arndt
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1901-06-22
Citations: 69 Ark. 406
Docket Number: 
Parties: Lawrence County Bank v. Arndt.
Judges: 
Reporter: Arkansas Reports
Volume: 69
Pages: 406–424

Head Matter:
Lawrence County Bank v. Arndt.
Opinion delivered June 22, 1901.
1. Promissory Note-Form of Signature — -Parol Evidence. — Where the only evidence on the face of a promissory note that the persons signing did not intend to hind themselves personally was the affix to their signatures of some designation of agency, as by signing themselves, respectively, as president, vice president, secretary and treasurer, without stating for whom or for what company they were acting, they are liable personally, and cannot, as a defense, show by parol evidence that they intended to hind a certain corporation, for which they were acting. (Page 410.)
2. Mutual Mistake of Law — Reformation.—Where a note payable to a hank, given for the indebtedness of an incorporated company, was, by direction of the president and cashier of the bank, signed by the officers of such company, followed by the official designation of each officer, and the bank officials at the time represented to such signers that they were not personally liable, and the note was executed and accepted as the obligation of the company alone, equity will reform the note, to correspond to the intention of the parties, and such intention may be shown by parol evidence. (Page 412.)
Appeal from Lawrence Circuit Court in Chancery.
FREDERICK D. Fulkerson, Judge. .
Cojfi-n & Ponder, for appellant.
The titles added to the signatures of appellees are not surplus-age; and, the note not showing that the signatures were meant to bind the company as principal, the appellees are individually liable. 61 Ind. 241; 26 Minn. 43; 87 N. Y. 250; 65 Ind. 27; Tied. Comm. Pap. § 123; 98 Mass. 101; 2 Conn. 260; 2 Wheat. 56; 122 Mass. 67; 5 Denio, 517; 38 Oh. St. 442; 6 Yerg. 479; 88 Ill. 219; 1 Dan. Neg. Inst. § 305; 56 Ga. 258; 34 Yt. 402; 62 Ark. 391. The note uses the expression, “we or either of us promise to pay,” and is a personal obligation. Tied. Comm. Pap. § 124; 10 Oh. St. 444; 4 Mete: (Ky.) 296; 3 W. Ya. 285; 71 la. 581; 43 Mich. 376; 9 N. H. 263; 12 Gray, 474; 78 Me. 390; 36 Ark. 296. If appellees had intended to bind the company, they should have designated it in some way as a party to the note. 105 U. S. 416; 12, Mass. 237; 60 Ind. 119; 90 N. C. 417-421. Parol evidence is not admissible to vary the terms of the written contract sued on and to show the representative character of the makers. 1 Am. & Eng. Enc. Law (2d Ed.), 1051-3; 3 Denio, 604; 21 Wend. 101; 9 M. & Yr. 79; 68 Me. 87; Tied. Comm. Pap. § 123; 35 Conn. 131; 1 Cal. 365; 1 McAll. 20; 75 Ga. 56; 109 U. S. 194; 5 Gray, 567; 50 Ark. 395; 35 Ark. 156; 13 Ark. 125; 4 Ark. 179; 15 Ark. 543; 16 Ark. 511; 45 Ark.' 177; 62 Ark. 391.
Joseph W. Phillips, S. D. Campbell and Jasper N. Bealeley, for appellees.
Equity had power to correct the mistake made in omitting the name of the principal: 4 Am. & Eng. Enc. Law (2d Ed.), 210; 11 Pet. 71; 13 Ark. 139; 49 Ark. 34. Parol evidence is admissible to correct mutual mistakes. 4 Am. & Eng. Enc. Law (2d Ed.), 150, 153; 27 Ark. 512 ; 139 TI. S. 568; 46 Ark. 131; 51 Ark. 434; 52 Ark. 65; 55 Ark. 115; 54 Ark. 97; 62 Ark. 99; 5 Wheat. 327. Cf., also, 67 Ark. 551; 65 Ark. 53; Fetter, Eq. 127.
J. W. Phillips, J. N. BeaTcley and 8. D. Campbell, for appellees on motion to reconsider. . ; . . . • .
• ' Parol evidence was admissible to explain the'mutual intention of the parties. 'Story, Eq. Jur. §§ 153-156; 3 G-reenleaf, By. 360; 115 U. S. 634; 50 Am. St. 614. Ignorantia juris non excusat does-not apply. Bish. Cont. § 107; 8 Wheat. 174; 141 IT. S. 260; 13 Ark. 138; 49 Ark. 32; ‘40 Am. St. Rep. 674; 52 L. R. A. 712; 58 S. W. 207; 60 S. W. 311; Fetters, Eq, 127; 15 Am. & Eng.' Enc. Law, 134; Pom. Eq. Jur. § 843. Between original parties promissory notes are subject to reformation. 4 Am. & Eng. Enc. Law, 153;" 15 Ark. 15; 20 TJ. S. 0. C. A. 287; 104 IT. S. 93; 29 S. W. 882; 34 Am. St. Rep. 433; 20 L. R. A. 705; 72 Am. St. Rep. 291. Original want of consideration follows, new note-given in substitution. . 15 Ark. 465. Want of. consideration may be shown by parol. 53 Ark. 4; 26 Árk. 449; 66 Ark. 521. Appellant was estopped by representations of its officers and agents made at the time of execution of note. 65 Ark. 51; 34 Am. St. Rep. 107; 56 Am. Rep. 106; 47 Am. Rep. Í82.
Chas. Gojfin, II. L. Ponder and J. C. Hawthorne, for appellant in reply.
Mistakes of law cannot be corrected. 45 Ark. 17‘5. To correct a written instrument evidence must be clear and free from doubt. 14 Ark. 481; 36 S. W. 122; 18 S. W. 928; 25 S. W. 1108; Kerr, Fraud and Mistake, 428; 46 Ark. 176; 2 Pom. Eq. Jur. § 843; 41 Ark. 499; 49 Ark. 429, 430. If any mistake at all, it was a mistake at law, and equity offers no relief. 56 Ark. 322; 40 S. C. 92; 15 Anr. & Eng. Enc. Law, 637; 4 Rich. Eq. 342; 35 S. C. 360; 13 Ark. 135; 15 Ark. 15; l.Am. & Eng. Dec, Eq. 138-236; 4 Am. & Eng. Dec. Eq. 480.

Opinion:
BuNN, C. J.
This suit was instituted on a promissory note on the 16th February, 1899, and on the pleadings and testimony in the ease the cause was transferred to equity, judgment was rendered for the defendants, and plaintiff appealed.
The plaintiff is an incorporated bank, doing business at Walnut Ridge, in Lawrence county in this state,' and'the defendants are citizens of said place, who made their promissory note to the bank, of which the following is a copy, -to-wit:
"$1,540.
"Ninety days after date we or either of ns promise to pay to the Lawrence County Bank fifteen hundred and forty dollars, negotiable and payable at the Lawrence County Bank, Walnut Ridge,' Ark., for value received, with interest at ten per cent, per annum after maturity until paid. The drawers and indorsers severally waive presentation for payment, protest and notice of protest, and nonpayment of this note.
[Signed] "EL ARNDT, President,
"J. M. Phelps, Yice President, "BeN0\ F. GRAPE, Secretary,
"S. 0. Dowell, Treasurer."
Payment of interest to November 1, 1898, amounting to $83, was indorsed on the note. No other payments were made, and the prayer was for judgment for the $1,540, and interest from 1st November, 1898.
The defendants answered, averring that the note was. in fact hut a renewal note, of two pre-existing notes aggregating the same amount, which the Walnut Ridge Manufacturing Company, another corporation of the same place, owed said bank, and that the defendants executed the same for no other consideration than to take up and renew said two notes and old indebtedness, and that they did not execute the note sued on in their individual capacities, nor was it the intention of the parties to it that they should be held individually liable for the same, but that, on the contrary, as the terms set opposite their signatures indicate, they executed the same as officers and directors of said Manufacturing Company, to bind said company alone; that the note was executed at the instance and request of said J. M. Phelps, who was the president of said hank, and at the same time vice president of said company, and that it was perfectly understood among them all at the time, and so expressed, that the note was to be regarded as the obligation of the Manufacturing Company, executed by the defendants as its officers and agents, and not otherwise. The two notes, of which the note sued on is claimed to be a renewal, appear, in the record as having been similar in language to the one sried on, and signed, by persons designated as president and treasurer, and others writing without official designation. The testimony in the case goes to show that the consideration of all these notes was an indebtedness originally of the Manufacturing Company, evidenced by note and renewed from time to time from an indefinite time past.
The sole question necessary to be considered in this case is, whether a note expressed in the language of the one sued on, and signed as it was, is subject to be explained by parol testimony.
It will be observed that the Walnut Bidge Manufacturing Company is nowhere referred to in the bodjr of the note as the payer or obligor; nor is it referred to, in connection with the signers of the note, as a company of which they were officers and directors, nor otherwise. There is, in fact, nothing on the face of the note, nor connected with the signatures, which has any reference to said Manufacturing Company, which is sought to be made the obligor by the defendants. Therefore a suit on the note as this is could' have no reference to said company, unless by extraneous averments, as made in defendants' answer herein.
The rule, as laid down in all the works of the text writers, and supported by all the decisions (with a few exceptions, and they only apparently exceptions), is that such a note is the note of the signers, individually, and not of the body or company they claim to represent, and that parol evidence is not admissible to explain the intention of the parties, and show the same to have been different from that expressed in the language of the note itself. In stating the principle, it may be well, however, to say that any reference, however slight, to the alleged obligor company in the body of the note, or in the official designation of the signers, would be sufficient to let in proof of the real intention of the parties, but the difficulty in this case is that there is nothing on the face of the note, or connected with the signatures, to indicate that the Manufacturing Company had any connection with the transaction whatever. That being true, parol testimony to show such connection is inadmissible under the rule, however hard that rule may appear to be; and the rule is in equity the same as at law. Tiede-man, Commercial Paper, § 123, and note thereunder, and corresponding sections in Daniel, Neg. Inst.; Randolph on Commercial Paper, and all text writers on the subject.
The case having been determined in the court below contrary to this rule, the decree is reversed, with directions to render judgment for the plaintiff.