Case Name: BANK OF SPARTANBURG v. MAHON
Court: Supreme Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1906-10-03
Citations: 75 S.C. 255
Docket Number: 
Parties: BANK OF SPARTANBURG v. MAHON.
Judges: Mr. Justice Jones concurs in the result and in the separate opinion of Mr. Justice Woods.
Reporter: South Carolina Reports
Volume: 75
Pages: 255–261

Head Matter:
BANK OF SPARTANBURG v. MAHON.
Banks — Notes—Indorser.—If A. indorse a renewal note with name of payee blank, forwards, it to B., who signs it as maker, and who under authority from A. delivers it to the bank, which fills in name of A. as payee, and surrenders to B. original note, A. thereby becomes a joint maker of the note and not an accommodation indorser. Here A. also received valuable consideration in the surrender of the original notes, and he cannot be considered an accommodation indorser.
Messrs. Justices Jones and Woods think A. is liable as indorser and not as maker.
Before DanTzuír, J., Spartanburg, November, 1905.
Reversed.
Action by Bank of Spartanburg against G. H. Mahon. From' judgment of nonsuit, plaintiff appeals.
Messrs. Simpson & Bornar and M. P. Ansel, for appellant,
cite: 1 McM., 76; 3 Rich., 134; 53 N. Y., 307; 6 Rich., 497; 45 S. C., 519; 1 Dan. Neg. Ins., sec. 142.
Messrs. McCullough & McSwain, contra.
Mr. McCullough cites: 33 & C., 329; 7 Rich., 13; 63 S, C., 436; 92 Ami. Dec., 99; 51 S. C., 58; 98 Ala., 484; 1 Ency., 336; Norton on Bills and Notes, 107; 45 S. C., 373; 4 Ency., 476; 37 S. C., 463; 41 & C., 81; 2 Ency., 253.
October 3, 1906.

Opinion:
The opinion of the Court was delivered by
Mr. Justice Gary.
This is an appeal from an order of nonsuit. The complaint sets out three causes of action, in the first of which it is alleged, that James and Stewart made their promissory note in writing, on the 15th of September, 1904, and thereby promised to pay to the order of the defendant, G. H. Mahon, the sum of $3,000. ' The third paragraph of the complaint is as follows: "That the said G. H. Mahon then and there, and before this action was brought, indorsed the said note to the plaintiff herein for value, who is now the legal owner and holder of the same."
The second and third causes of action are upon other notes maturing at different dates, but in other respects the allegations thereof are similar to those set out in the first cause of action.
There wasi testimony h> the effect that the notes in question were renewals of other notes, which the bank held against James and Stewart, and which were indorsed by the defendant; that the notes described in the complaint were executed in the following manner: the bank delivered to James and Stewart blank notes (except as to amounts) for the purpose of being signed 'by them, and indorsed by the defendant; that the notes were sent to the defendant, who wrote his name across the back thereof, and forwarded them to> James and Stewart, who signed'.as makers; that the notes were then presented to the bank by James and Stewart and the bank filled out the blanks by inserting the name of G. H. Mahon as payee, with the knowledge and consent of James and Stewart.
The grounds of the motion for nonsuit were: "1. That the bank has failed to prove title to these notes. 2. That the undisputed testimony shows that Mr. Mahon indorsed these notes in blank, and that they were subsequently written out and. signed' by James and Stewart at Spartanburg, Mr. Mahon not being present, and that the insertion by the bank of the name of Mr. Mahon as payee of the notes, was in viou lation of his rights as an indorser, and made for him a contract, whi'ch the bank had no right or authority to' make."
The appellant's exceptions merely assign error on the part of his Honor, the presiding Judge, in sustaining the motion for nonsuit, on the grounds just stated, and need not be considered in detail.
The cases of Stoney v. Beaubien, 2 McM., 319; Cockrell v. Milling, 1 Strob., 444; Baker v. Scott, 5 Rich., 310; Carpenter v. Oaks, 10 Rich., 17; McCreery v. Bird, 12 Rich., 556; Watson v. Barr, 37 S. C., 463, 16 S. E., 188, and Johnston v. McDonald, 41 S. C., 81, 19 S. E., 65, show that G. H. Mahon did not. sustain towards the bank the relation of an accommodation indorser, but of a joint maker, as he was a party to the original contract and indorsed the notes before-they were negotiated. It cannot be successfully contended that he was an accommodation indorser, for the further reason- that' -he received a valuable consideration when the bank surrendered the notes, previously executed by James and Stewart and indorsed by him.
The general principle as to the effect of inserting in a note the name of a party as payee, who had previously indorsed it, is stated as follows, in the case of Aiken v. Cathcart, 3 Rich., 133, which was an action by the last indorser, who had- paid the note, against the first indorser,' to wit: "The insertion of the name of the first indorser, in the blank left for the name of the payee, was not an alteration but the completion'of the note. It gave effect to the note, consistently with- the liabilities of the parties expressed by their indorsements. The note might then be perfected after a transfer. When the blank was filled in pursuance of the authority implied by the delivery of the note to the maker, it had relation back to the indorsement, and took effect as if the note were then perfect; for the cases show that when a signature is written te a paper Which is intended to have the operation of a negotiable instrument, it becomes such when perfected, from the time when it was signed, so as to support the allegation that the party made or indorsed the note or bill."
The testimony shows that James and Stewart' were the agents of the defendant in negotiating the notes. It does not appear that the plaintiff had notice of any limitations imposed upon their power by the defendant. In fact, it does not appear that he gave them any instructions whatever, as to the manner in which the blanks were to be filled. The insertion of the payee's name in the note was within the scope of their employment, as shown by the case of Aiken against Catkcart, supra, in which the Court says: "Many cases concur to establish that when the indorser of a note commits it to the máker in blank, either in whole or in part, the note carries on the face of it an implied authority to .the maker to fill up the blank. As between the indorser and third persons, the maker must under such circumstances be deemed to be the agent of the indorser, and as acting under his authority and with his approbation." Therefore, even if they acted contrary to defendant's instructions, he would nevertheless be liable as payee. Reynolds v. Witte, 13 S. C., 5; Rucker v. Smoke, 37 S. C., 377, 16 S. E., 40; Hutchison v. Real Estate Co., 65 S. C., 45, 43 S. E., 291; Mitchell v. Leech, 69 S. C., 413, 48 S. E., 248, 66 L. R. A., 723.
Furthermore, even if it should be conceded that the insertion of the payee's name was not the act of the defendant through.his, agents, nevertheless they had notice of this fact, while acting within the scope of their employment, and it was binding on him. American Co. v. Felder, 44 S. C., 478, 22 S. E., 598. Therefore, it was a question to be determined by the jury, whether he had not either acquiesced in such action or was estopped from contesting the point, after hé had received the valuable consideration arising from' the satisfaction of the notes previously executed, as hereinbefore mentioned.
It is the judgment of this Court, that the judgment of the Circuit Court be reversed, and the case remanded to1 that Court for a new trial.
Mr. Justice Jones concurs in the result and in the separate opinion of Mr. Justice Woods.