Court Opinion

ID: 8629716
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:35:45.610946+00
Date Added: 2024-06-11T16:55:43.663558
License: Public Domain

LIVINGSTON, Circuit Justice.
Evidence that Gleason & Cowles indorsed the note and gave it back to Gay, in order to give him credit, and that they never negotiated it, may have some important bearing on the case. Perhaps the same fraud which procured the note to be given was used in obtaining the indorsement; and if so it may be properly laid before the jury. The evidence may, therefore, be heard.
In the argument of the case, Ingersoll and Griswold, for the defendants, contended:
1. The plaintiffs cannot recover because the note has been decided by a competent tribunal to be void. The indorsement must of course be void. The indorsement is in the nature of security, and where notes are not negotiable it can be viewed in no other light. It is the same thing, then, as if Gleason & Cowles had signed this note with Gay, as his sureties. And it must be acknowledged that a surety cannot be holden when the obligation of his principal is void.
2. From the tesimony which has been let in. it appears that the plaintiffs are remote indorsees, and the defendants never indorsed the note to them. There is no privity of contract between the plaintiffs and defendants. To decide that upon these facts the defendants are liable to the plaintiffs would be giving to an indorsement all the efficacy which it has where notes are negotiable. On this principle, an indorsor can alter the nature of an instrument, and make that negotiable which was not so in its creation, which is absurd.
Mr. Daggett, for plaintiffs.
1. The contract of the indorsor is, in every case, that the sum contained in the note shall be paid when due, and for this payment he pledges himself to be responsible. It makes no difference whether the note is not paid by the maker because he is unable, or because the instrument is void, or on account of any other impediment in the way of collection. Let the cause of failure of payment be what it may, the in-dorsor is liable. If the note is forged the indorsor is still holden: and in a suit against an indorsor it is not necessary to prove the handwriting of the maker.
2. Nor is ' the contract made with the next indorsee only. It extends to all future indorsees. An indorsement in blank is a letter of credit to the whole world; and every man who trusts to it can recover of the indorsor. This principle is clearly illustrated and supported by the case of Russel v. Langstaffe, Doug. 514, where Lord Mansfield declared that the defendant, by indorsing blank copper-plate checks, gave a letter of credit for an indefinite sum; and that it did not lie in his mouth to say the indorsements were not regular. Indeed, this is a direct authority to both points, for it not only decides the general liability of indorsors on account of having given their names to the world, but declares further that the indorsor is holden though the paper indorsed was, at the time, a mere nullity.
LIVINGSTON, Circuit Justice, directed the jury that as to the first point, though he had had doubts, they were almost entirely removed. If a note were forged, the indorsement would bind the man who made it.
The second point he declared not to have altered the decision of the ease from what it would have been, if the plaintiffs were the only indorsees, and the defendants the only persons through whose hands the note had passed. Gleason & Cowles gave the weight of their names to the world, and must be responsible to every man who trusts to the note relying on their credit, as every subsequent indorsee must be supposed to do, from the nature of the transaction. The ease is, therefore, clearly with the plaintiffs on both points.
A verdict was accordingly found for plaintiffs to recover $1,599.20 damages.