Court Opinion

ID: 6572595
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:31:16.911324+00
Date Added: 2024-06-11T15:56:57.497879
License: Public Domain

The opinion of the court was delivered by
Redfield, J.
The plaintiff’s claim, in the present action, was to recover against the defendant, upon the common money counts, having abandoned the other counts. This, it is now settled, the indorsee of a promissory note may do, *232even against the maker. Chase & Grew v. Burnham et al. 13 Vt. R. 447.
Still we think the evidence offered by the defendant was competent to rebut the prima facie proof. It did tend to show, 1, that the defendant signed the note, as a guarantor, or surety merely, for Sayles; 2, that, in point of fact, no money was ever received by him, either of Edgerton or Raymond. As the prima facie right to recover upon a promissory note, as for money, may always be repelled by showing that the defendant did not personally receive any portion of the money, or that no money was, in point of fact, paid, the evidence offered in this case amounted, if believed, to a good defence. Stratton v. Rastall, 2 Term R. 366. I know that a fiction is sometimes resorted to, to make out that where no money passed, that was done, which was equivalent thereto, by shifting liabilities. Nothing of this, however, appears in the present case. Page v. Bank of Alexandria, 7 Wheaton, 25. Chitty on Bills, 595-6.
2. Although a person, other than the payee, putting his name upon the back of a promissory_.note, in blank, may always, in this state, be, prima facie, holden as a joint promissor, if this is done before the delivery of the note, or, what is equivalent, is done in consummation of a contract, made at the time of delivery, still this presumption may always be repelled by proof. In such case it may always be shown, by parol, what was the precise nature of the contract assumed by making such blank indorsement. Barrows v. Lane, 5 Vt. R. 161. Knapp v. Parker, 6 Vt. R. 642. Flint v. Day, 9 Vt. R. 345. In the former case, Phelps, J. well said, a blank indorsement, or signature, ‘means nothing of itself’ alone. It is, so to speak, a dead letter, until life is infused, by showing the obligation intended to be assumed.
3. In the present case, if the proof offered is credited, and, for the purposes of this trial, it must be to the full extent, this defendant, in no sense, assumed the obligation of a joint promissor, but merely of a collateral guarantor for Sayles. He did not indorse the note, until it had passed out of the hands of the payee; his promise, therefore, could not have been identical with that of Sayles. His contract was with *233Raymond, and without any concurrence with Sayles. He undertook to pay the money if Sayles failed to do it.
The precise difference in the extent of the obligation of a joint contractor and a collateral or conditional guarantor, in most respects, may not be very important. The contract of guaranty is not, as between the parties, negotiable. 3 Kent’s Com. 4 ed. 124, noté a. A collateral guarantor is entitled to reasonable notice of the default of the principal debtor, and if he sustain loss, or prejudice, in consequence of not receiving such notice, he will be exonerated to the extent of the loss so suffered. 3 Kent’s Com. 123-4 and notes. In the case of an absolute guaranty, no demand and notice are necessary in order to charge the guarantor. Whether the defendant having signed his name, in blank, upon the back of the note, and put it in circulation before it fell due, will make him liable, as a joint promissor, to all bona fide holders for value, it is not necessary now to consider.'
4. The evidence offered was, we think, of such a character as to impose upon the plaintiff the onus of showing that he did receive the note in the due course of business, and paid value for it. This I.understand to be the generally received rule upon that subject, at present. The plaintiff, in opening his case, where he sues as indorsee of a note or bill, is not bound to show how he came by it, even where notice to that effeet has been served upon him before the trial. 2 Starkie’s Ev. 155, n. (g) 1. Bassett v. Dodgekin, 10 Bing. 40, (25 E. C.L.R. 21.) 4 Taunt. 114. But when the defendant, either by calling witnesses or cross examining the plaintiff’s witnesses, makes out a case upon which none but a bona fide holder for value is entitled to recover against him, it then becomes incumbent upon the plaintiff to show that he is entitled to the advantage of suing in such a character. The practice of the common pleas, and some of the American courts, seems to be to require notiee before the trial that such proof will be required, in order to compel the plaintiff to produce it. 2 Starkie’s Ev. 156, n. B. Patterson v. Hardacre, 4 Taunt. 114. Note to Mann v. Lent, 22 E. C. L. 302. The practice in the Kings’s Bench seems to be otherwise, and such defence is there admitted and allowed without notice to the plaintiff to show how he came by the note or bill. Mann v. Lent, 22 E. C. L. 301, and *234note. Heath v. Sansom Evans, Id. 78. 2 Barn. & Adolph. 291. I know that, in the latter case, Mr. Justice Parke did insist that the onus rested upon the defendant to adduce proof positively impeaching the plaintiff’s title, and adverts to the rule as correctly laid down by Eyre, Ch. J. in Collins v. Martin, 1 B. & P. 651. But these are merely the dicta of the judges, in both cases, and although they have sometimes, by elementary writers, been insisted upon as containing the true rule, the authoritative determinations of the courts are almost all the other way. In the case of Heath v. Sansom the subject was very fully considered by the King’s Bench, in 1831. In 1833, in Basseit v. Hodgehin, the common pleas, by a solemn determination, established the same doctrine, Ch. J. Tindell expressly quoting the other case with approbation. I understand the same rule obtains in New York, and in many other of the states. It is, I think, a rule eminently calculated to do justice. It is but a rule of practice. All the cases, and all judges and writers upon the subject, agree that, upon proof that the note was given under such circumstances that the payee could not recover upon it, and that the holder gave no value for it, or did not receive it upon proper caution and bona fide, he cannot recover upon it. And this is but simple justice. In such case he should stand in no better condition than would the person from whom the note came into his hands. Prima facie, no doubt, an indorsement, in common form, does import a bona fide transfer for value. But when it is shown that the note, (and the case of a bill is the same,) was without consideration, or void in its inception, being obtained by force or frand, or that it had been lost, this does so far impeach the title of the holder as to impose upon him the obligation of showing that he paid value, and, in many cases, that he was guilty of no want of ordinary care in taking it. Gill v. Cubit, 3 B. & Creswell, 466, (10 E. C. L. 154,) which has reference to lost notes, turns upon the point of being taken without due caution. Some of the later cases, in regard to this particular point, seem to have receded a little from this case. 3 Kent’s Com. 82, and notes. But the doctrine of the case of Gill v. Cubit, is, in the main, adhered to. Easeley v. Crockford, 10 Bing. 243, (25 E. C. L. 116, A. D. 1833. C. Bench.) See note to *2353 Kent’s Com. 82. And we do not well see bow any other rule could consist with a tolerable regard to justice. For, if the onus of proof rests wholly upon the defendant to show that the plaintiff did not give value for the note, or that he received it without proper caution, it will always be in the power of interested men to bring their suits upon such notes in the name of some plaintiff, in regard to whose title no positive proof can be adduced, and, indeed, no other proof, except that he appears in court in the questionable shape of attempting to enforce an unjust claim, which should always be a ground of presuming against the claim, unless its justice were further vindicated. But, on the other hand, if the holder of such a bill, or note, is called to vindicate his title, it will never result, in our community, whatever may be the case in the large cities, in any embarrassment, in regard to proof, if the requisite facts exist. It will, too, lead to greater caution in receiving notes and bills, and this .will be a result calculated rather to advance than to hinder the course of justice, as well as the reasonable negotiability of paper.
It is apparent, in the present case, that if the plaintiff1 is a mere trustee of Raymond, it might be important that the suit should be against him, as guarantor, and in the name of the one to whom the guaranty was given, and who, as between them, at least, (whatever might be the rule as to innocent purchasers,) had no authority to treat it as a part of the original promise, and thus make it negotiable.
Judgment reversed and new trial.