Court Opinion

ID: 6411933
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:53:20.572727+00
Date Added: 2024-06-11T15:51:24.164645
License: Public Domain

Shaw, C. J.
There is nothing to take this case out of the usual and long established rule, though perhaps, if a new question, it would be fairly open to argument.
The position which we think is settled in Massachusetts is, that if one not the promisee indorses his name in blank on the note, before it is delivered to take effect as a promissory note, the law presumes that he intends to give it credit by becoming liable to pay it in some capacity and on some terms. One natural legal result might have been presumed to be that he intended to be liable as second indorser ; but this has long been held otherwise, and is now settled otherwise by authority. He cannot be held in the capacity of first indorser, for he is not payee, and no one but the promisee can be first indorser and put the note in circulation. If it be said he may, if he chooses-take upon himself the limited obligation of an indorser, the am swer is, so he may, if he so expresses it before signing it, but not otherwise. If it be said that signing in blank leaves it equivocal whether he means to assume the obligation of promisor or indorser, and that the law makes no presumption on the subject, then the contract would be a contract between the holder and such indorser requiring evidence aliunde to show which was *277intended, and that would make it in effect a paroi contract to pay the debt of another, and void by the statute of frauds.
But it is intended when the blank is filled to have the character of a written instrument, and not to depend on paroi proof to give it effect, and not to be altered or contradicted by paroi evidence. The law does presume, and it is a strict legal presumption, that such indorser did intend to be liable in some form and to some extent. It does not charge him as indorser, though his name is on the back, unless by express terms. The case of an indorsement in blank supposes that there are no such express terms ; therefore it must be either as promisor or guarantor. To that extent it is equivocal. But this does not leave it open to the holder to insert the one or the other contract over the name as he pleases. There are other considerations applicable to the subject.
The peculiar character of a contract of guaranty is that it is an independent contract between the holder of the note and the guarantor; it must be upon separate- consideration. He is not a party to the note. Such guaranty may be on the note or made by a separate instrument, but in either case it is upon a distinct consideration. Therefore if the note was thus indorsed in blank, after it was delivered by the promisor to the promisee, it could not be a contract made upon the original consideration of advancing the money on the note, and participating in the same consideration with the promisor. He cannot therefore be. held as promisor; he cannot be held except as guarantor. To hold him in the latter capacity a distinct consideration must appear.
Being a blank indorsement, of course no consideration appears on the face of it; but if it was put on after delivery, an instrument so indorsed in blank authorizes the holder to go into proof of the fact which such blank shows was intended to be supplied ; it may be proved by paroi testimony that there was a consideration as between the holder and guarantor, and what that consideration was, and the blank filled accordingly.
It follows therefore that in determining whether such blank indorsement constitutes an original promise, in which the per* *278son giving it is held as one participating in the original consideration of the loan, or whatever it was, on which the promisor was bound, it is important that it should appear whether the name of such blank indorser was on the note when it was delivered by the promisor to the promisee. If it was not, the conclusion of law is that he was not a joint or original promisor. If it was, then the conclusion of law equally attaches that he was an original promisor.
The question of the delivery of a note must necessarily be a question of fact. It is something which occurs after the contract has been completely written, and it cannot appear on the note itself. A note, like a deed or other written instrument of contract, takes effect from its delivery. Fay v. Richardson, 7 Pick. 91.
It is said in some of the cases that if a note is produced by a holder, having the blank indorsement of one not the payee, the presumption is that it was on when he took it. And perhaps it may be só, as the presumption is that a note was made and delivered at its date. But this is a presumption of fact, and may be rebutted by proof that it was not so on the note when delivered, on which question of fact the case is for the jury and open to proof on both sides.
This view in some measure indicates the nature and the extent of the paroi evidence which may be given in such case. It is always competent to give paroi evidence of the fact whether the blank indorsement was made before or after the delivery of the note. If it is proved as a fact that the name was on before it was delivered to the promisee, it is conclusive of the legal character and effect of the contract, and paroi evidence is not admissible to control such legal effect. But if the fact is proved that it was made after delivery to the promisee, paroi evidence is admissible to prove a separate consideration to give it effect as a guaranty. Perhaps it is impossible to prescribe any exact rule as to the extent of such paroi evidence. Some things, we think, are clear. Some paroi evidence may be admitted to show the time and-circumstances under which it was made and delivered. Samson v. Thornton, 3 Met. 275. On the *279contrary, it would not be competent to show that the agreement was that the words “ without recourse ” should be written over the party’s name. That would contradict the legal presumption that he intended to give credit to the note by binding himself in some form — which cannot be done. Precisely what are the limits it may be difficult to say before the cases arise.
It seems to be agreed on all hands, that the matter to be filled up by paroi evidence must be consistent with the writing as far as it has gone. The ground on which any power of filling up a blank is warranted is, that the party, by delivering an instrument in blank, consented to such filling up. Smith v. Crooker, 5 Mass. 538. Of course it must be something consistent with the contract when delivered, and does not extend to the insertion of matter inconsistent. For instance, it has been said that the delivery of a blank note, with a name written across in the usual place of indorsement, would warrant the holder to fill it up on the other side with a note for any amount, payable to him who had thus left his name in blank. So suppose this written on a stamp, where stamps are required, it would not warrant an amount larger than the stamp would cover. So if a note be filled and signed, leaving a blank for the number of dollars, it would be a letter of credit for any amount covered by the stamp.
The question whether the promisee was surety or principal is a question between themselves only, and does not affect the rights of the holder.
It has been argued that the case of Riley v. Gerrish, 9 Cush. 104, expressed a different view of the law as to the admission of paroi evidence from that which had been laid down in Chaffee v. Jones, 19 Pick. 263, Union Bank v. Willis, 8 Met. 509, Howe v. Merrill, 5 Cush. 80, and other previous cases. That case was left to the court on certain testimony of Mr. Hancock, so far as it was admissible. The decision was certainly right. There were words erased, and it was held that paroi evidence was competent to prove that they were stricken out before the note was delivered, with a full understanding of the effect of thus erasing the words “ as indorser.” It is there stated that “this power of *280filling up the blank is not arbitrary, but depends upon proof of the real negotiation.” It would have been more accurate to say, “ proof of the fact that it was signed before or after delivery; and, if after, then it would be competent to prove the consideration and an authority to fill the blank with words constituting a contract of guaranty.” Another material consideration in that case was that the proof tended to show that it was an original contract between the promisee and such special indorser, and so was open to any and all questions respecting want and legality of consideration, which it would not have been if sued by an indorsee having taken it in the due course of business and not dishonored. It had been recently held in the case of Howe v. Merrill, that when a party had signed in due order as indorser, paroi evidence was not admissible to show that he was bound as promisor. In the more recent case of Wright v. Morse, 9 Gray, 337, in the opinion given by Mr. Justice Dewey, some expressions in Riley v. Gerrish were set right.
Describing the notes in the mortgage as “ indorsed,” is a description of the notes simply to identify them; it was literally true, they were notes with the names of the defendant written on the back. Exceptions overruled.