Court Opinion

ID: 6510622
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:22:01.726033+00
Date Added: 2024-06-11T15:54:52.058041
License: Public Domain

SOMERVILLE, J.
— It is a well settled doctrine, in the general law commercial, both of England and the United States, that the giving of a negotiable bill or note for an antecedent debt will not operate to discharge such debt, unless it was accepted in absolute payment. Prima facie, it is to be considered as collateral, or additional security; but, by express agreement, it may be a satisfaction and a bar. — Myatts & Mocre v. Bell, 11 Ala. 222; 1 Brick. Dig. p. 257, § 501, cases cited; Sibree v. Tripp, 15 M. & W. 23; The Kymball, 3 Wall. (U. S.) 37.
The undisputed facts of this case show, we think, that there was an agreement on the part of Day to take the New York draft, sent him by Thompson, in payment of the pre-existing debt due by account. The proposition of Thompson, as made by letter, was to remit a draft on New York for $200, “ in payment of bill in fulland this was accepted by Day. When the draft was subsequently received, a letter from Day acknowledged it as being in full payment of the account. Such being the case, no action can be maintained on the original debt, but the remedy of the creditor is on the indorsement alone, as made by the payee, who is the original debtor. It would be otherwise, in a case of forgery, fraud, or misrepresentation. — Fulford v. Johnson, Hendon & Co., 15 Ala. 385.
At the time of the purchase of the, draft in question, the Eufaula bank, which drew it, was admitted to be in good financial standing and repute. It was sent by instruction of the creditor, and the bank became insolvent within a few days afterwards. The bona fides of the transaction on Thompson’s part not being impugned, the fact of the bank’s insolvency does not vitiate the payment. — Lowry v. Murrell, 9 Port. 280; Garriere v. Ticknor, 26 Ala. 571; Ware v. Street, 2 Head, 609. We think, under the circumstances, that the delivery and acceptance of the draft was a payment of the account.
The parol evidence, allowed to be introduced in the court below, to show that the defendant indorsed the bill in suit for the sole purpose of transferring the title to the plaintiff, and with no intent of rendering himself personally liable, was improperly admitted. The contract imported by the regular indorsement of a bill or note is of a fixed and definite character, and is interpreted by the law. It is legally incapable of explanation, contradiction, or modification, by parol evidence. This rule is founded on the soundest principles of reason and public policy, as well as on the weightiest *274authority. The reasons for its application to commercial paper are more cogent, if anything, than to other written contracts. In Tanlcersley v. Graham, 8 Ala. 251, therulewas declared by this court, in discussing its application to indorsements, to be too firmly established to be now unsettled, even if its correctness were doubted.- There are cases which hold the contrary doctrine; but the weight of authority greatly preponderates against the admission of such evidence. Channers v. Vanners (35 N. J. 517), 10 Amer. Rep. p. 256, where the cases are arrayed; Charles v. Denis, 42 Wis. 56, cited in 24 Amer. R. 383 ; 6 Blackf. 509; 23 Maine, 392. Professor Parsons forcibly maintains this view of the question, as being in entire harmony with reason as well as authority. — 2 Parsons on B. & N. 520-521.
As far back as Goupy v. Harden, 7 Taunt. 159, an agent, who purchased foreign bills for his principal, and indorsed them to him without' qualification, was held liable to such principal on his indorsement. Persons holding bills in auter droit must protect themselves, in making transfers, by some special form of words, so as to prevent personal liability. Smith’s Mer. Law, p. 291; Charles v. Denis, supra.
In Rodney v. Wilson (67 Mo. 123), 29 Amer. Rep. 499, parol evidence was held inadmissible, to show that the payee of a note, at the time of transferring it by indorsement, agreed to assume payment of it unconditionally. The court say : “ It is evident that the verbal contract on which the plaintiff relied, and the contract implied by the indorsement, are inconsistent with each other, and can not stand together. One is an undertaking to be bound absolutely ; the other, an undertaking to be bound conditionally. The proof of the former has the effect of varying the latter. The rule is universal, that all prior and contemporaneous agreements are merged in the written undertaking. . . If the indorsee may thus qualify the legal effect of a regular blank indorsement, why may not the indorser be permitted, on the other hand, to escape all liability by showing that the indorsement was without recourse.”
It is not to be denied that the cases involving this question are somewhat confused, and not entirely reconcilable. This results from a failure to recognize with sufficient clearness definite exceptions to the general rule ; such as parol proof of a failure of consideration, or some other equities between the original parties to bills, or between the holder and an indorsee affected with actual or constructive notice. Some of the decisions relax the rule, also, in cases of irregular indorsements, as this court did in the case of Hullum v. The State Bank, 18 Ala. 805. This indorsement was not made in *275due course of trade, nor by an original party to the bill. It was executed after the holder had acquired title, and after protest of th9 bill. It being doubtful, on the face of the paper, whether the indorser intended to bind himself as guarantor or indorser, parol testimony was admitted to correct the ambiguity.
We are not willing to enlarge the scope of these exceptions. It would tend to destroy the growing value of commercial paper, and to impair a salutary rule of evidence, which was designed to correct the proverbial infirmities of human memory, and ha§ done much to close the flood-gates against frauds and perjuries.