Court Opinion

ID: 6946460
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:26:12.515006+00
Date Added: 2024-06-11T16:07:55.898920
License: Public Domain

Douglass, Justice, delivered the opinion of the Court: (1)  This was an action of assumpsit, by the plaintiffs against fthe^.defendants, McKoy, Johnson, and Gray, as makers of a promissory note. McKoy and Johnson pleaded the generaUssue, whicljl’jyas joined, and Gray pleaded a former recovery, to which the plaintiffs demurred. Before any decision was had on the demun'er/'-the plaintiffs entered a nolle prosequi as to Gray, and proceeded to trial against McKoy and Johnson. By agreement of the parties, a jury was dispensed with, and the matters of fact as well as law were submitted to the Court. The plaintiffs offered in evidence the following promissory note and endorsement: “ Three months after date, I promise to pay J. B. & M. Camden & Co., or order, four hundred and eighty dollars, value received, without defalcation. “ John C. Gray. “ January 26, 1838.” Endorsement: “ For value received, we jointly and severally acknowledge ourselves as securities of John C. Gray, for the payment of the within note at maturity. “ Kenneth McKoy, “ Jacob Johnson.” The signatures of Gray, McKoy, and Johnson were all proven to be genuine, and the plaintiffs’ counsel admitted that the names of McKoy and Johnson were written in blank on the back of the note, and that they wrote said endorsement over said signatures on the trial. Various witnesses were then examined for the purpose of ascertaining at what time, and under what circumstances, McKoy and Johnson endorsed said note; but the whole evidence left it extremely doubtful whether they placed their names on the back of the note at the time of its execution, or long subsequently; and there was no evidence showing that they were privy to, or participated in the consideration. The plaintiffs then offered to read said note in evidence, under a declaration charging said McKoy, Johnson, and Gray as joint and several makers of said promissory note, to which the defendants objected, and the Court- sustained the objection ; and the plaintiffs offering no other evidence, a judgment of nonsuit, and for costs, was entered against the plaintiffs. The assignment of errors questions the decision of the Court, excluding the note from evidence, and entering the judgment of nonsuit. Supposing the names of McKoy and Johnson to have been endorsed upon the note at the time of its execution by Gray, it becomes necessary to enquire into the nature and extent of their liability, and especially whether they, in connection with Gray, are liable, as joint and several makers of the note. The general rule is, that an endorsement in blank operates as authority to the bona fide holder of the note to fill up the endorsement, by writing any thing over the signature, which shall be consistent with the nature of the instrument, and the intention of the parties. Great difficulty and confusion have arisen in applying the rule to the peculiar state of facts existing in each case. Upon an examination of the various cases cited in the argument, and others to which I have directed my attention, I find many apparently contradictory decisions, which will render it necessary to review the leading cases, in order to arrive.at a satisfactory conclusion. Herrick v. Carman, (1) was a case where one Ryan had executed his note to Carman & Co., and procured Herrick to endorse it in blank. Carman & Co. assigned the note to J. V. Carman, who sued Herrick, seeking to charge him on his endorsement. The Court held that as it did not appear that Herrick gave Ryan credit with Carman & Co., by endorsing the note, or that he was in any wise informed of the use to which Ryan meant to apply the note, it would intend that Herrick meant only to become second endorser, with all the rights incident to that situation ; that the fact of his endorsing first, in point of time, could have no influence, for he must have known, and we are to presume he acted on that knowledge, that though the first to endorse, his endorsement would be nugatory, unless preceded by that of the payees of the note. The Court also says, had it appeared that Herrick endorsed the note for the purpose of giving Ryan credit with Carman & Co., he would have been liable to them, or any subsequent endorsers, and his endorsement might have been converted into a guarantee to pay the note, if Ryan did not, according to the decision of the Supreme Judicial Court in Massachusetts. (1) From this decision, it appears that the endorser was not liable, either as maker or guarantor, for the reason that it was not proven that the payees gave the credit to him at the time they received the note ; and if that fact had been proven, he would have been responsible as guarantor, and not as maker of the note., The case of Herrick v. Carman, (2) was an action on the same note, and the Court decided that it could not be maintained, either in the names of the payees, or the assignees of the note. In Nelson v. Dubois, (3) the Court maintains the same doctrine, upon a case similar in all respects, except that the person who endorsed the note in blank, did so for the purpose of inducing the payees to accept it, and part with their property in lieu of it. In delivering the opinion, Chief Justice Spencer says, the facts in that case (Herrick v. Carman), are the same as in this, with the difference only, that it did not appear that Herrick endorsed the note for the purpose of giving Ryan credit with Carman & Co. It was then, and still is, my opinion, that, had he done so, he would have been liable to them or any subsequent endorsee, and that Herrick’s endorsement might have been converted into a guarantee to pay the note, if Ryan did not. In the present case, it does appear clearly and affirmatively, that the plaintiff refused to sell the horse for which the note was given, on Brundige’s (the maker’s) responsibility, and that the defendant put his name upon the note as guaranty for Brundige’s payment of it, when it fell due ; and that but for the defendant’s undertaking, as guaranty, the plaintiff would not have parted with his property. The case of Campbell v. Butler, (4) was founded upon a state of facts precisely similar in all respects to the preceding one. One Law executed his note to Butler, and Campbell & Harvey endorsed their names on the back of the note, for the purpose of enabling Law to obtain from Butler, a horse and wagon, in exchange for the note. Butler sued Campbell, upon his endorsement, and ©n the trial, filled up the blank endorsement as follows : “ For value received, I undertake and promise to guaranty the payment of the money within mentioned, to the within named James Butler. “ William Campbell.” Per Curiam : The question is, whether the plaintiff- -below was authorized to write such a contract over the names of the endorsers of the note, respectively, and can sustain an action upon that contract. According to the decision in Nelson v. Dubois, and as the law is recognised in Herrick v. Carman, we think the plaintiff had a perfect right to recover, as on an original undertaking to pay, by each of the endorsers, as guarantors of the note. The defendant in error is, therefore, entitled to judgment. The case of Josselyn v. Ames, (1) which was cited in Herrick v. Carman, was an action by the assignee against the assignor of a note. The facts disclosed in the pleadings and proofs are these : Josselyn held a note against John Ames, and demanded security upon it. John proposed his brother Oliver as surety, who was accepted ; and accordingly, John executed a note to Oliver, who endorsed it in blank, and delivered it to Josselyn in lieu of the first note. Josselyn sued Oliver on his note, averring in his declaration, that “ the said Oliver then and there promised the said Josselyn, to guaranty to him the payment of the contents of said note, on demand, and then and there, in consideration of the premises, promised the said plaintiff to pay him the contents of said note, agreeable to the tenor of the same,” etc. The Court held that the blank endorsement did not authorize such an averment; but did authorize the following endorsement over the signature: “ For value received, 1 undertake to pay the money within mentioned, to E. J.” I confess that I am unable to discover what principle this case does establish, for the reason that I can perceive no material difference between the averment in the declaration, which the Court held to be unauthorized by the blank endorsement, and the one dictated by the Court; and it seems the parties took the same view of it, for they immediately agreed to have judgment entered upon the declaration as it stood. The case of Ulen v. Kittridge, (2) was upon a state of facts substantially the same as Nelson v. Dubois, and Butler v. Campbell. Ulen declared against Kittridge, who had endorsed the note in blank, as guarantor, and proved a parol agreement that he was to guaranty the payment in the event that the maker did not pay it by a certain time; and he recovered according to his averments and proof. The question there was, whether the endorsement was valid, as against the statute of frauds, and the Court says, we are of opinion that the defendant’s signature on the back of the note, with the authority given by him to the witness to write over the signature a sufficient guarantee, and such guarantee being accordingly written by the witness, pursuant to such authority, may be considered as a memorandum signed by the party, within the intent of the statute, as fully as if it had been written in the defendant’s presence, immediately after the signature. In Moire v. Bird, (3) the action was brought by the payee against an endorser in blank, who was not in any other manner a party to the note ; but there was proof, showing that the endorser had affixed his signature there in pursuance of an agreement between the maker and the payee, at the time of the sale of the land, and the execution of the note. The defendant insisted, that if liable at all, he was only responsible as endorser ; but the Court held that in consequence of the parol agreement, he washable as original obligor. Tenny v. Prince, (1) was a case where a person endorsed a note in blank, nine months after date, and three months before maturity, and the payee brought suit against the endorser, charging him as original promisor. The Court held that he could not be rendered liable in that capacity, nor in any other, unless the endorsement was based upon some new consideration, and then only as guarantor. In Sumner v. Gay, (2) the plaintiff declared against the defendant, who had endorsed a note in blank, as maker of the note in the first count, and as guarantor in tire second ; and the suit was maintained ; but it does not appear whether as maker or guarantor, nor was it material in that case, for the liability would have been the same. Baker v. Briggs, (3) was an action brought to recover the amount of a note made by Ryan to Baker, and endorsed in blank by Briggs. It appears, from the report, that one count charged Briggs as maker of the note ; but we have no means of knowing in what character he was declared against in the other counts. The proof in the case shows that it was the understanding of the parties that he should be held responsible as surety, and the Chief Justice treats him as an original promisor. It is worthy of note, that, in each of the preceding cases, the endorsement was in blank ; the endorser was sued alone, unconnected with the maker ; and in every one, where a recovery was had, there was proof showing, affirmatively, the understanding of the parties, and the nature of the transactions between them. There are two other cases in the Massachusetts Reports, which belong to a different class, and deserve attention. The case of Hunt, (Adm’r.) v. Adams, (4) was on a promissory note made by one Chaplin, to the plaintiff, with the following endorsement at the bottom: “ I acknowledge myself holden as surety for the payment of the demand of the above note. Witness my hand. “ Baunabas Adams.” Adams was sued as surety in said note ; and the Court decided that the suit was well brought, saying that the defendant is an original party to the contract, as well as Chaplin. The contract, in its legal construction, is a promise made, as well by the defendant as by Chaplin, for value received, to pay fifteen hundred dollars to plaintiff’s intestate. To this promise Chaplin has signed as principal, and defendant as surety. This mode of signing is an accommodation between the promisors, by which the defendant is entitled, if he pay the note, to an indemnity from Chaplin; but as to the intestate, they must be considered as joint and several promisors. Again the Chief Justice says, the legal effect of a note in this form is not different from a note in the form of “ I, A B, as principal, and I, C_D» as surety, promise to pay, etc.” This last form is not uncommon, and the promise has always been holden to be made by each as original promisor. The other is the case of White v. Howland, and is similar to this in the facts of the case, the form of the action, and the reasoning of the Court. These are distinguishable from all the other cases in this, that the endorsement was written out and mutually agreed upon, by the parties, before signing. The terms of the contract, and the character and extent of the endorser’s liability, were matter of agreement between the parties, and it only remained for the Court to execute that agreement according to its spirit and legal effect. If the endorser was liable as a joint maker of the note, in the capacity of surety, he became so in pursuance of the provisions of an agreement written and signed by himself, and not by virtue of a contract made for him, by the Court, or the construction of law, over a blank endorsement upon the back of a promissory note. In Dean v. Hull, (1) the doctrine upon this subject is discussed with great learning and ability. The New York and Massachusetts cases are all reviewed by Justice Cowen, and the conclusion seems to be, that the endorser cannot be charged as maker, unless there are some peculiar circumstances arising out of a promise to become originally and directly responsible, or a participation in the consideration for which the note was given. In fact, such a state of case was shown, by proof, to exist in Nelson v. Dubois, and Campbell v. Butler, and, indeed, in all the New York cases where the endorser in blank was held responsible as guarantor; and for the want of such evidence, it was held, in Herrick v. Carman, that the endorser was not liable, either as maker or guarantor. Besides the absence of any* evidence connecting McKoy and Johnson with the original consideration of the note, the case under consideration differs from those referred to, or any I have been able to find in the books, in one essential particular. Here the makers and endorsers are sued jointly, as makers of a joint and several promissory note. In each of the others, the suit was against the endorser alone; and I have been able to find no case in which the maker and endorser were joined in one.action. This difference becomes important, for the reason that in most, if not all the cases, except Moire v. Bird, where the endorser has been held to be an original promisor, the declaration contained counts charging the defendant as guarantor, as well as maker; and the language of the Court usually is, that he is responsible as original promisor or undertaker, without distinguishing between maker and guarantor. In those cases it was not material in which character the defendant was responsible, as the effect would have been the same, as it regards the form of the action, and the extent of the liability. If, then, this question is to be determined upon the weight of authority, we do not feel authorized, in the absence of any testimony showing the understanding of the parties, to treat McKoy and Johnson as joint and several makers of the note with Gray. Aside from authority, and relying upon general principles, the question is, in our opinion, free of difficulty. Whilst the law requires no particular form of words to constitute a promissory note, and designates no, particular place at which the owner shall affix his name, in order to, establish his liability in that capacity, yet|[l?y the universal consent- and acquiescence of commercial and business men, custom has established and sanctioned a form and mode of signing, which furnish a legal presumption of the intention of the parties, and the precise character of the liability attaching to the signature, which presumption may, in many cases, be rebutted by parol evidence» For instance, a signature at the bottom of a note, on the right hand side of the paper, is prima facie evidence that it was affixed there in the character of maker, whilst the same signature, at the left hand side of the paper, would furnish equally satisfactory evidence that it was placed there only as a witness to the instrument. So. the signature of a third person, upon the back of a note, after the payee has endorsed it, is evidence of a contract to become responsible as second endorser. If custom has ripened into the form of legal presumption, in these respects, it would seem to follow, that a departure from this custom would negative such presumption, and furnish prima, facie evidence of a different kind of liability. The authorities are not definite and conclusive as to the technical character of this liability; yet their general tendency, as well as the nature of the transaction, lead us to the conclusion that it amounts^ to a guarantee. Upon the ground of variance, the note was clearly inadmissible in evidence. The note declared on purported to be made and signed by McKoy, Johnson, and Gray, and the note offered in evidence was signed by John C. Gray alone, and endorsed by McKoy and Johnson, with implied authority to write a guarantee over the signatures. Upon the well settled principle, that the pleadings and proofs must correspond, the note was properly rejected. In this case, it is unnecessary to enquire whether the plaintiffs, after entering a nolle pvsequi, as to Gray, could proceed to trial and judgment against the other defendants. The judgment is affirmed.   Lockwood, Justice, was not present at the argument of this cause, and gave no opinion.    12 Johns, 159.    3 Mass. 374.    10 Johns. 334.    13 Johns. 175.    14 Johns. 349.    3 Mass. 274.    7 Mass. 233.    11 Mass. 435.    4 Pick. 385.    4 Pick. 3X1.    8 Pick. 122.    5 Mass. 358.    17 Wend. 314.