Court Opinion

ID: 3680037
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:25:40.27632+00
Date Added: 2024-06-11T15:27:54.742740
License: Public Domain

Counsel for the appellant have filed a petition for rehearing. It is contended that the holding summarized in the third paragraph of the syllabus, to the effect that the contract evidenced by a regular blank indorsement is within the general rule which excludes parol evidence to vary or contradict a written contract, is contrary to the previous decisions of this court in the cases of Dickinson v. Burke, 8 N.D. 118, 77 N.W. 279, and Sawyer State Bank v. Sutherland, 36 N.D. 493, 162 N.W. 696, and it is said that those cases should either be followed or expressly overruled. The position taken in the petition is somewhat influenced by a view of the record that is not shared by this court, as is evidenced by the original opinion herein. Counsel's position, as we understand it, is substantially this: *Page 804 
That if at the time the note was indorsed by the defendants a trade had been completed under the terms of a contract whereby the plaintiff was to receive the note in question wholly upon the strength of the responsibility of the prior parties and without recourse to the defendants, and the note had been transferred without indorsement, the subsequent indorsement would be without any consideration and the terms of the contract under which it had previously become the property of the plaintiff could be shown to establish this lack of consideration. Under the record before this court, we can not agree with counsel that the evidence was offered for the purpose of establishing such a transaction. We think the question presented to the district court on the record here was the question as to the right to introduce parol evidence to establish an agreementcontemporaneous with the indorsement to the effect that the indorsers should not be liable upon the note according to the contract evidenced by the form of the indorsement. Is this holding contrary to the decisions referred to and is it in accord with the law?
In Dickinson v. Burke, supra, it appeared that one Andrew Burke had drawn his check upon the Marine National Bank of Duluth, payable to the defendant Moug; that Moug had thereafter indorsed the check to the plaintiff Dickinson; that the check was presented for payment and dishonored. Burke and Moug were sued and the latter alone defended. It appeared that the check represented the proceeds of a car of grain which the defendant, Moug, had shipped to Burke, who was a grain commission merchant; that the grain had been shipped through the plaintiff Dickinson upon his solicitation and in reliance upon his express agreement that he would guarantee Moug against loss in case of Burke's failure and that he would take Burke's check as his own property and assume entire responsibility for its collection and give the defendant his own personal check in lieu thereof; that the defendant's indorsement thereof should be merely for the purpose of transferring title. It seems clear from the opinion in that case that the court recognized the force of the parol evidence rule as applied to any contemporaneous agreement, as on page 120 it is said:
"Appellant, however, insists that even though the parol agreement was as alleged by the defendant, yet it was blotted out and superseded by the subsequent written indorsement. The wholesome doctrine thus *Page 805 
urged, which is found embodied in the Revised Codes (§ 3888), is not applicable to the facts as they exist in this case. There is no controversy as to the contract of indorsement. It is complete in itself, and admitted. The dispute is as to the alleged agreement preceding the shipment. It would, indeed, be a gross perversion of the doctrine relied upon to make it a means of destroying their prior contract, which the evidence shows was performed fully on the part of the defendant, and was entirely separate and distinct from the subsequent indorsement."
In other words, the court recognized that there were involved two contracts; one a contract which should cover the entire transaction concerning the marketing of Moug's grain, at Dickinson's solicitation, through Burke acting as a commission merchant; and another subsequent contract of indorsement, the latter being a mere step in the performance of the former contract and being neither an appropriate form of agreement in which to embrace the former contract, nor actually intended as the embodiment of it. The opinion merely gives effect to the prior agreement, which was not superseded by the subsequent one. It shows, furthermore, that there was no consideration for the indorsement by the defendant in that he received nothing therefor that he was not otherwise entitled to receive under the contract existing between him and Dickinson. The evidence shows that the indorsement was substantially for Dickinson's accommodation.
Similarly, in the case of Sawyer State Bank v. Sutherland, supra, the assignee and purchaser of an account had procured the debtor to give a promissory note made payable to the original owner of the account instead of to himself. He later procured the payee named to indorse the note, and the holding was to the effect that the indorsement was without consideration. It is elementary that parol evidence is admissible to establish absence of consideration and the original opinion herein does not question that principle.
Under the record in the instant case it appears that the defendants sought to show that, at the time the note was indorsed in blank, there was an agreement that the indorsers should not be liable. If this could be shown it is difficult to conceive of any contemporaneous parol agreement affecting the terms of the contract of indorsement that could not be shown. If it could be shown that a general indorsement was intended *Page 806 
to be "without recourse," it could be shown that an indorsement "without recourse" was intended to carry a guaranty of payment. There would be nothing left of the parol evidence rule as applied to indorsements. Counsel seem to concede that the weight of authority is in accord with the opinion and we deem it unnecessary to add to the citation of authorities therein contained. While it is useless to attempt to reconcile the decided cases, it may be worth while, in view of the difficulty in applying the rule under varying circumstances, to refer to the test suggested by Daniel (1 Dan. Neg. Inst. 6th ed. § 723): "When it appears that the indorsement was accompanied by a transfer for value, and is unimpeached by fraud, it imports a distinct liability which can not be varied."
We are clearly of the opinion that this case is not controlled by Dickinson v. Burke, 8 N.D. 118, 77 N.W. 279, or Sawyer State Bank v. Sutherland, 36 N.D. 493, 162 N.W. 696.
The petition for rehearing is denied.
CHRISTIANSON, Ch. J., and BIRDZELL, BURKE, JOHNSON, and NUESSLE, JJ., concur.