Court Opinion

ID: 6902886
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:56:47.461793+00
Date Added: 2024-06-11T16:06:14.034005
License: Public Domain

Mr. Justice Eakin
delivered the opinion of the court.
The principal contention of defendant is that the action is for the recovery of money loaned, and that the case *26attempted to be proved is upon the liability of the indorser of a promissory note, and that this constitutes a variance. We do not so view the evidence. Plaintiff refused to buy the note, stating that he would look to defendant for repayment, and relied upon defendant’s statement that, if Templeton did not pay, defendant would, and gave defendant the check and the $515 note with the statement, “If you pay when it comes due, you can have it,” and he held the Templeton note as collateral security only, and was not bound to rely for his remedy upon the note or its indorsement. This is within the principle announced in Kiernan v. Kratz, 42 Or. 474, 484 (69 Pac. 1027, 1031), where Mr. Chief Justice MOORE says:
“Where a party, in payment of his own debt, assigns ' to his creditor a note, bill, or check- of a third person, orally agreeing that it will be discharged at a given date, and, if not, that he will pay it, upon principle it would seem that his undertaking is original, and he is liable thereon for a breach thereof, for the following reason: The transfer of such paper by indorsement for a contemporaneous- debt raises a presumption that the payment is conditional only. * * If a note is not only indorsed over in payment of goods, but guaranteed absolutely by the purchaser, he may still be sued on the original debt.”
This principle is also recognized in Stringham v. Mutual Ins. Co., 44 Or. 447 (75 Pac. 822). The plaintiff received the Templeton note with defendant’s indorsement in payment for the money advanced by plaintiff only on condition that the note would be paid within the time specified. The transaction is no different than if defendant had given his own note, which plaintiff might have surrendered and sued on the original liability, and unless the original liability was expressly canceled by the transfer of the Templeton note, defendant’s primary liability remained. This is not an action on the Templeton note or against defendant on the indorsement of it; the note *27being held by plaintiff as collateral security only. This principle is well stated by Daniel, Negotiable Instruments (4 ed.) Section 1265, where he says that, when the debtor transfers and indorses a note of a third party for a contemporaneous debt, there is a presumption of conditional payment only, and the creditor may sue for the amount of the consideration. A similar question was involved in Swenson v. Stoltz, 36 Wash. 318, 321 (78 Pac. 999, 1000: 2 Ann. Cas. 504, 505), where the action was upon an alleged oral guaranty of a promissory note. The court says that this is not a suit on the instrument, but upon the guaranty of appellants that the amount the note represented would be paid when due. It was a promise to pay their own debt. In that case the amount received by the guarantor was the measure of the guarantees’ recovery, and the note in the meantime is held as collateral security to the promise of the guarantor. If the note is not paid, the guarantor remains liable upon his own obligation. See note to this case in 2 Ann. Cas. 504; Cardell v. McNiel, 21 N. Y. 336; Bruce v. Burr, et al., 67 N. Y. 237.
This action is an action of debt, and the effect of the indorsement on a note is not involved. The judgment is affirmed. Affirmed.