Court Opinion

ID: 6667563
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:07:13.088519+00
Date Added: 2024-06-11T16:00:23.206110
License: Public Domain

Opinion by
Lewis, C. J.,
full Bench concurring.
This action was brought to recover the sum of three hundred dollars on a promissory note, which it is alleged in the complaint was on the 27th day of January, A. L>. 1864, executed and delivered by the defendants to the plaintiff.
It is further alleged in the complaint that the defendants, Winters and Hopkins, signed the note as sureties; that they became and were original parties thereto, and joint makers by the indorsement of their names upon the back thereof, at the time of its execution and before the delivery of the same to the plaintiff.
It is also alleged that the defendant Tjader, at the time of making the note, and continuously since that time, has been, and now is, wholly insolvent, and that there is now due plaintiff from the defendants on said note the sum of three hundred dollars.
To this complaint the defendants, Winters and Hopkins, interpose a demurrer, assigning as grounds therefor that the complaint does not state facts sufficient to constitute a cause of action against them, in this:
First — That it appears by the complaint that they are not *385primarily or originally liable on tbe note, but only secondarily and conditionally liable tbereon as sureties for tbe maker, and bave not been notified of tbe presentment to, demand of payment of, and refusal of payment by tbe maker.
Second — That it appears from tbe complaint that tbe defendants, Winters and Hopkins, are indorsers, and not original makers of tbe note, and that no demand and notice is alleged.
Tim'd — That it appears from the complaint that they signed tbe note as guarantors, and not as makers, and that it is not alleged that they bave ever been notified of tbe non-payment and dishonor thereof by tbe maker, A. W. Tjader.
Two points are presented for investigation in this case:
First — What character does an irregular indorser in blank, of a negotiable promissory note, who signs bis name upon tbe back at the time of tbe execution and delivery, occupy— whether he is to be treated as an original maker, a strict indorser, or as a guarantor; and
Second — -What are his responsibilities %
Tbe authorities, it must be admitted, are irreconcilably conflicting, and it cannot be said that any rule is now definitely settled; indeed, tbe only fact fully determined by tbe authorities is, that nothing at all has been settled. The earlier decisions in New York uniformly held an irregular indorser liable as the maker of the note. (Marrow v. Durham, 3 Hill, 584; Seguor v. Prosser, 1 Ib. 256; 4 Ib. 420; Miller v. Gaston, 2 Ib. 188; Hough v. Gray, 19 Wend. 202; Kitchell v. Burns, 24 Ib. 456; Allen v. Rightmire, 20 John. 365.) But all these cases have subsequently been overruled, and an irregular indorser in blank, signing his name upon the back of a negotiable note at the time of its execution, is now held in that State to be an indorser, entitled to strict notice, and discharged by the failure to present for payment, and to give strict notice of non-payment. (Spies v. Gilman, 1 Comst. 321; Ellis v. Brown, 6 Barb. 282; Waterbury v. Sinclair, 26 Ib. 425; Cottrell v. Conklin, 4 Duer, 45.)
This same doctrine has been recognized in some other States, but no satisfactory reason is given for holding that an entire *386stranger to a note, and one wlio never bad an interest m it, should be held only as an indorser.
These decisions are also in direct conflict with the general rule that there can be no strict indorsement of a negotiable promissory note, except by the payee or an indorsee.
The rule requiring the presentment for payment to the maker,' and strict notice of non-payment to the indorser, in general embodies no principle of justice to recommend it to the favorable consideration of the Courts. And as the strict legal rules governing the duties and liabilities of indorsers often work hardship and injustice, they should not be extended so as to embrace cases not already clearly within their scope. To extend it, therefore, to a class of cases not clearly within its scope would be abandoning the manifest purpose and spirit of the law for its rigorous rules.
The general rule governing the responsibilities of guarantors, on the other hand, is founded upon the clearest principles of equity, and has that at least to recommend its adoption where any doubt exists as to what rule should be followed.
In many of the States an irregular indorser in blank is prima facie, regarded as a guarantor. (Klein v. Currier, 14 Ill. 237; Webster v. Cobb, 17 Ib. 459; Carroll v. Weld, 13 Ib. 682; Camden v. McKey, 3 Scam. 437; Cushman v. Demrut, Ib. 497; Smith v. Finch, 2 Ib. 321; Carr v. Rowland, 14 Texas, 275; Cook v. Southwick, 9 Ib. 615; Watson v. Hart, 6 Gratt. 633; Clark v Melvain, 25 Conn. 576; Beckwith v. Angell, 6 Ib. 315; Perkins v. Cutler, 11 Ib. 213.) And this certainly seems to be much the most reasonable rule. The intention of the parties to a contract is always the object which is to govern the Court in its interpretation, and in ascertaining the rights and obligations of the parties to it. If this rule should be recognized in these cases it would be difficult to see how a person not a party to a negotiable note, signing his name upon the back of it, could be treated as a maker. The very fact of the name being indorsed upon the back would be some evidence at least against the presumption of his intention to become primarily liable as a maker of the note. Deeming the position of guarantor in a case of this kind most consonant with justice, reason and the intention of *387tbe parties, we feel bound to follow the rule as laid down in Klein v. Currier (14 Ill.) and tbe eases ab.ove cited; though under tbe statute of this State a mere indorsement in blank is not sufficient to establish tbe liability of such guarantor.
Tbe authorities in California which bold that a guarantor is entitled to strict notice as an indorser are counter to tbe long and well established rules in all tbe other States, and we have, therefore, no disposition to follow them.
With the exception of the decisions of that State, it is uniformly held that reasonable notice of demand and non-payment only is required, and even that is not required where the maker is insolvent at the time the note becomes due. (Lewis v. Brewster, 2 McLane’s Rep. 21; Fooot & Bowles v. Brown, Ib. 369; 3 Kent, 121.)
The contract of guaranty is a separate and independent contract involving duties and imposing responsibilities very different from those created by the original contract, to which it is collateral.
It is a promise “ to answer for the debt, default or miscarriage of another,” and by the statute of frauds it is made void unless there be some note or memorandum thereof in writing, expressing the consideration upon-which it is based; and for those reasons it has frequently been held that a guarantor cannot be jointly liable with the maker of a note, nor joined in the same action; but section 15 of our Practice Act ignores this rule, and expressly authorizes the joinder of a guarantor and the original obligor in the same action.
The contract of guaranty must, however, be in wilting, signed by the party to be charged, and must express the consideration. A mere indorsement in blank is not sufficient, nor are any words which do not express the consideration upon which the agreement rests. It has frequently been held by some of the highest Courts of this country, that when the guaranty of a promissory note is simultaneous with the making thereof, that the consideration of the note will sustain the guaranty: and as the holder of the instrument has the right to fill up the contract in accordance with the intention of the parties, an irregular indorsement in blank was sufficient to answer the requirements of the' statute. Whether those *388decisions were correct or not, under tire statutes upon which .they were based, is a question of no consequence here, for the same* Courts which established that rule have subsequently, upon the amendment of the statute so as to make it like ours, held that the strict letter of the statute 'must be followed; that the contract of guaranty, though made at the time of the principal contract, and upon the same consideration, must be in writing, and must express the consideration which sustains it. These authorities are directly in point here, and clearly follow the plain letter of the statute. (Brewster v. Silence, 11 Barbour, 144; Glen Cove Mutual Insurance Co. v. Harrold, 20 Barbour, 298.) There are cases in California where it is held that the consideration expressed in the original obligation is sufficient to sustain the contract of guaranty made simultaneously with it, but none of them go so far as to hold that a mere indorsement in blank answers the requirements of the statute.
The complaint in this action clearly shows that there was no' such agreement or memorandum in writing as the law requires on the part of Winters and Hopkins, but only that' they indorsed their names upon the back of the note at the time of its execution.
The demurrer is therefore well taken, and the judgment of the Court below must be reversed.