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with an attorney it was ascertained fer on the record of the deed of that it was not necessary for an ac- trust, then plaintiff cannot hold knowledgment to the transfer to be Shields on said indorsement, and the made on the record. The real estate jury will find for the defendant." covered by the several mortgages And a verdict was returned for the was sold under the first trust deed, defendant, and from the judgment and Hawkins became the purchaser. entered thereon this appeal is prosThe property did not bring enough ecuted. money to pay the debts covered by In the first place, it may be said the first and second trust deeds, and there was no evidence at all, even the result was that Hawkins de- if it were admissible, that the inmanded of Shields the balance that dorser, Shields, was not to be rewas due on the Johnson notes, trans- sponsible in the event the makers ferred by Shields to Hawkins. failed to pay the notes. There was

The defense set up by Shields was in truth and in fact no agreement that at the date of the transfer

one way or the other about this matShields was not to be responsible ter. Evidently the conversation reas an indorser of the notes. There lating to having the record show a is no evidence in the record to show transfer of the notes was for the that at the time of this transfer purpose of complying with § 2794 of there was any understanding at all the Code of 1906, to the effect that between Hawkins and Shields as to the assignor "shall be required by the latter's liability on the notes as the assignee to enter the fact of the indorser. Hawkins never said any assignment on the margin of the thing to Shields about being liable record of the lien, and in default of as indorser until after the property making such entry any satisfaction was sold under the trust deed, but

of the lien or instrument shortly thereafter he made demand evidencing it, entered by the original upon Shields for the difference. creditor, shall release the same as to Shields's testimony on this point is subsequent creditors and purchasas follows: “There was no agree- ers for value without notice," ete.; ment between me and you that I was and under § 2795 of the Code it is to become responsible. He says: 'I provided that “all assignments know it, but the place did not bring

of any indebtedness seenough to pay the two notes; but, cured by mortgage [etc.] shall be as your indorsement is on the notes, entered on the margin of the record I will look to you for it. I says:

of the lien within thirty days from 'If I was legally or morally responsi- the day of said assignment,” and ble to you, I would pay you; but I for a failure so to do the assignee am neither legally nor morally re

"shall forfeit to the debtor 10 per sponsible for it. You did not ask

cent of the amount of said indebtme to indorse them to you, and for

edness." We must conclude from

the evidence in this case that the that reason I will not pay it, unless

conversation had between Hawkins the law says so.'” Objection was made to the testimony of Shields, show the assignment, was simply for

and Shields, as to letting the record objection overruled, and exception the purpose of complying with the taken.

provisions of these two statutes. The court gave the following in

The indorsement of a bill or note struction for the defendant: “The

is not merely a transfer thereof: court instructs the jury for the de- but it is a fresh and substantive fendant, Shields, that if they believe

contract, embodying all of the terms from the evidence that Shields did

of the instrument in itself. The innot indorse said notes for the pur- dorsement of a bill

Bills and notespose of transferring same to E. B. is equivalent to the effect of Hawkins, and that the only require drawing of a new ment of Hawkins from Shields was bill by the indorser upon the drawee that Shields was to make the trans- in favor of the indorsee; and the or vary the writing.

indorsement.

(100 Mi88. 739, 57 80. 4.) indorsement of a note is equivalent they should be left for the ascertainto the drawing of a bill upon the ment and judgment of the jury unmaker, who stands in the relation of der proper instructions from the acceptor, as it were, in favor of the court. Further, that when the facts indorsee. So entirely distinct and are ascertained it is for the court to independent is the contract of an determine what is reasonable time indorser of a note thereof and the as a matter of law. Dan. Neg. maker that at common law a sepa- Inst. § 612; Baskerville v. Harris, rate action against each was in- supra. dispensable. The indorser engages It is elementary that parol evithat the bill or note will be accepted dence is never ad

Evidenceor paid, as the case may be, accord- missible to contra- parol-to vary

ing to its purport; dict -engagement of but this engagement terms of a valid written instruIndorser.

is conditioned upon ment. While this general prindue presentment or demand and ciple is admitted to be applinotice. It also engages that it is cable to all contracts written out in every respect genuine, that it is in full, some authorities are not the valid instrument it purports to willing to apply this principle to be, that the ostensible parties are those contracts which are raised competent, and that he has the law- from implication by the operation ful title to it and the right to in- of law, such, for instance, as indorse it. Such is the nature and ef- dorsements in blank. Such seems fect of the contract of indorsement to be the rule in Pennsylvania, as shown by all of the authorities. North Carolina, Florida, Colorado,

As between the indorser and in- and Connecticut; but this doctrine dorsee there is no difference in the is certainly opposed to the great contract of indorsement, so far as weight of authority, and also to the the rights and liabilities of the better reason.

When it appears indorser are con- from an inspection of the paper that -time of mak

cerned, when the ining-effect.

the party is an indorser, there seems dorsement is made to be no just ground for the disbefore and when made after matu- tinction taken between the implied rity; the only difference being that, contract from his mere name therewhen the indorsement is made be- on written and contracts written out fore the maturity of the bill or note, in extenso. The signature of the the time of payment is fixed by the indorser upon the bill or note is as terms of the instrument itself; but marked a manifestation of the inwhen the indorsement is made after tention of the party as if the conmaturity, payment must be demand- tract were set forth in express ed of the payor within a reasonable words. All of the authorities hold time and notice, in the event of a that, though there be nothing but refusal given to the indorser in or- the indorser's signature, the indorsder to charge him. In such an in- er's contract is as fully expressed stance the instrument is regarded

as that of the drawer of the bill or as being equivalent to one payable maker of a note payable to bearer; on demand. Dan. Neg. Inst. 5th ed.

and it is a general rule, supported $ 611, and authorities cited in notes; by the great weight of authority, 7 Cyc. 822, et seq; Baskerville v. that the indorser in a suit brought Harris, 41 Miss. 535.

by the
indorsee,

-varying inThe great weight of authority is whether mediate or dorsement on that, when the facts are few and remote, cannot show Trial-reason

simple, it is within by parol that it was agreed that able time for the province of the the indorser should not be liable, presenting note.

court to determine and that his indorsement was withwhat is reasonable time; but, when out recourse on him. Brown v. they are complicated and doubtful, Spofford, 95 U. S. 474, 24 L. ed.

note.

508; Martin v. Cole, 104 U. S. 30, The evidence in this case shows 26 L. ed. 647; Dan. Neg. Inst. § that the indorser wrote his name in 709; Tiedman, Com. Paper, § 274. blank across the back of the notes Indeed, this is no new question in and delivered the same to a bank, this state, as has been so declared when he hypothecated these notes by this court. Baskerville v. Harris, as collateral security for an accomsupra.

modation extended by the bank; that In denying the admissibility of when he paid the bank its debts parol evidence to vary or to contra- these notes were surrendered to the dict the terms of a contract of indorsement, we, of course, do not

indorser, Shields; that the indorser

did not erase his indorsement, but extend this rule, so as to exclude evi

the same remained on the notes, and dence offered to show want or failure of consideration, or in cases of when, subsequently, he made the con

tract with the appellant, Hawkins, irregular indorsement (Thomas v.

he, the indorser, did not rewrite Jennings, 5 Smedes & M. 627; Polkinghorne v. Hendricks, 61 Miss. 366;

his name or reindorse the notes, but

delivered the notes with the old inHolmes v. Preston, 70 Miss. 152, 12 So. 202; Richardson v. Foster, 73

dorsement thereon,-it being a blank Miss. 12, 55 Am. St. Rep. 481, 18 So.

indorsement. It was not at all 573; Pearl v. Cortright, 81 Miss. necessary to rein. 300, 33 So. 72), or to impeach the

dorse the notes. The Note-second original or present indorsement on

delivery of the notes original 18the ground of fraud, nor to exclude with the old inthe parol evidence to the effect that dorsement thereon the indorsement was upon trust for

was an adoption of the former insome special purpose, as from a dorsement, and was equivalent to a principal to an agent, or for collec

new indorsement. No authority is tion merely, or as an escrow upon

needed for so obvious a proposition. an express condition that has been The instruction given for appellee complied with, and in cases of fraud, was in direct conflict with this opinand perhaps in other instances. ion, and the cause is reversed.

transfer

dorsementeffect.

ANNOTATION.

Admissibility of parol evidence to vary or explain the contract implied from

the regular indorsement of a bill or note. 1. Introductory, 765.

II. a, 3-continued. II. Instruments regularly executed and

(b) Agreements enlarg. transferred:

ing the ina. Majority rule:

dorser's con1. In general, 765.

tract: 2. Theory, 771.

(1) Agreement 3. Application:

that indorser (a) Restrictive agree.

was maker, ments:

surety, or (1) In general,

guarantor, 772.

774. (2) That indorser

(2) Agreement was not to in

waiving de

mand and noability or

tice, 774.

4. Limitations, 776. that indorse

b. Minority rule: ment was to

1. In general, 778. be without re

2. Theory, 781. course, 772.

3. Application, 783. (3) Miscellanous,

4. As against subsequent 773.

holders, 784.

cur

any li

III. Accommodation indorsers:

a. In general:
1. Theory of regular indorse-

ments, 785.
2. Theory of irregular in-

dorsements, 789.
b. Actions between original par-

ties, 790.
IV. Qualified indorsement:

a. Indorsement without recourse,

794.
b. Indorsement "with recourse,”

795.
c Indorsement "for collection" or

“for account," 796.
d. “Without recourse" between

indorsers' signatures, 797.

V. Evidence to show absence of con.

tractual intention or limited

contractual intention: a. In general, 798. b. Indorsement for collection,

799. c. Indorsement for collateral se

curity, 801. d. Indorsement to transfer to

true owner, 801.
e. Indorsement to evidence pay.

ment, 802.
VI. Negotiable Instruments Law, 802.
VII. Identification indorsements, 803.
VIII. Ambiguous indorsements, 803.

1. Introductory.

qualifiedly indorsed by such transferThe admissibility of parol evidence rer to evidence the transfer, the deto vary or explain the contract im- cided weight of authority holds that plied from a regular indorsement can- the contract implied from such indorsenot be stated in any general way. ment, whether it is made in blank or There are several elements which have in full, cannot, even as between the a bearing upon the admissibility. The parties, be varied or explained by pacircumstances under which the in- rol evidence of a prior or contemporadorsement was made, the question as neous agreement. to whether the rights of a bona fide

United States.—Bank of United holder are involved, and the character

States v. Dunn (1832) 6 Pet. 51, 8 L. of the evidence, are the three chief

ed. 316 (see Rose's notes to this case); elements to be considered on the ques- Martin v. Cole (1881) 104 U. S. 30, 26 tion. As regards the circumstances

L. ed. 647; Bank of Alexandria v. Deunder which the indorsement was

neale (1824) 2 Cranch, C. C. 488, Fed. made, indorsements may be divided in

Cas. No. 846; Van Vleet v. Sledge to (a) those made by a holder of the

(1890) 45 Fed. 743 (in full). instrument for value upon a transfer

The holding in Susquehanna Bridge of the same in the ordinary course of

& Bank Co. v. Evans (1824) 4 Wash. a commercial transaction, and (b)

C. C. 480, Fed. Cas. No. 13,635, that accommodation indorsements.

parol evidence is admissible, is overThe present note deals only with

ruled by the above decisions of the regular indorsements. This limitation

United States Supreme Court. is particularly important in its rela

Alabama.—Sommerville v. Stephention to accommodation indorsements.

son (1831) 3 Stew. 271; Hightower v. Accommodation indorsements are

Ivy (1835) 2 Port. 308; Tankersley v. sometimes regular and sometimes ir

Graham (1845) 8 Ala. 247; Carlton regular. The present discussion is

v. Fellows (1848) 13 Ala. 437; Day v. confined to those that are regular in

Thompson (1880) 65 Ala. 269 (in form, that is, an indorsement appear

full); Preston v. Ellington (1883) 74 ing after the indorsement of the payee. Ala. 133. II. Instruments regularly executed and

California.—Goldman V. Davis transferred.

(1863) 23 Cal. 256; Citizens' Bank v.

Jones (1898) 121 Cal. 30, 53 Pac. 354. a. Majority rule.

Colorado.-Martin v. Cole (1876) 3 1. In general.

Colo. 113, affirmed in (1881) 104 U. S. When an instrument which has had 30, 26 L. ed. 647; Dunn v. Ghost (1879) a valid inception in the hands of the 5 Colo. 134; Doom v. Sherwin (1894) payee is by such payee or subsequent 20 Colo. 234, 38 Pac. 56; Torbert v. indorsee transferred with the intent Montague

Montague (1906) 38 Colo. 325, 87 to pass the property therein, and un- Pac. 1145.

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Connecticut.-Dale v. Gear (1871) 8 Me. 213, 23 Am. Dec. 499; Smith v: 38 Conn. 15, 9 Am. Rep. 353; Hopkins Frye (1837) 14 Me. 457; Crocker v. v. Merrill (1907) 79 Conn. 626, 66 Atl. Getchell (1844) 23 Me. 392; Goodwin 174; SCHINE V. JOHNSON (reported v. Davenport (1860) 47 Me. 112, 74 herewith) ante, 744.

Am. Dec. 478. The doctrine of these Georgia. --Bartlett v. Lee (1863) 33 cases is overruled by the later cases Ga. 491; Meador v. Dollar Sav. Bank in this state. See infra, II. b, 1. (1876) 56 Ga. 605; Dunn v. Welsh Michigan.-Newberry v. Trowbridge (1879) 62 Ga, 241 (case involved a (1865) 13 Mich. 263; Ortmann v. CanaNew York contract). See Georgia dian Bank (1878) 39 Mich. 518. statute discussed in II. b, 1.

Minnesota.-Levering v. WashingIllinois.-Mason V. Burton (1870) ton (1859) 3 Minn. 323, Gil. 227 (note 54 Ill. 349; Skelton v. Dustin (1879) given to assignees of maker and by 92 Ill. 49; Courtney v. Hogan (1879) them indorsed, to pay debt of maker); 93 Ill. 101; Johnson v. Glover (1887) Borup v. Nininger (1861) 5 Minn. 523, 121 III. 283, 12 N. E. 257; Hately v. Gil. 417; Kern v. Von Phul (1862) 7 Pike (1896) 162 Ill. 241, 53 Am. St. Minn. 426, Gil. 341, 82 Am. Dec. 105; Rep. 304, 44 N. E. 441; Cozzens v. First Nat. Bank v. National Marine Chicago Hydraulic-Press-Brick Co. Bank (1873) 20 Minn. 63, Gil. 49; Coon (1897) 166 Ill. 213, 46 N. E. 788 (obi- v. Pruden (1878) 25 Minn. 105; Knobter); George E. Lloyd & Co. v. Mat- lauch v. Foglesong (1888) 38 Minn. thews (1906) 223 Ill. 477, 7 L.R.A. 352, 37 N. W. 586; Farwell v. St. Paul (N.S.) 376, 114 Am. St. Rep. 346, 79 Trust Co. (1891) 45 Minn. 495, 22 N. E. 172; Kimmel v. Weil (1901) 95 Am. St. Rep. 742, 48 N. W. 326; Clarke Ill. App. 15; Second Nat. Bank v. Wood- v. Patrick (1895) 60 Minn. 269, 62 N. ruff (1904) 113 Ill. App. 6; First Nat. W. 284; Giltner v. Quirk (1915) 131 Bank v. Heeb (1914) 188 Ill. App. 194. Minn, 472, 155 N. W. 760; Lake Har

This rule was applied to an indorse- riet State Bank v. Miller (1917) 138 ment by a man who married the payee Minn. 481, 164 N. W. 989. in Beattie v. Browne (1872) 64 Ill. Mississippi.--Baskerville v. Harris 360.

(1867) 41 Miss. 535; HAWKINS V. Indiana.-Wilson v. Black (1843) 6 SHIELDS (reported herewith) ante, Blackf. 509; Bowers v. Headen (1853) 760. 4 Ind. 318; McGaughey v. Elliott Missouri.-Rodney v. Wilson (1877) (1862) 18 Ind. 121; Parker v. Morton

67 Mo. 123, 29 Am. Rep. 499; Beeler v. (1867) 29 Ind. 89; Campbell v. Rob

Frost (1879) 70 Mo. 185; Lewis v. bins (1868) 29 Ind. 271; Lee v. Pile

Dunlap (1880) 72 Mo. 174; Howser v. (1871) 37 Ind. 107; Holton v. McCor

Newman (1896) 65 Mo. App. 367; mick (1873) 45 Ind. 411; Smythe v.

First Nat. Bank v. Korn (1915) Scott (1886) 106 Ind. 245, 6 N. E. 145;

Mo. App. — 179 S. W. 721; People's Brown v. Nichols, S. & Co. (1889) 123

Bank v. Baker (1917) Mo. App. Ind. 492, 24 N. E. 339 (dictum).

193 S. W. 632; Eaves v. Keeton (1917) ļowa.-It is not clear whether the

196 Mo. App. 424, 193 S. W. 629. indorser in Porter v. Moles (1911) 151 Iowa, 279, 131 N. W. 23, was a regular

New Hampshire.—Barry V. Morse indorser, but apparently this was the

(1824) 3 N. H. 132. fact. In that case parol evidence was

New Jersey.-Foley v. Emerald & P. held inadmissible to vary the contract

Brewing Co. (1898) 61 N. J. L. 428, 39 of a blank indorser under the Negotia

Atl. 650. See Chaddock v. Vanness ble Instruments Law.

(1871) 35 N. J. L. 517, 10 Am. Rep. 256 Kansas.-Doolittle v. Ferry (1878) and Johnson v. Ramsey (1881) 43 N. 20 Kan. 230, 27 Am. Rep. 166 (in full);

J. L. 279, 39 Am. Rep. 580, infra, II. Guaranty Invest. Co. v. Gamble (1918)

b, 1. 102 Kan. 791, 171 Pac. 1152.

New York.—Bank of Albion v. Louisiana.—Helm v. Ducayet (1868) Smith (1858) 27 Barb. 489; Washing20 La. Ann. 417 (obiter).

ton Sav. Bank v. Ferguson (1899) 43. Maine.-Fuller v. McDonald (1832) App. Div. 74, 59 N. Y. Supp. 295; Hod

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