Cline v. Receiver of Commercial Nat. Bank

90 F.2d 968, 1937 U.S. App. LEXIS 3999

• Court: Court of Appeals for the Seventh Circuit
• Decided: June 18, 1937
• Docket: No. 6152
• Status: Published

Opinion

EVANS, Circuit Judge.

The many questions which are raised by appellant with one exception must all be decided against him.

We are satisfied that the extension of time of payment of a judgment note upon which judgment may be entered at any time, before or after due, furnishes a valid consideration for an endorsement.¹

The taking of the judgment against the original maker of the note is no bar to an action against the endorser on his endorsement of the note, the original maker not having paid any part of the judgment.²

Appellant’s endorsement can not be successfully disputed by parol evidence tending to show that the endorser did not intend to be bound by the legal consequences resulting from his endorsement.³ There was no fraud or deceit on the part of the hank, and the signer was intelligent and not incompetent.

There is one issue of fact which should have been submitted to the jury. In order to hold appellant on his endorsement, there must have been a consideration.⁴ ***The alleged consideration in this case was the extension of maturity of the note.

The existence of an agreement by appellee to extend the note is denied by appellant. This issue of fact presented a jury question.

Appellee argues that the evidence on this issue overwhelmingly supports the ruling of the court and that the testimony to the contrary does not rise to the dignity of substantial evidence. The endorsement upon the back of the note contains the words “Due March 16, 1930, Extended by Indorsement to 4-1-31.” If these words were there when appellant signed his name and he read them or had them explained to him it would be rather conclusive proof that there was an extension of time granted because of said endorsement. However, the evidence does not show that these words were upon the note when Cline signed his name. We express no opinion as to the weight of this evidence as the case must go 'back for a new trial. We can not hold that an essential fact issue is conclusively established when two witnesses, even though interested in the outcome, deny there was an extension of,the due date of the note.⁵

The judgment is reversed and a new trial granted.

1 Extension of time, no matter how short, to maker is adequate consideration to accommodation endorser. Brannon’s Negotiable Instruments Law, p. 233 ; Coal River Collieries v. Eureka Coal & Wood Co., 144 Va. 263, 132 S.E. 337, 46 A.L.R. 485; Ramish, Inc., v. Woodruff, 2 Cal.(2d) 190, 40 P.(2d) 509, 96 A.L.R. 1146. See also extensive annotations on this point to Sec. 25, notes 151— 155, Uniform Negotiable Instruments Act, Annotated, Volume 5 of Uniform Laws Annotated; 7 American Jurisprudence, Bills & Notes, § 248.

2 Petri v. Manny, 99 Wash. 601, 170 P. 127, 1 A.L.R. 1595; Daniel on Negotiable Instruments, § 1284, p. 1445; Brooklyn City, etc., R. Co. v. National Bank, 102 U.S. 14, 26 L.Ed. 61; 8 Corpus Juris, Bills and Notes, § 862.

3 Parol evidence is not admissible to show non-liability of accommodation endorser except as against any person not a holder in due course. Forbes v. Ft. Lauderdale Mercantile Co., 83 Fla. 66, 90 So. 821; Gerli v. National Mill Supply Co., 78 N.J.Law, 1, 73 A. 252; Bank of California v. Starrett, 110 Wash. 231, 188 P. 410, 9 A.L.R. 177; Farmers’ State Bank v. Forsstrom, 89 Or. 97, 173 P. 935; Sec. 28 of N. I. L.

4 To hold accommodation indorser there must be consideration except as to holder for value. See Secs. 28 and 29 of N. I. L. and annotations there given; 7 . American Jurisprudence, Bills and Notes, § 251; Brannon’s Negotiable Instruments Daw, p. 254,

5 Eairmount Glass Works v. Cub Pork Goal Co., 287 U.S. 474, 53 S.Ct. 252, 77 L.Ed. 439.