Hullum v. State Bank

18 Ala. 805

• Court: Supreme Court of Alabama
• Decided: January 15, 1851
• Status: Published

Opinions

DARGAN, C. J.

It is said that a blank endorsement of a bill or note, made in the regular course of trade, is a contract defined and ascertained by law, and parol proof cannot be received to show a contract different from that which the law attaches to the act of endorsement. — Wilson v. Black, 6 Blackf. 509; Tankersly v. Graham, 8 Ala. 247. But we think it is settled beyond controversy, that if one write his name on the back of a bill or note, under such circumstances, that it cannot be considered as an endorsement in the usual course of trade, parol proof may be received to show the nature of the contract and the extent of the liability assumed by the party. Thus, if a note be made by A., payable to B., or order, and the name of C. be endorsed on the back of it, the contract is open to explanation, and its real terms may be shown by parol proof. Strong v. Riker, 16 Verm. 554; Crozier v. Chambers, 1 Spencer, 256; Kimbrough v. Lamb, 3 Humph. 17; 3 Scam. 497; 13 Ohio, 228. In the absence of all proof, as to the terms of the contract evinced by the signature, the law would regulate or ascertain the contract, if it appeared to have been founded on a sufficient consideration. — Milton v. Deyampert, 3 Ala. 648, and cases there cited. But we do not understand this authority as denying the admissibility of parol proof to explain the real nature oí the contract, or the liability of the party making such an endorsement. We must then look to the evidence to ascertain, if vve can, the intention of the defendant in writing his name on the back of the bill, for it is this intention that governs and ascertains his contract. The Bank was the holder of the bill at the time the defendant endorsed it; the bill was then over due and had been protested for non-payment;- no consideration passed from the Bank to the defendant, nor did he endorse the bill at the request of the Bank, but at the instance of Dennis Dent, whose liability as an endorser was then absolute. We also infer from the testimony, that in consideration of1 this endorsement made by the defendant. Robert Carothers executed the deed of trust, to which the defendant became a party, and-that he also received by way of indemnity the note of $1000 on Kinkle & Carothers. The deed on its face shows that it was. not expected that the Bank would demand immediate payment, of the bill from Carothers, but it was presumed that Carothers would be indulged upon paying ten per cent, on the amount of the debt semi-annually. On this consideration and in view of these facts, he endorsed the bill. Bow did he consider that he stood in reference to it? I think there'can be no doubt but that, he considered himself liable on the bill, in (he same manner and to the same extent, that he knew Dent and Patterson, the other, endorsers, were. — and lie did not expect an immediate demand of payment to he made of Caroihers, nor notice to him of a, failure to pay ; but the true intention of his contract was that he should he absolutely liable, as were the other endorsers, without demand of payment from the acceptor. We attain this conclusion of foot from the deed of trust, which was signed by the defendant and the other endorsers, and which treats them as all liable absolutely and unconditionally for the debt; also, from the conduct of the defendant in reference to the sale of the property and the transfer of the notes to the Bank, which evinces, in our opinion, that he then considered himself absolutely liable in the same manner that the other endorsers were. He then signed his name on the back of the bill, intending to create an absolute and unconditional liability for its payment. But it is urged that the contract, as explained by the evidence, can amount only to a guaranty for the payment of the bill, and mot to an endorsement, and therefore the plaintiff cannot recover — first, because the Bank cannot proceed in this summary way against a guarantor — and secondly, because the defendant, being treated as endorser in the notice, proof that he was guarantor of the bill would not entitle the Bank to a recovery.

I admit that there is great diversity to be found in the authorities, respecting the nature and character of these irregular endorsements. But after the best consideration lam able to give the question, I think the correct rule is this, that the nature of the contract and the extent of the liability of the party are to be ascertained from his intention, as shown by the evidence, in making the endorsement. If the party endorsing the note intended to create a liability as guarantor only, he must be so treated and so sued, to enable the plaintiff to recover; if he intended' to. create a liability as endorser, he must be so treated. This is the conclusion, to which Judge Story came, after a review of most of the conflicting American authorities. — See Story on Prom. Notes, § 479. Governed by this rule, which is the principle that governs in the interpretation of all contracts, I feel constrained to hold from the evidence that the defendant intended to stand in reference to the bill as an endorser, whose liability was fixed.. This is the nature and extent of his contract in putting his name on the back of the bill, and I see no reason why he should not be treated as such. The judgment must therefore be affirmed.