Massey v. Turner

7 Del. 79

Opinion

Houston, J.,

announced the opinion of the Court.

The material facts presented in the case before us are as follows. The promissory note in question was drawn by Deakyne, the formal and sole ostensible maker on the face of it, to the order of Massey the plaintiff, who has himself never endorsed, nor parted with it. After it was thus drawn and signed by Deakyne, it was handed by him to Turner, the defendant, who wrote his name on the back of it, took it and delivered it to Massey and received the money on it from him. It also appears that he not only received the money of Massey on the note for which it was given, but that the loan was first proposed by him both to Deakyne and to Massey, and was cheifly, if not entirely negotiated by him, and that with the understanding and consent of Deakyne, he was to receive and apply to his own use the whole amount of the' loan, in part payment of a larger sum due to him from Deakyne. It also further appears that the note was not even complete on its face, .when the defendant wrote his name upon the back of it and delivered it to the plaintiff. As the note was drawn and signed by Deakyne, and before the defendant wrote his name upon the back of it, the latter had no interest or property, or right whatever, in or to it to be negotiated and transferred to any one by an endorsement of his name upon the back of it, according to commercial usage and the law merchant. It was not payable to his order, nor was his name any where written in, or upon it. About the time the note matured, something was said to Deakyne by the plaintiff, in regard to paying or renewing it; but neither was done, and there was no protest, and no notice of the nonpayment of it by Deakyne at maturity was served upon the defendant, so far as the facts appear from the special verdict of the jury returned in the court below. Deakyne failed in business about a year afterward; The plaintiff, the payee, is still the holder of the note, and this action is now brought by him to recover the amount of it from the defendant, not as an endorser of it in the legal and technical acceptation, of that term, but as substantially a joint or co-maker of it with Deakyne, under the facts and circumstances just stated. And the question which we are called upon to decide is, whether the signature of Thomas Turner made by him on he back of the note, was a mercantile endorsement of It by him according to the legal effect and meaning of that term, so as to entitle him to due notice of its presentment for payment to Deakyne, the primary maker of it, and his failure to pay it at maturity before he could be made liable for the payment of it as an endorser of it; or, on the other hand, whether he is absolutely bound to pay it under the circumstances, without' such notice, as substantially a joint maker andan original promisor with Deakyne in the note. If he was an endorser of it merely, it is admitted that his engagement and liability upon it was but conditional and collateral in its character, and without such notice he would not be bound to pay it.

The decisions upon the question involved in similar cases in the courts of this country, have at least of late years, been to some extent conflicting: and into such an extreme nicety and refinement of distinction have some of the most recent cases particularly run, that if it is not altogether impossible to reconcile them, it is certainly the next thing to an impossibility to extract or eliminate from them any precise or definite rule for our guidance on this occasion. They certainly justify the concluding remark of Judge Story in his work on Promissory If ates in regard to them, that “ whatever difficulty may be thought to exist in some of these cases, as to interpretations put upon the contract of the party, sought to be charged, the Courts will be found uniformly to have adopted that which, in their judgment, expounded truly the intention of all the parties thereto.” Story on Promissory Notes, sec. 480. In the earlier cases however, there seems to be no discrepancy, or conflict in the decisions in the several States upon the question; for they all, with uniform tenor, hold, so far as we are informed, in a case like the present, of a negotiable promissory note, but not negotiated and endorsed in blank, as this was, that where the endorsement was by a stranger, that is to say, where the endorsement was by one who had no interest in, or connection with the note apparent upon the face of it, and the endorsement was made at, or about the time when the note was given, by such a person who ■ was privy to, or had any interest, or participation in the consideration for which it was given, he may be considered and treated as an original promisor, or joint maker of it, and is primarily and absolutely liable as such, for the payment of it. The endorsement in such a case not being considered to be a strict and literal endorsement, in the proper legal sense of that term. The following authorities will be found to warrant this conclusion. Story on Prom. Notes, see. 476. Tenney v. Prince, 4 Pick. 385. Baker v. Briggs, 8 Pick. 122. Bryant v. Eastman, 7 Cush. 111. Samson v. Thornton, 3 Metc. 275. Union Bank v. Willis, 8 Metc. 504. Austin v. Boyd, 24 Pick. 64. Adams v. Hardy, 32 Maine Rep. 339, Flint v. Day, 9 Vermont Rep. 345. Nash v. Skinner, 12 Vermont Rep. 219. Sylvester v. Downer, 20 Vermont Rep. 355. Martin v. Boyd, 11 New Hamp. Rep. 385. Leonard v. Wilkes, 36 Maine Rep. 265. Moies v. Bird, 11 Mass. Rep. 436. Hawks v. Phillips, 7 Gray’s Rep. Herrick v. Carman, 12 Johns, 159. Nelson v. Dubois, 13 Johns, 175. Campbell v. Butler, 14 Johns 349. And the principle of these authorities is still recognized and ruled in cases like the present in all the States from which they have been cited, except alone, we believe, in the State of Kew York, in which the later have materially modified, if they have not entirely overruled, their former decisions on the question. But the cases which we have just cited, have further ruled that if a person puts his name in blank upon the back of a negotiable promissory note payable to the order of another person, at the time when it is made, for the purpose of giving it credit and currency, he may be treated as an original promisor, or joint maker of the note, and will be bound absolutely for the paymént of it; which in the absence of proof to the contrary, will be presumed, and so conclusive is such presumption, that it cannot be rebutted or controlled by paroi evidence that the undertaking and intention of the parties was that he was to be a surety, or guarantor only, and not a joint maker of it. In the case of the Essex Company v. the Executors of Reynor et al. decided in the State of Massachusetts as late as the year 1858, it was held that where a person, not the payee, endorses a note before its delivery to the payee, he thereby becomes liable as an original promissor; and that it is a conclusive presumption of law that a person endorsing a note under such circumstances, intends to become liable as a joint promisor, or maker, and therefore paroi evidence is not competent to vary that liability and to show that the real agreement was that he was to be liable only as an endorser. Story on Promissory Notes, See. 476, n. 1. And the principle has been extended so far as to hold that if such an endorsement is made even a considerable time after the note was made and delivered to the payee, but "in pursuance of an agreement entered into at the time of making the note, or where the party so endorsing was privy to, or had any interest, or participation in the consideration for which it was given, he is still to be considered as an original promisor, and is" absolutely bound for the payment of it.

But in the case now before the Court it appears that the promissory note in question was endorsed in blank by the defendant, by simply writing his name on the back of it, and before it was fully made and delivered to Massey, the payee, that it was made at his own instance and suggestion and for his own special convenience and accommodation, that he took it and delivered it himself to the payee, the plaintiff, and thereupon received of him and immediately applied to his own use the whole amount of the $250 for which it was given. It is therefore it seems to us under all the facts and circumstances stated, a peculiarly strong case for holding him absolutely and unconditionally bound for the payment of it to the plaintiff, as an original promisor, or joint maker of the note, if we are to be guided and governed in the decision of it by the principle recognized and ruled in the numerous cases to which we have before referred, as well as in several others which might be cited, if we deemed it necessary, in support of it. But we do not deem that necessary. Bor we not only approve the principle ruled and established in those cases, but we think it safer to rely upon them than to attempt to follow and conform to the later Hew York cases, with the extremely nice and subtle and almost imperceptible distinctions into which some of them have run in cases of this nature. But the rule there, as now established, it must be admitted, is just the reverse of the rule as we have stated it on the authority of the cases cited from other States. For the recent cases in that State have ruled that an endorsement in blank on the back of a negotiable note payable to the order of one person, by another at the time of making it and before the delivery of it to the payee, notwithstanding such endorser may be privy to, or interested in the consideration for which the note is given, is to be treated as a regular commercial endorsement, and in the absence of any special agreement, or proof of an intention to the contrary, it is to be legally presumed or inferred from the fact of his so endorsing his name in- blank on the back of the note, that he intended to render himself liable collaterally and conditionally only, as a commercial endorser merely of the paper, and that he is consequently entitled to due notice of its presentment to the maker and of the non-payment of it by him, and without that he is not bound to pay it. In some of the cases cited, however, such as Dean v. Hall, 17 Wend. 214, and Seabury v. Hungerford, 2 Hill 80, the notes in question were made payable to bearer, in which perhaps, there would be less difficulty in recognizing the soundness of the ruling; because in such a case, it might well be presumed that the note was passed to the endorser for a consideration and was by him afterwards endorsed and delivered to the holder, the plaintiff, in which case he would be prima facie a commercial endorser of it merely; and it would be the same in such a case, even if he gave no consideration for it when he received it, but he endorsed it for the purpose merely of giving it additional credit. The cases, however, before alluded to, go beyond this, even to the extent, that when such an endorsement is made by another person, a friend of the sole ostensible maker, before delivery of the note to the payee, and for the benefit and accommodation of such third party, he is to be considered and treated as a commercial endorser simply; and the decision in the case of Hill v. Newcomb, 3 Hill 233, has distinctly overruled the decisions in the earlier cases in that State on the question. But as we have before remarked, we are not aware that the decisions have gone to that extent in any other State.

The case of Bishop v. Hayward, 4 T. R. 470, has sometimes been referred to, as favoring that view of the question, and was cited in the present case by the counsel for the defendant, to show that it was in the power of Massey the plaintiff and payee in the note, to have put it in such a state by endorsing his own name upon it above that of the defendant’s, as to have rendered the latter liable to him as a second endorser upon it, although as a general rule, or principle, a prior endorser of a promissory note is not liable to any subsequent endorser of it. But the remark of Lord Kenyon C. J. in that case which has been relied upon in support of this idea, was at best, but an obiter dictum; and yet, when properly apprehended,-his words will not warrant any such interpretation of them. In that case the note was made by one Collins payable to the plaintiff, or order, by whom it was endorsed to the defendant and by the latter afterward endorsed back again to the plaintiff. It therefore presented the novel spectacle of a first" endorser suing a second endorser on a promissory note, which the Court held could not be done. In delivering the opinion, Lord Kenyon, however, admitted “that a case might occur in which the plaintiff might have stated that he was substantially entitled to recover on this note, e. g. that his own name was originally used for form only, and that it was understood by all the parties to the instrument, that the note though nominally made payable to the plaintiff, was substantially to be paid to the defendant.” If such had been the case presented to the Court, it would in effect have converted the defendant, the first endorser upon it, into the substantial payee of the note, and that in effect also would have made his endorsement substantially a commercial endorsement in the strictest sense of the term, and substantially according to the hypothesis, as the first and only endorsement upon it, the preceding endorsement by the plaintiff upon it, for the sake of example and illustration being assumed to be for form only, and in that light, a mere nullity, for the purpose of maintaining the action and the right of the plaintiff to recover in it. Viewed in this aspect as a hypothetical case merely, we conceive that it is against, and not in favor of the principle for which it was cited.

But there is nothing in the present case to warrant the hypothesis, or assumption on which the dictum and admission of his Lordship in that case proceeded. Here the payee in the contemplation of all the parties concerned, was the real and substantial, and not a mere- formal or fictitious payee in the note, who never endorsed it and has never parted with it, and there never was anything written over the name of the defendant on the back of it by the plaintiff, by leave of the Court below, or otherwise. On the contrary, it comes before us on the special verdict found by the jury and the question of law thereupon reserved aud sent up from the Court below, just as it was on the day it was made by Deakyne, was signed on the back of it by the defendant and was delivered by him to the plaintiff; and the only question for us to consider and determine is, whether, under the facts and circumstances stated in the case, the defendant is absolutely liable upon it as an original promisor, or joint maker of the note, or is only collaterally and conditionally liable upon it as an endorser of it merely. For the reasons already stated at so much length, we do not think the signature of the defendant in this case on the back of the note in question, can be properly considered and treated as a commercial endorsement of it according to the legal import and technical signification of that term; but that he is absolutely liable upon it in the present action at the suit of the plaintiff, as an original promisor in it and joint maker of it, and that the plaintiff below therefore ought to recover. And this will accordingly be certified as our opinion in the case to the Court below.