Taylor v. French

70 Tenn. 257

• Court: Tennessee Supreme Court
• Decided: April 15, 1879
• Status: Published

Opinion

Cooper, J.,

delivered the opinion of the court.

The mother of the plaintiffs, then infants, loaned twelve thousand dollars of their funds to Partee & Harbert, a firm composed of C. C. Partee and B. P. Harbert, taking therefor two notes of the firm, dated June 1st, 1870, payable twelve months after date, to Jno. Harbert and H. Partee, endorsed by them sever.ally, and by James H. French.

The two notes were alike, except that the name of H. Partee preceded the name of John Harbert in the body and on the back of one of them. The money was paid to B. F. Harbert. The notes were not presented for payment at maturity, nor were the endorsers notified of their dishonor. The firm paid interest at the end of the first year. This suit was brought on the 15th April, 1872, against all parties to the paper.

Pending the suit Partee & Harbert received a discharge in bankruptcy, and their plea to that effect was admitted and allowed. The suit abated as to H. Partee, by his death.

The remaining defendants, John Harbert and James IT. French, demurred to the plaintiff’s declaration, and the demurrer was sustained as to all the counts except two. Issue was joined on these counts, and a trial had, resulting in a verdict and judgment for the defendants, and the plaintiff appealed in error.

The second and third counts of the declaration sought a recovery against the defendants as endorsers simply, without averring demand and notice, and were clearly bad. The fifth count was for money loaned and advanced, and the eighth count averred an extension of the time of payment for one year after the maturity of the note, with the knowledge and consent of the endorsers.

The trial was on the fifth and eighth counts. The other counts, after making profert of the notes showing that the endorsements were in blank, averred that the endorsers had agreed to be bound, at the inception of the paper, as sureties, guarantees, or comakers.

The learned circuit judge was of the opinion that parol evidence was inadmissible to show a different-obligation on the part of the endorsers at the execution and delivery of the paper, from which the law would imply from the endorsements.

The point for consideration, and which has been argued with marked ability, is the admissibility of pa-rol evidence to show the real contract as averred in the declaration. The general rule that parol evidence is not admissible to contradict or vary terms of a written instrument, applies to promissory notes, as has been repeatedly held by this court. Campbell v. Upshaw, 7 Hum., 185; Hancock v. Edwards, 7 Hum., 349; Blackmore v. Wood, 3 Sneed, 470; Ellis v. Hamilton, 4 Sneed, 512. The rule also, perhaps, applies to regular endorsements, as against a bona fide holder for value before maturity. And some courts have applied it even between the immediate parties. Lake v. Stetson, 13 Gray, 310, note. The tendency of recent decisions seems to be in that direction, upon the ground that the contract is as fully expressed by the simple endorsement as if written out in full over the signature. 1 Dan. Neg. Instr., sec. 717. The rule is clearly otherwise when the endorsements are irregular, as, for example, when the endorser puts his name on the paper before the payee, or for the benefit of the payee. Id., seo. 710; Rivers v. Thomas, 1 Lea,, 649. And many courts allow parol evidence in all cases of blank endorsements, because the right to demand and notice arises by implication of law, and. may be waived directly or indirectly by conduct and circumstances. Dick v. Martin, 7 Hum., 263; Ross v. Espy, 66 Penn. St., 487; Davis v. Morgan, 64 N. C., 381; Johnson v. Martimus, 4 Halst., 144; Cartrigue v. Battigieg Moore, P. C. C., 94.

The authorities are generally agreed that the statute of frauds has no application to contracts within the law merchant, or that an endorsement in blank is sufficient to satisfy the statute, the signature applying to the contract already written in the instrument endorsed, or to the words above the signature which are afterward written by express or implied authority. 2 Dan. Neg. Instr., sec. 1765.

This court has uniformly held that parol evidence is admissible between the immediate parties, to show the real contract of the endorser, even in the case of regular endorsements. Thus parol evidence has been declared admissible to show a waiver of demand and notice. Kimbroe v. Lamb, 3 Hum., 17; Dick v. Martin, 7 Hum., 263. So to prove that the endorser guaranteed the payment of the note. Hall v. Rodgers, 7 Hum., 536. And to show an absolute undertaking on the part of the endorser, provided the proof was clear and satisfactory. Newell v. Williams, 5 Sneed, 209. “There is no question,” says Judge McKinney, “but that an endorser in blank may by his agreement enlarge or vary the liability created by law. As in the case of an endorsement in full, it may be general or restrictive, qualified, conditional, or absolute. Nor is there any doubt as to the right of the holder to fill up the blank endorsement in conformity to the agreement of the parties; and such agreement is to be interpreted so as to carry into effect their true intention; neither is there any doubt that, if the endorsement remain in blank, or only partially filled up, the holder may on the trial, show by parol evidence the nature and extent of the undertaking of the endorser.” Brookway v. Comparree, 11 Hum., 360.

The court below erred in sustaining the demurrer to any except the second and third counts of the declaration.

The judgment must be reversed, the demurrer overruled in accordance with this opinion, and the case •remanded for further proceedings.