Good v. Martin

• Decision Date: 01 October 1877
• Citation: 24 L.Ed. 341,95 U.S. 90
• Parties: GOOD v. MARTIN
• Court: U.S. Supreme Court

95 U.S. 90

24 L.Ed. 341

GOOD v. MARTIN.

October Term, 1877

ERROR to the Supreme Court of the Territory of Colorado.

This action was brought by Ida Martin, the defendant in error, in the District Court of Arapahoe County, Colorado Territory, against Parker B. Cheeney, William N. Shepard, and John Good, as joint makers of a certain promissory note executed there June 29, 1866, and payable sixty days thereafter to the order of Alexander Davidson, by whom it was, before maturity, indorsed to the plaintiff. The note was signed by the first two defendants, and, before its delivery to the payee thereof, indorsed in blank by Good.

Judgment by default was rendered against Cheeney and Shepard. Good appeared, and pleaded the general issue.

There was a judgment against all the defendants, which was affirmed by the Supreme Court of the Territory. Good sued out this writ of error.

As the other facts in the case, as well as the assignments of error, are fully set out in the opinion of the court, they are omitted here.

Mr. Richard T. Merrick and Mr. M. F. Morris for the plaintiff in error.

1. The rule of law is, that a party whose name appears on the back of a negotiable instrument, under circumstances like those connected with this note, is prima facie an indorser; that parol testimony is admissible to show in what character he signed, whether as surety, guarantor, or indorser; that the presumption of law does not arise to charge the party as surety, but favors his being regarded as an indorser; and that it is incumbent on the plaintiff who seeks to make him liable as a maker to rebut that presumption. The instruction of the court on this point was, therefore, erroneous. Rey v. Simpson, 22 How. 341; Story, Pr., sect. 133.

2. The exclusion of the defendants Good and Shepard as witnesses, because of their interest, was also erroneous.

The sixteenth section of the act of Congress of Feb. 28, 1861, 12 Stat. 176, organizing the Territory of Colorado, provides that all laws of the United States which are not locally inapplicable shall have the same force and effect within that Territory as elsewhere within the United States. The act of July 2, 1864, 13 id. 351, declaring that in the courts of the United States no witness shall be excluded in any civil action because he is a party to or interested in the issue tried, is not locally inapplicable; and the territorial court, though but a legislative court, is still a court of the United States, entirely liable to be controlled in all things by the laws of Congress. There is, therefore, no reason why the latter act should not have been applied to this case.

Again, it does not appear very plainly why the territorial act of 1870, rendering parties to suits competent witnesses, though passed after issue was joined in this case but before the trial took p ace, should not have governed. The legislative power may modify or change existing remedies without thereby impairing the rights of parties, and questions of practice are to be determined in accordance with the forms in force at the time of trial. Calder v. Bull, 3 Dall. 386; Baltimore, &c. Railroad Co. v. Nesbit, 10 How. 395.

Mr. H. C. Alleman, contra.

MR. JUSTICE CLIFFORD delivered the opinion of the court.

Decisions of a conflicting character exist as to the nature and legal effect of the obligation which a third person assumes who indorses his name in blank on a negotiable promissory note before the payee and before the instrument is delivered to take effect. Courts of justice, in some jurisdictions, hold that such a party is a second indorser, even though it be true that the payee may never indorse the instrument. Phelps v. Vischer, 50 N. Y. 69; Shafer v. Farmers' & Mechanics' Bank, 59 Penn. St. 144.

Even elementary rules show that he cannot be first indorser, for the reason that he is not payee; and it is well settled law that no one but the payee can sustain that relation to the maker, or put the note in circulation as a negotiable instrument. Essex Company v. Edmunds, 12 Gray (Mass.), 272; Moies v. Bird, 11 Mass. 436.

Three of the counts of the declaration are framed upon a promissory note, dated June 29, 1866, payable to Alexander Davidson or order sixty days after date, signed by the first two defendants; and the record shows that it was indorsed by Good, the other defendant, before it was indorsed by the payee, and before it was delivered to take effect as a negotiable instrument. His indorsement was in blank, and, of course, was without any written explanation as to its nature and intended effect.

Besides the three counts framed upon the promissory note, the declaration also contained the common counts, in which it was alleged that the defendants were indebted to the plaintiff in the sum of $2,000 for work and labor done and performed, and in the same sum for goods, wares, and merchandise sold and delivered, and in the same sum for money had and received, and other counts in indebitatus assumpsit.

Service was made; but the two defendants first named failed to appear, and were defaulted. Instead of that, Good appeared, pleaded the general issue, and went to trial. Evidence was introduced on both sides; and the verdict and judgment were for the plaintiff in the sum of $3,625.33. Exceptions were filed by Good; and he sued out a writ of error, and removed the cause into this court.

Only two of the exceptions are embodied in the assignment of errors, and those only will be re-examined: 1. That the court erred in instructing the jury that if they found from the evidence that the defendant wrote his name upon the back of the note before the delivery of the same to the payee, and that he did not then make any statement of his intention in so doing, he is presumed to have done so as the surety of the makers, and for their accommodation, to give them credit with the payee and is liable for the payment of the note in this action, and that if that presumption is not rebutted by the evidence in the case, they must find for the plaintiff in the issue joined between her and Good. 2. That the court erred in excluding the testimony of the two defendants called as witnesses by Good.

Decided cases almost innumerable affirm the rule, that, if one not the promisee indorses his name in blank on a negotiable promissory note before it is indorsed by the payee, and before it is delivered to take effect as a promissory note, the law presumes that he intended to give it credit by becoming liable to pay it either as guarantor or as an original promisor. Bryant v. Eastman, 7 Cush. (Mass.) 111; Benthal v. Judkins, 13 Met. (Mass.) 265; Colbun v. Averill, 30 Me. 310.

Different courts, as remarked in that case, hold different views in respect to the question here involved; but all c ncur that such an act constitutes a contract which is to receive a reasonable and an available construction. Great conflict exists in the decided cases; but the better opinion is, that there are certain general rules and principles to be followed in the interpretation of such a contract, which, in the absence of other evidence, will lead to satisfactory results, even amid the conflicting decisions.

Beyond all doubt, the contract should be construed as it was at the time it was made. If made at the inception of the note, it is presumed to have been for the same consideration and a part of the original contract expressed by the note. If made subsequently to the date of the note and without a prior indorsement by the payee, it will be presumed that it was not made for the same consideration, and the party, if liable at all, will be regarded as a guarantor. Such a contract to guarantee the debt of a third person must be in writing, and there must be sufficient proof of the consideration. Brewster v. Silence, 8 N. Y. 207; Leonard v. Vredenburg, 8 Johns. (N. Y.) 29; Hall v. Farmer, 5 Den. (N. Y.) 484.

These remarks apply where the third person indorses the note before the payee; but, where such a person indorses the note after a prior indorsement by the payee, the law presumes it to have been done in aid of the negotiation of the note, and the party will be regarded as a subsequent indorser the rule being, that, if the indorsement is without date, it will be presumed to have been made at the inception of the note. Ranger v. Cary, 1 Met. (Mass.) 369; Noxon v. De Wolf, 10 Gray (Mass.), 343; Collins v. Gilbert, 94 U. S. 753.

Irregularities of the kind in the execution of promissory notes are noticed by Judge Story in his work on Promissory Notes, and he says that the maker and such a party are both to be deemed original promisors, and the note a joint and several promissory note to the payee, although as between the maker and the other party they stand in the relation of principal and surety. Standard authorities, too numerous for citation here, are referred to by the author in support of the proposition. Story, Pr., sect. 58; Sylvester v. Downer, 20 Vt. 355; Lewis v. Harvey, 18 Mo. 74; 1 Parsons, Contr. (6th ed.) 243.

None will deny, it is presumed, that the cases cited sustain the proposition where the third person indorses his name in blank on the note at the time when it was made and before it was indorsed by the payee; and the same learned author admits that the rule would be otherwise if the party actually wrote his name at a subsequent period, unless it was done in compliance with an agreement made before the note was executed. Hawkes v. Phillips, 7 Gray (Mass.), 284; Leonard v. Wilder, 36 Me. 265; Champion v. Griffith, 13 Ohio, 228. Prior decisions of this court are to the same effect, as appears by the following citation. Rey et al. v. Simpson, 22 How. 341.

When a promissory note made payable to a particular person or order is first indorsed by a third person, such third person is held to be an original promisor, guarantor, or indorser, according to the nature of the transaction and the understanding of the parties at the time the transaction...