Allison v. Hollembeak
| Decision Date | 19 February 1908 |
| Citation | 114 N.W. 1059,138 Iowa 479 |
| Parties | ALLISON v. HOLLEMBEAK. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Adair County; James D. Gamble, Judge.
Action on an indorsement of a promissory note. From judgment on a directed verdict for plaintiff, the defendant appeals. Reversed.Hager & Powell, for appellant.
Sullivan & Sullivan and Frank B. Wilson, for appellee.
On September 4, 1903, one Henry Principal executed and delivered to the defendant a promissory note for $3,500, payable on or before April 1, 1906. The note was payable by its terms to the order of defendant, and was in the usual form of negotiable promissory notes, save that on the back were written at the time of its execution these words: “This note is secured by purchase money mortgage on 160 acres of land in Guthrie County, Iowa, and payee herein agrees to look to mortgage security for payment of this note.” On November 20, 1903, in connection with some exchange of property between defendant and the firm of Osgood, Allison & Son, of which plaintiff was a member, a written contract was entered into, under which the defendant bound himself to assign and indorse over to said firm the note above described “by signing his name on the back thereof, and to execute to [said firm] a written assignment of the mortgage which secures said note.” In accordance with this agreement, defendant indorsed the note in blank and delivered it to the firm of Osgood, Allison & Son, and by that firm it was subsequently transferred to plaintiff. On February 27, 1905, at a sale on foreclosure under the mortgage, the sum of $2,500 was realized from the property, which amount was credited on the note, and this action is to recover the balance with interest.
The stipulation written on the back of the note at the time of its execution became a part of it. Heaton v. Ainley, 108 Iowa, 112, 78 N. W. 798;Elmore v. Higgins, 20 Iowa, 250;Bonewell v. Jacobson, 130 Iowa, 170, 106 N. W. 614, 5 L. R. A. (N. S.) 436. The instrument was thereby rendered nonnegotiable. Nevertheless by the indorsement thereof defendant assumed an obligation to his indorsee or any subsequent holder to pay the amount due as provided in the instrument, according to its tenor. The negotiable instruments act (29th Gen. Assem. p. 88, c. 130, § 66); Code Supp. 1902, § 3060-a66. Prior to the passage of the negotiable instruments act, this court held that the indorsee of a nonnegotiable instrument became liable to his...
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