Ayres v. Milroy

• Decision Date: 31 October 1873
• Citation: 53 Mo. 516
• Parties: SALATHIEL B. AYRES, Plaintiff in Error, v. JOHN M. MILROY, Defendant in Error.
• Court: Missouri Supreme Court

53 Mo. 516

SALATHIEL B. AYRES, Plaintiff in Error,

v.JOHN M. MILROY, Defendant in Error.

Supreme Court of Missouri.

October Term, 1873.

Error to Louisiana Court of Common Pleas.

Minor & Foster with Anderson & Niel, for Plaintiff in Error.

I. If defendant signed the note as surety at the request of the maker and delivered it to him on the condition that he should obtain Dyer's name, and the maker, without securing it, delivered the note to the payee, who had received no notice of the condition upon which defendant signed the note, the latter is liable on the note. (Farrell vs. Hunter, 21 Mo., 436.)

II. As the note was absolute on its face when plaintiff received it, parol testimony was inadmissible to vary or contradict it. (Smith's Adm'r vs. Thomas, 29 Mo., 307; Blackburn vs. Harrison, 37 Mo., 303.)

Fagg & Dyer, for Defendant in Error.

WAGNER, Judge, delivered the opinion of the court.

This was an action commenced upon a non-negotiable promissory note against the defendant.

The defense set up in the answer was, that Milroy, the defendant, signed the note as surety for one Jones upon the express understanding, that Jones was also to procure the signature of D. P. Dyer, as an additional security, and, that if the name of Dyer was not obtained, then he was not bound; that Jones did not get Dyer to sign the note, and that plaintiff had full notice of this condition before he received the note.

It seems that Jones took the note, and, without getting Dyer to sign it, he delivered the same to plaintiff. The court below found for the defendant, but its verdict appears to have been based on the fact, that the plaintiff had notice of the condition upon which defendant signed the note. It is now contended, that there was no evidence adduced to show that plaintiff had any such notice, and if there was no such notice, then the verdict and judgment are against the law.

An examination of the record forces upon my mind the conclusion, that there was, in fact, nothing to bring notice home to the plaintiff of the agreement upon which the note was signed by the defendant. But it is conceded throughout the whole case, that there was such an understanding, and that defendant signed the note as surety upon the express condition, that Dyer was also to sign it, and that Jones was not to deliver it to the payee till Dyer's signature was obtained.

The question then is, whether the defendant is liable, where the condition was not complied with, though the plaintiff had no notice of the fact when he took the note.

In the case of negotiable or commercial paper, it is very clear that the defense would not be held good.

In a suit upon a note of that character it was expressly adjudged by this court in the Bank, etc. vs. Phillips, 17 Mo., 29, that it was no defense for an indorser who was sued upon a note, that he indorsed it upon the express condition, that it should also be indorsed by another person, when it did not appear that the plaintiff knew of the condition.

In making this line of defense there is a clear distinction recognized between bonds or other instruments that are not negotiable, and those which are negotiable.

The question here presented has often been before the courts, and the almost universal holding has been, that where a bond or other instrument for the payment of money is executed by a surety on the condition that another person shall also sign it as surety, and that if not so signed, then the principal obligor shall not deliver it, and the obligor does deliver it in violation of this agreement, then the surety who signed will not be bound.

In the case of State vs. Sandusky, 46 Mo., 377, we quoted approvingly the rule laid down by the Supreme Court of Mass., in Cutter vs. Whittemore, 10 Mass., 442, where Jackson, J., speaking for the court, said: “If there had been any agreement or condition at the time, that it should not be delivered as their deed unless a third person named as obligor should also execute it, this would show that it was only delivered as an escrow.”

In Linn County vs. Farris, 52 Mo., 75, the principal procured the signature of a surety on the bond, the surety signing it on condition, that another person should likewise be procured to it, but the other person's signature was not procured and his name was forged on the bond, and the principal then delivered it. In an action on the bond it was decided there was no delivery as to the surety, and that the bond was void as to him.

In the case of Lovett vs. Adams. 3 Wend., 380, the defense was, that the bond had never been delivered by the obligors, and the fact was offered to be proved by a co-obligor. The witness was rejected. In delivering the opinion of court, Savage, C. J., said: If a bond be signed and put into the hands of the obligee or a third person, on the condition that it shall become obligatory upon the performance of some act by the obligee or any other person, the paper signed does not become the bond of the party signing the same, until the condition precedent be performed. Until then there is no tract.”

In Bronson vs. Noyes, 7 Wend., 188, a bond was given to the sheriff on an arrest. The sheriff said to the party signing, “sign the bond and he will get some other person to sign with you or get other bail in the morning.” It was said by the court (Nelson, J.,) “If it was the agreement of the parties at the time it was put into the hands of the officer, that it was not to be delivered to take effect until additional bail was procured, then, whatever might be the intention of the defendant, the bond would be inoperative and have no legal existence.”

In Leaf vs. Gibbs, 4 Car. & P., 466, it was decided, that when a person signs a promissory note on a representation that others are to join, and one afterwards refuses to sign, the payees cannot recover in an action on the note against the person who signed it, unless the jury are satisfied that such person, knowing the facts and being aware of his rights, had consented to waive his objection.

Ch. J. Tindal, in summing up the case to the jury, uses this language: “It seems from the evidence of the plaintiff's witnesses, that the defendant was told that his mother was to join, and therefore the obtaining of her signature was a condition, which, if not carried into execution, would justify the defendant in withdrawing, and if matters have not been altered since the signing of the note, the defendant will not be liable.”

There was a verdict for defendant.

In Perry vs. Patterson, 5 Humph., 133, it was held, that where a bill was delivered to the creditor by an obligor as surety, upon condition that another should sign as co-surety, it was delivered as an escrow, and was not obligatory unless the condition was complied with, or unless he agreed that it should be obligatory upon him after his knowledge of the refusal of the other to sign as co-surety.

It was also further held, that when delivered as an escrow by a surety to the principal obligor, and by the latter to the creditor absolutely and without condition, the ignorance of the creditor does not discharge the condition and constitute the delivery a valid delivery. It was the business of the creditor to have informed himself of the facts connected with the delivery.

The court observes, “the law upon this point is settled beyond controversy, and needs at this day no investigation.” So in Alabama (Bibb vs. Reid, 3 Ala., 88) it was decided, that a bond may be delivered conditionally to a co-obligor, and will not be operative as a deed of the party until the condition is performed.

The court speaking through Ormond, J., who wrote the opinion, say: “We are satisfied that on principle there can be difference...