Bradford v. Prescott

• Decision Date: 01 June 1893
• Citation: 27 A. 461,85 Me. 482
• Parties: BRADFORD v. PRESCOTT.
• Court: Maine Supreme Court

27 A. 461

85 Me. 482

BRADFORD

v. PRESCOTT.

Supreme Judicial Court of Maine.

June 1, 1893.

(Official.)

Report from supreme judicial court, Aroostook county.

Action by John H. Bradford against Noah M. Prescott on a promissory note. Heard on report. Judgment for plaintiff.

This was an action against the defendant as a joint and several promisor upon a note in the following form: "$302.00. Caribou, Nov. 22d, 1889.

"Four months after date I promise to pay to the order of F. M. York, three hundred and two dollars. Payable at any bank in Maine. Value received. D. M. Moody.

"Waiving demand and notice, N. M. Prescott.

"Waiving demand and notice, F. M. York."

The plaintiff discounted the note before its maturity, for value, in the form as it appears above, and obtained the note from the payee without notice for whose benefit it was originally given, other than what is shown by the note itself. The defendant contended that his liability was that of a guarantor, only, and relied for further defense upon a release given by the plaintiff to said Moody, not under seal, of the following form:

"I, John H. Bradford of Houlton, Aroostook county, Me., in consideration of the payment to me of $130, hereby surrender to said Moody, * * * and release to said Moody, his heirs, executors, administrators, and assigns, for myself, my executors, administrators, and assigns, all claim, suits, or causes of action I have against said Moody by reason of the signature of said Moody on a promissory note dated Nov. 22, '89, on 4 mo., for $302, payable to order of F. M. York. John H. Bradford."

At the same time when this release was given, Moody requested that the note now in suit might be given up with the other notes that were then surrendered. He was informed, however, that it was not to be surrendered; that Prescott was good, and the note was to be collected of him, he not being affected by this agreement.

Madigan & Madigan and L. G. Stearns, for plaintiff.

Wilson & Lumbert and Powers & Powers, for defendant.

FOSTER, J. The plaintiff, in the regular course of business, purchased of the payee the note in suit before it became due. Upon its face it bore the signature of the maker, and across the back, below the words "Waiving demand and notice," was the defendant's name. When the note was transferred to the plaintiff, the payee indorsed the same, waiving demand and notice, below the name of the defendant.

The payee, after the execution and delivery of the note to him by the maker, procured the signature of the defendant without consideration, and for the purpose of getting the note discounted. The defendant, therefore, was not a party to the note when it was made, and did not partake in the consideration given. He affixed his name to the note while it was in the hands of the payee. Had the plaintiff been cognizant of these facts at the time he purchased the note he certainly would not be entitled to recover of this defendant, either as an original promisor or guarantor. Sawyer v. Fernald, 59 Me. 500.

But the case finds that the plaintiff was an innocent purchaser; that of these facts the plaintiff had no information, except such as he would obtain from an inspection of the note itself.

As between the original and immediate parties to the contract, or those occupying their position and having no superior rights, the nature of the contract, as well as the consideration upon which it is founded is always the subject of inquiry until once judicially determined. Sturtevant v. Randall, 53 Me. 149; Smith v. Morrill, 54 Me. 48.

As between such parties, the relative time at which the indorsements were made, as also the understanding or agreement as to the nature of such indorsements, is frequently the subject of inquiry in suits between such parties in reference to their relative liability to each other. As to them, the instrument itself is only prima facie evidence of the contract implied by law. Patten v. Pearson, 57 Me. 428.

But as against an innocent indorsee for value, in the regular course of business a different rule applies, and prohibits a defendant from asserting any extrinsic matter to vary the apparent liability exhibited by the note itself. "By permitting their paper to go into circulation," say the court in Smith v. Morrill, supra, "with no evidence upon it of any other contract than that implied by law, parties in effect represent to bona fide holders, and, as against them, will be estopped to deny, that the implied contract is the true one."

The courts, following the usage and customs prevalent in mercantile circles, invariably hold that the innocent holder for value without notice is to be protected in construing the agreement he has obtained title to, as a reasonable man would construe it. It would be impossible to ascertain the understanding which the parties had privately as to who should or should not be holden. Having failed to make this meaning plain in the written contract, they should be forever estopped, as to such purchaser, from setting up any defense not to be inferred from such contract.

Accordingly, it is held in Maine and Massachusetts that the obligation which the signer of commercial paper assumes to the taker is to be determined by an inspection of the note as it was when negotiated. Stevens v. Parsons, 80 Me. 353, 14 Atl. Rep. 741; Bigelow v. Colton, 13 Gray, 309; Spaulding v. Putnam, 128 Mass. 363, 365.

It is the settled doctrine of these states that one not appearing to be a party, either as payee or indorsee, to a note payable to a payee therein named, or his order, who puts his name on the back of it in blank at its inception and before negotiated, is a joint and several promisor. The legal presumption in such case is that it was done for the same consideration with the contract on the face of the note; and when there is no date as to such indorsement the presumption is that it was made at the time when the note had its inception. Colburn v. Averill, 30 Me. 310; Lowell v. Gage, 38 Me. 35; Childs v. Wyman, 44 Me. 433; Bank v. Lougee, 108 Mass. 371, 373. This presumption will prevail in favor of an innocent indorsee for value before due, and in the regular course of business; and his rights cannot be infringed by proof of any extrinsic facts which might affect the original parties to the contract, or those occupying their position and having their rights only. Sturtevant v. Randall, 53 Me. 149, 157; Smith v. Morrill, 54 Me. 48, 53; Malbon v. Southard, 36 Me. 147.

The plaintiff, having had the note in suit presented to him by the payee, before due, and being ignorant of any facts except such as he might obtain from an inspection of the note itself, found the defendant's name upon it He had a right to presume it was placed there at the inception of the note, and before its delivery to the payee, (Moore v. McKenney, 83 Me. 80, 85, 21 Atl. Rep. 749, and cases cited;) and as to the plaintiff the defendant must be considered a joint and several promisor. By signing the note as he did, without date, before transfer or indorsement by the payee, by whom it was negotiated to the plaintiff, the defendant left the innocent purchaser to presume that he signed in the usual manner, and not after the note's inception.

Nor does the use of the words "waiving demand and notice" in the least weaken or affect this presumption. They are words...