Collieries v. Eureka Coal & Wood Co

• Citation: 132 S.E. 337
• Court: Supreme Court of Virginia
• Decision Date: 18 March 1926
• Parties: COAL RIVER COLLIERIES . v. EUREKA COAL & WOOD CO. et al.

132 S.E. 337

COAL RIVER COLLIERIES .

v.EUREKA COAL & WOOD CO. et al.

Supreme Court of Appeals of Virginia.

March 18, 1926.

Error to Circuit Court of City of Norfolk.

Action by the Coal River Collieries against the Eureka Coal & Wood Company and N. Or leans. Judgment for plaintiff against defendant first named, but in favor of defendant last named, and plaintiff brings error. Reversed, and final judgment rendered.

Swink & Fentress, of Norfolk, for plaintiff in error.

Herman A. Sacks, of Norfolk, for defendants in error.

BURKS, J. This was an action by the payee against the makers of the following note:

"552.60 Norfolk, Va., July 19, 1924.

"Sixty after date we promise to pay Coal River Collieries Co., or order, without offset, five hundred fifty-two dollars 60/100 dollars. Negotiable and payable at Merchants' & Planters' Bank of Berkley. Value received. The drawer and indorser of this note hereby waive the benefit of homestead exemption as to this debt.

"No. A39791. Due 9—17—24.

"Eureka Coal & Wood Co., Inc.,

"J. Liebman, Treasurer, N. Orleans."

The coal company made no defense. Orleans defended on the ground that he signed the note as president of the company, and was not personally bound thereon, and, further, that there was no consideration for his signature thereto. There was a judgment against the coal company and in favor of Orleans. The latter judgment is assailed here because the trial court admitted parol evidence on behalf of Orleans to show that he intended only to sign officially, and was not bound personally.

The facts of the case are as follows: The Eureka Coal & Wood Company was incorporated in November, 1923, and had but three stockholders, all of whom were officers of the company, and their names as such appeared on the letter heads of the company used in its business correspondence. This letter bead showed Orleans as president, a Mr. Foy as vice president, and Liebman, as secretary treasurer. Some time thereafter it purchased coal of the plaintiff, and, after the account had been standing some time, the plaintiff wrote to the Eureka Company, on July 17, 1924, a courteous letter, requesting it "to make some arrangement to take care of this balance not later than the 28th of this month, " or, as Orleans testified, "they have asked us to send them some money, " and Liebman testified that the note in suit "was sent in response to a request for money." The letter inclosing the note, after expressing appreciation for the indulgence shown, and speaking of the company's bright prospects in the near future, says:

"Inclosed please find note for 552.60, to be paid in 60 days."

The letter inclosing the note was not acknowledged, and there was no other com-munication between the parties until after the note fell due and payment was refused. Orieans, when examined as a witness in his own behalf, and in response to a question by his own counsel, testified as follows:

"Q. Now, when you received this letter which asked that you send a check for that past-due account, what did you do?

"A. Well, I replied to the letter, and I sent him my note because we didn't have no money at that time."

At the trial, and while Orleans was testifying in his own behalf, he was asked by his counsel this question:

"When you signed that note N. Orleans, did you sign it to become bound individually, or as president of the corporation?"

To which he replied:

"I just signed because I was president of the corporation. That is the way I signed it."

Exception was duly taken to this and all other similar questions, but the court overruled the exceptions; being of opinion that the note "is signed by the company and the circumstances of the signature would be sufficient to let in parol evidence." This presents the main question we are called upon to decide.

A number of text-books and cases have been cited on both sides, and we have given them the consideration which the importance of the question demands, and some of those most relied on are hereinafter considered, but in none of them, so far as we have discovered, has such evidence been admitted, unless there was something on the face of the instrument, or in the manner of the signature, to create an ambiguity, or an uncertainty as to the liability of the party signing.

In Germania Nat. Bank v. Mariner, 109 N. W. 574, 129 Wis. 544, so much relied on by the defendant in error, the note sued on was as follows:

"Milwaukee, January 6, 1905.

"Four months after date the Northwestern Straw Works promise to pay to the order of F. G. Bigelow ($20,000) twenty thousand dollars at the First National Bank, Milwaukee. Value received.

"The Northwestern Straw Works.

"E. R. Stillman, Treas.

"John W. Mariner."

It was held that Mariner was not personally liable because the note was ambiguous on its face, thereby admitting parol evidence to explain the ambiguity, and that the parol evidence clearly showed that he was not personally liable. It was said that—

"The general rule is well supported that when it clearly appears, either in the body of the note or by appropriate words added to the signatures themselves, that a corporation is the party making the promise, there is no individual liability on the part of the signers."

Again:

"Granting that the section [referring to section 20, Negotiable Instruments Act] does not apply as to the signature of Mr. Mariner, we think it would be conceded that upon its face it is ambiguous so far as Mr. Mariner is concerned. The instrument says that the 'Northwestern Straw Works' promises to pay. The signature of Mr. Mariner is the bare signature of an individual. This is certainly not usual, and should arrest the attention of any one dealing with it at once. People do not ordinarily sign contracts purporting on their face to be contracts of others. If they do, the fact itself suggests at once a doubt as to what they mean by it. In other words, the instrument becomes, as to such signatures, ambiguous."

After deciding that there was nothing in the Negotiable Instruments Act which applied to the case, and that it must be decided on principles of the common law, the court concludes its opinion as follows:

"It is elementary that, in case a written contract is ambiguous in its terms, parol proof of the facts and circumstances under which it was executed may be introduced to aid in its construction. This rule applies to commercial paper, even in the hands of third persons, because, where the ambiguity is apparent to a reasonably prudent man on the face of the paper, he is necessarily put upon inquiry. Mechem, Agency, § 443; Hood v. Hallenbeck, 7 Hun [N. Y.] 362; 10 Cyc. 1051; 4 Thompson, Corp. § 5141. The parol evidence in the present case showed without dispute that Mr. Mariner's signature was attached simply in his representative capacity and as agent of the corporation. There being a plain ambiguity in this respect appearing on the face of the note, the evidence was properly received, and the judgment against Mr. Mariner individually was erroneously rendered."

The case is rested wholly on the ambiguity appearing on the face of the instrument, and is not applicable to the instant case, where no such ambiguity appears.

In American Trust Co. v. Canevin, 184 F. 657, 107 C. C. A. 543, the note sued on was as follows:

$15,000. New Salem, Pa., Feb. 26, 1908.

"One year after date * * * promise to pay to the order of Fidelity Funding Company, at the First National Bank of New Salem, fifteen thousand dollars, without defalcation. Value received.

"[Signed] St. Thomas R. C. Congregation, "By Rev. Ign. Ostaszewski, Treas. & Pastor.

Indorsed:

"St. Thomas R. C. Congregation at Footedale.

"By Rev. Ign. Ostaszewski, Pastor.

"Regis Canevin, Trustee.

"Fidelity Funding Co.

"By P. J. Keiran, Vice Pres't."

The court makes the following statement of facts:

"After the note had been delivered to the payee, the Fidelity Funding Company, it placed its indorsement under the name of Regis Canevin, and transferred the note before maturityand for value to the plaintiff, the American Trust Company. The action is against Canevin only, and he is sued as indorser.

"The form of the note presents the question whether there is, above the indorsement of the Fidelity Funding Company, one indorsement (that of the St. Thomas Roman Catholic Congregation at Footedale, verified by the signatures of Rev. Ign. Ostaszewski, Pastor, and Regis Canevin, trustee), or whether there are two indorsements (one by the St. Thomas Roman Catholic Congregation at Footedale, verified by the signature of Rev. Ign. Ostaszewski. Pastor, and the other by Regis Canevin, trustee). The affidavit of defense, however, expressly admits that, before the note was delivered to the Fidelity Funding Company, there was an oral agreement that the defendant should indorse it, although it is further said that the agreement was that the indorsement should be 'as trustee for said congregation.' And the case was tried on the theory that the defendant's signature constituted a separate indorsement. Consequently we must dispose of the case upon that theory."

After referring to some early Pennsylvania cases, the court proceeds:

"But the question remains: Must the word 'trustee' be rejected as a mere descriptio personse, or may the defendant show, by parol evidence, that he intended, by adding the word 'trustee' after his name, to make a restrictive indorsement as trustee for the St. Thomas Roman Catholic Congregation at Footedale?

"Section 20 of the Negotiable Instruments Law (Pa. St. 1920, § 16007) is as follows: 'Where the instrument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words describing him as an agent or as filling a representative character, without disclosing his principal, does not exempt him from personal liability.' "

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