Douglas v. Rumelin

• Decision Date: 17 April 1928
• Citation: 125 Or. 261,266 P. 624
• Parties: DOUGLAS v. RUMELIN ET AL.
• Court: Oregon Supreme Court

266 P. 624

125 Or. 261

DOUGLAS v. RUMELIN ET AL.

Supreme Court of Oregon, En Banc.

April 17, 1928

Appeal from Circuit Court, Multnomah County; Robert G. Morrow Judge.

On petition for rehearing. Rehearing denied.

For former opinion, see 264 P. 852.

COSHOW J.

Defendant Ashley has presented a very earnest and urgent petition for rehearing. No new authorities or additional reasons are assigned in the petition or brief for rehearing. The brief on petition for rehearing is ably presented but is not convincing.

The contention made by defendant Ashley, and sustained by the learned circuit judge, is that the indorsement on the note signed by defendants is a collateral contract or undertaking and not a direct liability on the note. This argument overlooks the fact that the indorsement was written on the back of the note and subscribed before the delivery or negotiation of the note. It was a part of the original transaction between the plaintiff and defendants. The complaint alleges that the consideration of the note was paid to the indorsers by plaintiff. The undertaking of defendant by their indorsement and guaranty was then a direct obligation to plaintiff and not collateral. Delsman v Friedlander, 40 Or. 33, 35, 66 P. 297. In that case the indorsement was as follows:

"November 20, 1893, for value received, I or we hereby guaranty [guarantee] payment of the within note, and waive demand, notice of protest, and protest." The late Justice Wolverton wrote the opinion and in page 35 of the official report (66 P. 298) says:

"Primarily, it may be stated as a legal proposition sustained and established by the very weight of judicial opinion that a guaranty of the payment of a note or other obligation is an absolute undertaking to pay it when due, and that no demand or notice of nonpayment is necessary or requisite to fix the liability of the guarantor; and that mere passiveness on the part of the holder will not release such guarantor, even if the maker was solvent at its maturity, and thereafter became insolvent. [ Citing many authorities.]"

And in page 37 (66 P. 299) says:

"Friedlander [the party signing the guaranty] was, therefore, liable as an indorser, and this conclusion renders it unnecessary to consider the motion for nonsuit, as it is based upon the hypothesis that he was a guarantor."

It is true that Friedlander was the payee in the note and was passing the title. Under the allegations of the complaint, and there was evidence to support the allegation, defendants were also negotiating the note and received the money represented by the note instead of the ostensible maker thereof.

It is not for the court to determine the fact as to whether or not defendant Rumelin was authorized to sign the name of the partnership, Rumelin & Ashley, to the indorsement on the note. That is a disputed question and should have been submitted to the jury under proper instructions. Defendants and the learned circuit court relied largely on the case of Noble v. Beeman, 65 Or. 93. 100, 131 P. 1006, 1009 (46 L. R. A. [ N. S.] 162), where this language is used:

"It may be conceded that as to the bank the plaintiff, who signed the writing on the back of the note, and the defendants in this action, all of whom signed the note as makers, were all directly liable. Such is the doctrine taught by all the cases cited in the defendant's brief. [ Cases cited.]"

It thus appears that the learned justice who wrote the opinion relied upon with such assurance by defendants held that in the similar indorsement in the Noble Case the guarantor's undertaking was direct and not collateral. The Noble Case was brought by the guarantor, who was compelled to and did pay the note against the other defendants, who...