Elgin City Banking Co. v. Zelch
| Citation | 59 N.W. 544,57 Minn. 487 |
| Decision Date | 15 June 1894 |
| Docket Number | 8790 |
| Parties | Elgin City Banking Co. v. John Zelch |
| Court | Minnesota Supreme Court |
Argued June 4, 1894
Appeal by defendant, John Zelch, from an order of the District Court of Ramsey County, Chas. D. Kerr, J., made December 26, 1893 denying his motion for a new trial.
On November 19, 1891, at St. Paul, defendant made and delivered to Daniel Dunham his promissory note dated that day whereby he promised to pay to the order of said Dunham at Wayne Ill., five hundred dollars and interest on or before January 1, 1893. The note was given in part payment for a horse that day sold to defendant by Dunham. Defendant claims that Dunham fraudulently represented and warranted the horse to be sound. That he was not sound and that defendant sustained damages exceeding the amount due on the note. On January 25, 1892 Dunham sold and delivered the note to the plaintiff, the Elgin City Banking Company, and endorsed thereon as follows This action was brought by the Elgin City Banking Company on the note. Defendant answered stating that the note was given in part payment for a horse fraudulently represented and warranted sound, its unsoundness and his damages and denying that plaintiff bought the note in good faith or for value. Defendant claimed that the peculiar indorsement of the note made it nonnegotiable, that plaintiff was merely an assignee of a chose in action and that it was subject to all equities and defences subsisting against Dunham. The trial court thought otherwise and ordered the jury to return a verdict for plaintiff for the amount of the note and interest. Defendant excepted, and afterwards moved for a new trial. Being denied, he appeals.
Order affirmed.
Morphy, Ewing, Gilbert & Ewing, for appellant.
The writing on the back of the note does not read "pay to the Elgin City Banking Co. or order." It omits the words "to" and "or order," and merely says "pay the Elgin City Banking Co. Payment guaranteed." Plaintiff claims this is nothing more nor less than an indorsement with an enlarged liability. The writers on this subject differ and the cases are in conflict. Story Bills, § 458.
One of the oldest and one of the leading cases on the subject and one which is referred to in all text books is Partridge v. Davis, 20 Vt. 499, decided in 1848, which held that a written guaranty of the payment of a promissory note placed by the payee upon the back of the note for the purpose of negotiating it is the same in legal effect and for every practical purpose as an indorsement and may be treated as such and an indorsement made in the form of a guaranty will render the payee liable as indorser to any subsequent holder of the note upon proof of the proper demand and notice. The same principle was laid down in Robinson v. Lair, 31 Ia. 9; Heard v. Dubuque County Bank, 8 Neb. 10; State Bank v. Haylen, 14 Neb. 480.
Story on Bills (4th Ed.) § 215, and Daniel on Negotiable Instruments (3rd Ed.) § 1781, lean towards the negotiability of guaranties but they rely on such authorities as Upham v. Prince, 12 Mass. 13; Blakely v. Grant, 6 Mass. 386; Heard v. Dubuque County Bank, 8 Neb. 10, and others where the conclusions have either been questioned or the cases overruled.
But Mr. Ames in Cases on Bills and Notes, Vol. 1, p. 224, sets out the case of Belcher v. Smith, 7 Cush. 482, and in his notes says, that a payee or subsequent party who writes a guaranty upon a bill or note is not liable as indorser, is now well settled; that Upham v. Prince, 12 Mass. 13; Bell v. Johnson, 4 Yerg. 194 and Leggett v. Raymond, 6 Hill 639, are overruled.
The writing on the back of the note is merely a guaranty and nothing more. Dunham sold and transferred the note and guaranteed its payment. The writing cannot at the option of plaintiff be converted into an indorsement. The defences of the maker are not cut off. This can only be done by indorsement according to the law merchant. Trust Co. v. National Bank, 101 U.S. 68; Snevily v. Ekel, 1 Watts & S. 203; Lamourieux v. Hewit, 5 Wend. 307; Miller v. Gaston, 2 Hill 188; Eastern Townships Bank v. St. Johnsbury & L. C. R. Co., 40 F. 423; Omaha Nat. Bank v. Walker, 5 F. 399.
The fact that the payee, Dunham, signed his name after the transfer as well as after the guaranty does not make the transaction other than one transaction. If a man signs his name more than once to an ordinary contract that fact alone does not make more than one contract.
John W. Best, for respondent.
The question of the negotiability of a guaranty so exhaustively treated in ...
To continue reading
Request your trial