First Nat. Bank of Elgin v. Bach

• Decision Date: 21 December 1920
• Citation: 98 Or. 332,193 P. 1041
• Parties: FIRST NAT. BANK OF ELGIN v. BACH ET AL.
• Court: Oregon Supreme Court

193 P. 1041

98 Or. 332

FIRST NAT. BANK OF ELGIN v. BACH ET AL.

Supreme Court of Oregon

December 21, 1920

In Banc.

Appeal from Circuit Court, Union County; J. W. Knowles, Judge.

Action by the First National Bank of Elgin against W. B. Bach and others, and J. D. Casey. From a judgment for defendant Casey who alone appeared, plaintiff appeals. Affirmed.

After alleging its own corporate existence and that the defendants Bach and Robinson constituted a partnership styled "Summerville Lumber Company," the plaintiff avers in its complaint:

"That the plaintiff paid to the defendant J. D. Casey the sum of $1,000 upon two drafts of $500 each, drawn by him and accepted by defendant Summerville Lumber Company, in consideration of which all of the above-named defendants made, executed, and delivered to the plaintiff their promissory note in writing, of which the following is a copy:

" '$1,000.00.

Elgin Oregon, July 1, 1912.

" 'Ninety days after date, without grace, I, we, or either of us, promise to pay to the order of The First National Bank of Elgin, Oregon, one thousand and 00/100 dollars for value received, with interest after maturity until paid, at the rate of eight per cent. per annum. Principal and interest to be paid in United States gold coin at the First National Bank of Elgin; and in case suit or action is instituted to collect this note, or any portion thereof, I promise to pay such an additional sum as the court may adjudge reasonable attorneys' fees in said suit or action.

" 'Summerville Lumber Co., " 'By P. S. Robinson.

" 'P. S. Robinson.

" 'W. B. Bach.

" 'J. D. Casey.

" 'No. 5946.

" 'Due Oct. 1--12.'

"That although the names of defendants P. S. Robinson, W. B. Bach and J. D. Casey appear on the back of said note, it was so signed when issued and before delivery to plaintiff."

Further stating that no part of the note has been paid except specified interest, that the plaintiff is the holder of the note, and that a certain sum is a reasonable attorneys' fee, the plaintiff demands judgment.

The answer of the defendant Casey, who alone appeared, denies every allegation of the complaint except the incorporation of the plaintiff, its location, and the copartnership of Bach and Robinson, and except as further stated. In the view here taken of the case, it is not necessary to consider the new matter of the answer, which was challenged by the reply.

A motion for nonsuit made by the defendant Casey at the close of plaintiff's case was denied, and, after all of the evidence was in, both parties moved the court for a directed verdict. The court denied both motions and submitted the case to the jury, which found a verdict for the defendant. From the resultant judgment the plaintiff appeals.

L Denham, of Elgin, for appellant.

George T. Cochran and Colon R. Eberhard, both of La Grande (C. H. Finn, of La Grande, on the brief), for respondent.

BURNETT, J. (after stating the facts as above).

Both parties waived trial by jury by moving for a directed verdict. They thus submitted to the court whether as a matter of law a verdict should be directed for the plaintiff or for the defendant. Under such circumstances, the court should have decided the question. Patty v. Salem Flouring Mills Co., 53 Or. 350, 357, 96 P. 1106, 98 P. 521, 100 P. 298. In the instant case this matter of practice is of small importance, for in our opinion the judgment rendered was the proper result.

We glean from the record that the trial court submitted the case to the jury under the direction that, if the name of Casey was indorsed on the note prior to its delivery to the bank, he should be held liable for the full amount of the note, but, if that indorsement was placed on the note after its delivery to the bank, he could not be held. The essence of the averment concerning the note is that the defendants executed the instrument by the signature of the partnership as maker under the name of Summerville Lumber Company," and that the names of the other defendants appeared on the back before the delivery to the plaintiff. The plaintiff relies greatly upon certain language used by Mr. Justice Moore in Lumbermen's National Bank v. Campbell, 61 Or. 123, 121 P. 427, to the effect that where any one writes his name on the back of a note at the time it is issued, for the purpose of procuring credit for the maker, or if the one so signing receives a part of the proceeds for which the obligation is given, he is an original maker. A careful study of that case discloses that the opinion in that part of it was discussing the law as it existed prior to the enactment of our negotiable instruments law, codified in chapter 4, title 43, Or. L. That this is the proper construction of the opinion is plain from the quotations later made in the deliverance of Mr. Justice Moore, setting out excerpts from the negotiable instruments act and holding in effect that the mention of requirements of the act excludes the operation of all other conditions, with the result that that legislation constitutes the sole and exclusive standard by which questions relating to negotiable paper must be adjudicated.

It is said in section 7855, Or. L., that any one placing his signature upon an instrument otherwise than as maker, drawer, or acceptor is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity. In section 7856 we learn that, where an individual not otherwise a party to the instrument places thereon his signature in blank before delivery, he is liable as an indorser. Section 7858 prescribes the obligation of the indorser who indorses without qualification. Among other things, he engages that on due presentment of the instrument it shall be accepted or paid or both, as the case may be, according to its tenor, and that, if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay. The time when the instrument must be presented is prescribed in section 7863, to the effect that, if it is not payable on demand, it must be paid on the day it falls due. We learn in section 7875 that--

"The instrument is dishonored by nonpayment when (1) it is duly presented for payment but payment is refused or cannot be obtained, or (2) presentment is excused and the instrument is overdue and unpaid."

Again according to section 7881--

"Except as herein otherwise provided, when a negotiable instrument has been dishonored by nonacceptance or nonpayment, notice of dishonor must be given to the drawer and to each indorser, and any drawer or indorser to whom such notice is not given is discharged."

It thus appears that the rule is that notice of dishonor must be given to an indorser, if he is to be held for payment of the amount due upon the instrument. The exception to the rule is found in two sections of the statute:

"Presentment for payment is not required in order to charge an indorser, where the instrument was made or accepted for his accommodation, and he has no reason to expect that the instrument will be paid if presented." Section 7872.

"Notice of dishonor is not required to be given to an indorser in either of the following cases: * * * (3) Where the instrument was made or accepted for his accommodation." Section 7907.

Section 7821 reads thus:

"An accommodation party is one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party."

The consequence of this definition is the abolition of all previous decisions to the effect that, if the holder knew a party had signed for accommodation only, he must be treated as a surety, so that indulgence to the real debtor would in some instances discharge the accommodation party. The law now is, as laid down in this section, that an accommodation party can claim no benefit as such, but he is liable according to the face of his undertaking, the same as if he were himself financially interested in the transaction.

It is said in the complaint that the plaintiff paid to Casey $1,000 upon two drafts, which transaction formed the consideration for all of the defendants making the note in controversy. The effort of the pleader in stating that the defendants made, executed, and delivered the promissory note is to hold Casey as a maker and so not entitled to notice of dishonor. But this legal conclusion which the plaintiff essays to fasten upon the instrument is controlled by the instrument itself quoted in the complaint, and the subsequent allegation of the complaint to the effect that the name of Casey appeared on the back of the note. Somers v Hanson, 78 Or. 429, 153 P. 43; Cranston v. California Insurance Co., 94 Or. 369, 185 P. 292. Under section 7855, supra, Casey was clearly an indorser, for his name appears in blank on the back of the note and there are no words whatever indicating his intention to be bound in any other capacity than as such indorser. In Overland Auto Co. v. Winters (Mo. App.) 180 S.W. 561, later affirmed...