Ger.-Am. Sav. Bank of Burlington v. Hanna

• Decision Date: 13 June 1904
• Parties: GERMAN-AMERICAN SAV. BANK OF BURLINGTON v. HANNA ET AL.
• Court: Iowa Supreme Court

124 Iowa 374

100 N.W. 57

GERMAN-AMERICAN SAV. BANK OF BURLINGTON

v.HANNA ET AL.

Supreme Court of Iowa.

June 13, 1904.

Appeal from District court, Des Moines County; Jas. D. Smyth, Judge.

In September, 1889, M. L. Wherry executed a promissory note for the sum of $2,500, payable to her father, John Hanna. She took the note to him, and he indorsed it, “Payment guaranteed,” and returned it to her. It was afterwards and before maturity deposited with the plaintiff as collateral security for the indebtedness of J. W. Wherry, the husband of the maker. It was filed as a claim against the estate of John Hanna and allowed. The executors appeal. Affirmed.J. T. Illick, for appellants.

Power & Power, for appellee.

SHERWIN, J.

M. L. Wherry, the maker of the note, testified that at the request of her husband, J. W. Wherry, she took the note in suit to her father, told him that her husband wished him to indorse it, and that her father went into the house, and, after a short time, returned and handed her the paper, and that she afterwards delivered it to her husband. The husband testified that he received the note from his wife, indorsed it, and pledged it to the bank. It is doubtful whether the objections made to the introduction of this testimony were sufficient to raise the question of the competency of the witnesses, but, conceding that they were, we think the witnesses were not incompetent under the statute (Code, § 4604). They were not parties to the action, nor was M. L. Wherry a person interested in the event thereof, within the meaning of the statute. True, she was the daughter of John Hanna, and the maker of the note, and may have had an interest in the question to be decided; but such an interest would not disqualify her under the common law, nor under the statute. The disqualifying interest must be in the event of the case itself, and not in the question to be decided. The “liability to a like action, or his standing in the same predicament with the party, if the verdict cannot be given in evidence for or against him, is an interest in the question only,” and does not exclude the witness. 1 Greenleaf on Evidence (13th Ed.) § 389. This has been held to be the rule in this state under the statute. “The true test of the interest of a witness is that he will either gain or lose by the direct legal operation or effect of the judgment, or that the record will be legal evidence for or against him in some other action.” Wormley v. Hamburg et al., 40 Iowa, 22. If the plaintiff's claim was allowed against the estate, Mrs. Wherry's liability on her note would be none the less certain, for she would then be liable to the estate, instead of to the bank; hence the judgment or allowance of the claim could not affect her in any way. See, also, Goddard v. Leffingwell, 40 Iowa, 249. If M. L. Wherry was not disqualified as a witness, her husband certainly was not.

It is contended that the note was not protested, and that it was not shown that a failure to comply with the law in this respect worked no injury to the defendants, and, further, that other notes and mortgages were received as security for the same debt, and that the plaintiff was not diligent in its efforts to realize on them. The note, in terms, provided that “the indorsers severally waive presentment for payment, protest and notice of protest, and nonpayment of this note.” It is a familiar rule that the provisions of the note itself form a part of the contract of indorsement, “and, if a waiver is put into the body of the instrument, it enters into and forms a part of the contract of every one who signs his name to the paper, whether as a drawer or indorser.” Tied. Com. Paper, § 363; 2 Dan. Neg. Inst. § 1092; Phillips v. Dippo, 93 Iowa, 35, 61 N. W. 216, 57 Am. St. Rep. 254;Iowa Valley State Bank v. Sigstad, 96 Iowa, 491, 65 N. W. 407.

This brings us to the vital question in the case, which is whether John Hanna was an indorser with enlarged liability, or simply a guarantor. If he was an indorser in a strict commercial sense, the appellee's claim was properly allowed. If he was only a guarantor, it should not have been allowed, under the evidence before the court. The appellants rely upon Carter v. City of Dubuque. 35 Iowa, 416, as sustaining their contention that the contract was one of guaranty only, and that it was not negotiable. The Dubuque Central Improvement Company issued a bond payable to the city of Dubuque or bearer, and the city became a guarantor of the bond. The defense was that the guaranty was beyond the power of the city and void, and this was sustained. The statement in the opinion that “the decided weight of authority is that a contract of guaranty is not negotiable” was foreign to any issue in the case. In Robinson v. Lair, 31 Iowa, 10, the defendant executed a promissory note to Warder, Mitchell & Co., which was by them indorsed as follows: “For value received we hereby guarantee payment of the within note, and waive demand and notice of nonpayment thereof.” It was contended that the writing on the back of the note did not convey the title of the note to the plaintiff, because it was not an indorsement of the note. In disposing of this point it was said: “We confess ourselves unable to give effect to the contract of guaranty of payment,...