Harris v. Johnston
| Decision Date | 14 July 1893 |
| Citation | 55 N.W. 970,54 Minn. 177 |
| Parties | Jonathan N. Harris v. John Johnston et al |
| Court | Minnesota Supreme Court |
Submitted on briefs June 28, 1893.
Appeal by defendants, Andrew J. Smith and Frank E. Searle, from a judgment of the District Court of Ramsey County, John W Willis, J., entered against them February 23, 1893, for $ 2,155.20.
The defendants, Andrew J. Smith, Frank E. Searle, John Johnston Alvin R. Bushnell and William M. Bushnell, each owned an undivided fifth of Summit Park Addition to South St. Paul, in Dakota County. On April 4, 1888, William M. Bushnell was given a power of attorney by each of the other four part owners, authorizing him to sell the lots and to make and deliver warranty deeds of his interest in the property, and each of the four in his power of attorney authorized Wm. M Bushnell to sell and indorse any promissory notes that might be taken and secured by mortgages on any of said lots, and to assign the mortgages. Under these four several powers of attorney Wm. M. Bushnell on March 1, 1889, sold and conveyed seven of the lots to Lewis D. Petre, and took Petre's note for $ 2,000 and interest, with current exchange on New York City, secured by mortgage on the lots so sold. On March 25, 1889, Wm. M. Bushnell sold this Petre note and assigned the mortgage to the plaintiff, Jonathan N. Harris, and wrote on the back of the note as follows:
Plaintiff brought this action on this indorsement against these five parties. Searle and Smith alone answered, denying Wm. M. Bushnell's authority to make this indorsement on their behalf. Each claimed that the power of attorney made by him did not authorize Wm. M. Bushnell to make for him a joint contract with others, or to indorse his name on the paper of the other owners, or on any note not owned by him alone. A jury was waived. The court made findings and ordered judgment for plaintiff. It was entered, and these two defendants appeal.
Judgment reversed.
Lusk, Bunn & Hadley, for appellants.
The powers of attorney given by these defendants did not authorize Wm. M. Bushnell to make the contract he attempted to make in their names on the back of the note. These powers each authorize the attorney to sell and indorse any promissory notes that may be taken and secured by mortgages on any of said lots. This instrument is not an indorsement, it is a guaranty. A power given to an agent to indorse negotiable paper does not give him power to guaranty, nor bind the principal to any liability upon the paper, except it is conditional upon due presentment to the maker and due notice of dishonor to the indorser. Graul v. Strutzel, 53 Iowa 712; New York Iron Mine v. Citizens' Bank, 44 Mich. 344.
The great weight of authority is that a guaranty upon a promissory note cannot be construed to be an indorsement. Miller v. Gaston, 2 Hill, 188; Brown v. Curtiss, 2 N.Y. 225; Trust Co. v. Nat'l Bank, 101 U.S. 68; Lamourieux v. Hewit, 5 Wend. 307; Tuttle v. Bartholomew, 12 Met. 452; Belcher v. Smith, 7 Cush. 482; Snevily v. Ekel, 1 Watts & S. 203; Sample v. Martin, 46 Ind. 226.
But it will be claimed that this contract is a double one, a contract of guaranty and also one of indorsement, and that inasmuch as the agent did not have authority to make the guaranty and did have the authority to make the indorsement, therefore the unauthorized part of the contract may be stricken out or be disregarded and the parties be held to the indorsement. The persons making this claim seek to strike out a part of the contract and make it silent upon one branch of the agreement, and then turn around and say that because the contract is silent in that respect, therefore, the law will come in and imply that the parties intended to make a contract which is not only totally different but the reverse of what was expressed and stricken out. They seek to strike out the guaranty and the provision that the indorser shall be bound without presentation of the paper and notice of dishonor, and then by implication of law, substitute in their place the provision that the indorser shall be only bound upon presentation and notice of dishonor. This is not disregarding the excess or unauthorized part of the contract, but it is substituting a new and totally different contract in the place of the unauthorized one.
The power of attorney under which Wm. M. Bushnell acted in making the contract on the back of this note did not give him authority to make the contract he did make, for the reason that the powers given by the defendants are separate powers and do not authorize the agent to bind the principals jointly with any other persons. The contract sought to be enforced in this case is a joint contract wherein these two defendants unite with John Johnston, A. R. Bushnell and Wm. M. Bushnell. There is nothing in the power that authorized Bushnell either to sell the lots for these persons jointly with others or to indorse notes jointly with others, but the whole instrument tends to show that he was empowered to sell their interest in the land separately, and to indorse notes running to them separately and not jointly with others. If this authority had been strictly pursued in this respect, the appellant Smith would have been made liable only on his proportional part of the notes taken for the property. Whereas by signing his name jointly with the other defendants, the agent has rendered him liable upon the whole amount of the mortgage debt. Stainback v. Read, 11 Gratt. 281; First Nat. Bank v. Gay, 63 Mo. 33; Mechanics' Bank v. Schaumburg, 38 Mo. 228.
The conclusion of law of the court below is not supported by its findings of fact for the further reason, that it appears from the findings of fact that the note on which the action is brought is not negotiable, because it provides for the payment of $ 2,000 and interest with current exchange on New York City. This court has already held that a note providing for the payment of a reasonable attorney's fee in case suit is instituted for its collection, is not negotiable because the amount is uncertain, (Jones v. Radatz, 27 Minn. 240,) although some authorities hold that such a note is negotiable. And there is just as much reason for holding the note providing for the payment of exchange to be non-negotiable, as there is for holding one providing for attorney's fees to be non-negotiable. The important thing is to have some rule upon the subject fixed and established, and when such rule is fixed it should, if possible, be governed by some reason, and the rules governing commercial paper should be founded upon some principle and be harmonious with each other.
S. E. Hall and Young & Lightner, for respondent.
It may be conceded that the power to sell and indorse did not include power to guaranty payment. But if the agent had power to indorse, and did indorse, although he also attempted to guaranty, the indorsement is binding on the principal, though the attempted guaranty must be rejected. Reed v. Seymour, 24 Minn. 273; Alexander v. Alexander, 2 Ves. 644; Warner v. Howell, 3 Wash. C. C. 12.
The simple question then is: Does the writing include the contract of indorsement? It seems to us that it does. Whatever may be the decisions in other states, the question is settled in this court by the reasoning in Maine Trust & Banking Co. v. Butler, 45 Minn. 506.
A guaranty of payment merely, will exclude the contract of indorsement. But in this case, the writing in terms expresses both a guaranty and the contract of indorsement. Harbord v. Cooper, 43 Minn. 466.
Whether a payee who signs his name to a simple guaranty of payment is liable both as guarantor...
To continue reading
Request your trial