Heaton v. Dickson

• Decision Date: 30 December 1910
• Citation: 153 Mo. App. 312,133 S.W. 159
• Parties: HEATON v. DICKSON et al.
• Court: Missouri Court of Appeals

133 S.W. 159

153 Mo. A. 312

HEATON v. DICKSON et al.

St. Louis Court of Appeals. Missouri.

December 30, 1910.

1. BILLS AND NOTES (§ 242) — PROMISSORY NOTES—CO-MAKER—INDORSER.

If one who is neither a payee in the note nor indorsee thereof signs his name on its back before delivery, he becomes prima facie a co-maker and not an indorser.

2. BILLS AND NOTES (§ 426) — PAYMENT BY CO-MAKER — EFFECT — CONTRIBUTION.

Payment of a note by a co-maker operates to extinguish its obligation and confers on him the right to sue the other co-makers for contribution.

3. BILLS AND NOTES (§ 260) — PROMISSORY NOTES—PAYMENT BY INDORSERS—ACCOMMODATION INDORSERS—SUBROGATION.

The rule that an indorser of a note who pays the same thereby acquires title thereto and may sue the maker on the note itself, applies to accommodation indorsers.

4. EVIDENCE (§ 423) — PAROL EVIDENCE AFFECTING WRITING—PROMISSORY NOTE—ACCOMMODATION INDORSEMENT.

In an action on a note by one claiming to be an accommodation indorser and to have paid the note, parol evidence was competent to show that he signed the note as an accommodation indorser.

5. BILLS AND NOTES (§ 223)—"INDORSER."

While the word "indorser" is frequently used in a popular way to designate a maker who subscribes his name on the back of a note, as well as an indorser in the technical sense of the term, yet when the parties to the contract testifying that the indorsement was an accommodation one only appear to be intelligent business men knowing the technical import of the term, the trial court may infer that the term was understandingly used.

6. APPEAL AND ERROR (§ 930) — REVIEW — QUESTIONS OF FACT—PRESUMPTIONS IN AID OF VERDICT.

On appeal, all reasonable inferences from the testimony and from the appearance and conduct of the witnesses must be considered in aid of the verdict.

7. TRUSTS (§ 151)—INTEREST OF CESTUI QUE TRUST—REMEDIES OF CREDITORS.

Where the defendant is a nonresident, and has no property in the state subject to legal process, but is possessed of an equitable estate, plaintiff may seek in equity to sequestrate the income therefrom without first obtaining a

judgment at law and endeavoring to collect the same.

8. WILLS (§ 440)—CONSTRUCTION—INTENT.

In construing a will the court must ascertain testator's intention from the provisions of the whole document.

9. TRUSTS (§ 141) — CONSTRUCTION — LIMITATIONS — PRESUMPTIONS.

While one may settle an estate in trust with an equitable use to another for life, with a limitation against alienation and free from the claims of creditors, the presumption is that he has not done so unless either express words to that effect are set forth or a clear and undoubted intention to the same end is manifested in the will.

10. TRUSTS (§ 151)—ACTIVE TRUSTS—RIGHTS OF CREDITORS.

Creditors of a cestui que trust are not inhibited from proceeding against the income from the trust estate merely because the trust is an active one.

11. TRUSTS (§ 151)—RIGHTS OF CREDITORS— SPENDTHRIFT TRUSTS.

Testator directed that his wife and children or their heirs should receive quarterly from his executor one-fifth each of the net income from the rental of his real estate, etc. Held, that no spendthrift trust was created, and the income of one of the daughter's share was subject to the rights of her creditors.

Appeal from St. Louis Circuit Court, James E. Withrow, Judge.

Bill by Warren Heaton against Amanda V. Dickson and another. Decree for plaintiff, and defendants appeal. Affirmed.

Harry H. Haeussler and Chas. J. Macauley, for appellants. W. Christy Bryan and O. L. Cravens, for respondent.

NORTONI, J.

This is a proceeding in equity in the nature of a creditor's bill or an equitable garnishment. The finding and decree were for plaintiff, and defendant prosecutes the appeal.

Defendant Amanda V. Dickson is the beneficiary of a trust estate, settled to her use by the provisions of her father's will, and the important question for decision relates to a construction of that instrument. But there are other matters urged relating to plaintiff's right of recovery which should be first examined and disposed of. The bill is in two counts, each of which declares upon a promissory note, executed by defendant in favor of one Rush, payee, to whose title plaintiff succeeded and of which notes he is now the holder. We will consider the matters urged against plaintiff's right of recovery on the note described in the first count only, as the argument relating to that sued upon in the second does not merit discussion in the opinion. It appears by the note declared upon in the first count that defendant executed the same to J. M. Rush on September 29, 1899. By its provisions, defendant promised to pay Rush $291.40 three months after date, with interest from date at the rate of 8 per cent. per annum until paid. On its face, the note recites that it was given for value received, and is negotiable and payable without defalcation or discount; in other words, the note is in the usual form of a negotiable promissory note. Plaintiff Warren Heaton is an accommodation indorser thereon, for it appears that the signed his name on the back of the note as such before it was delivered. Afterwards, plaintiff as such indorser was required to pay the note, which he did, and he now prosecutes this suit against the maker of the note on the note itself, which he acquired by operation of law by discharging his independent obligation of indorser.

It is first argued that the suit on the note may not be maintained by plaintiff for the reason it appears he signed his name on the back of the instrument before delivery. It is said in such circumstances plaintiff is a co-maker of the note instead of an indorser, and that therefore, upon paying the note, he extinguished the indebtedness vouchsafed therein, and acquired the sole right to sue defendant for contribution on the implied undertaking which always obtains between the parties in such circumstances. The notes in suit antedate our negotiable instrument law of 1905, and with that legislation we are not concerned. Under the rule of decision in this state pertaining to the law merchant, there can be no doubt of the general proposition that if one, who is neither a payee in the note nor indorsee thereof, signs his name on its back before delivery, he thus becomes prima facie a co-maker of the note and not an indorser. Boyer v. Boogher, 11 Mo. App. 130; Rossi v. Schawacker, 66 Mo. App. 67; Oexner v. Loehr, 106 Mo. App. 412, 80 S. W. 690; Schmidt Malting Co. v. Miller, 38 Mo. App. 251; Otto v. Bent, 48 Mo. 23, 26. It is true, too, that the payment of a note by a co-maker operates to extinguish its obligation and exclude an action thereafter on the note itself unless reissued. In other words, payment of the note by a co-maker confers a right upon him to sue other co-makers solely for a contribution of their proportionate part of the amount of his outlay in that behalf not exceeding the amount of the note, interest and costs. Curry v. Lafon, 133 Mo. App. 163, 113 S. W. 246; Williams v. Gerber, 75 Mo. App. 18. But though such be the rule as to a co-maker, it is not so with an indorser. Contribution alone lies between comakers because of the contractual privity which obtains between them and there is no such privity between the maker of a note and a mere indorser though there be an equitable right in the indorser to be subrogated with respect to collateral deposited by the maker of the note for its security. The undertaking of the indorser is wholly independent of that of the maker of the note, for by it he renders himself independently liable to the holder of the instrument and his right to subrogation inures on payment of the note through the privity between him and the holder of the note and collateral. It is therefore the rule that an indorser who pays the note acquires title thereto by such payment, and may, of course, sue the maker on the note itself. The principle obtains alike to accommodation indorsers, for their rights and liabilities are the same as others. Fenn v. Dugdale, 40 Mo. 63; 7 Cyc. 1020, 1021. The precise question for decision with respect to this matter, therefore, is as to whether plaintiff appears to be a co-maker or an indorser of the note in suit. Parol evidence is competent in the circumstances of the case to show the relation plaintiff assumed, and the rule above stated as to one who is neither payee nor indorsee, signing his name on the back of the note before delivery, pertains only to the prima facie liability of such party. But it is said unless an express understanding appears that the party signed his name as indorser, he will be treated, and his rights determined, as though he is a co-maker, for such is the obligation which the law imports. Oexner v. Loehr, 106 Mo. App. 412, 80 S. W. 690; Otto v. Bent, 48 Mo. 23, 26; Rossi v. Schawacker, 66 Mo. App. 67; Boyer v. Boogher, 11 Mo. App. 130; Schmidt Malting Co. v. Miller, 38 Mo. App. 251. The express understanding referred to, lying as it does, in parol testimony, is peculiarly a matter within the province of the trial court and it must be viewed in this instance from the standpoint of after-judgment affirming such express understanding, for the court found the issue for plaintiff as though such express understanding was had. If there is substantial evidence to support it, the judgment with respect to that matter should be affirmed. Both plaintiff and Rush, the payee of the note pointedly testified that plaintiff affixed his signature on the back of the note as accommodation indorser only, and no one gave testimony to the contrary. Indeed, plaintiff and Rush, the payee, to whom the note was originally made, were the only witnesses who spoke upon this subject at all. Plaintiff and Rush were the sole parties to the contract, if it were one of indorsement, for, in this case, such is an independent undertaking between the indorsor and the payee, Rush, to whom the...