Hunter v. Harris

• Decision Date: 26 November 1912
• Parties: HUNTER v. HARRIS.
• Court: Oregon Supreme Court

127 P. 786

63 Or. 505

HUNTER v. HARRIS.

Supreme Court of Oregon

November 26, 1912

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

This is an action by W.B. Hunter against D.H. Harris for contribution as cosurety on a note. From a judgment of nonsuit, plaintiff appeals. Reversed and remanded.

The complaint alleges, in substance, that Arthur D. Hulse, with plaintiff and defendant, executed to J.W. Cook their promissory note for the sum of $270, which plaintiff and defendant signed as accommodation makers, for the purpose of lending their names and giving credit to the instrument; that plaintiff signed his name on the face of the note; that defendant, in order to suit his convenience, placed his signature on the back of the same with the intent to become liable as an accommodation maker; that Cook obtained a judgment against plaintiff for a balance of the note and costs; that plaintiff paid the same, which amounted to the sum of $229.10. Defendant pleads, in effect, that he signed the note on the back thereof as an indorser, without consideration, and became liable thereon only as such; that he was not notified of the presentment, nonpayment, or dishonor of the note at the maturity thereof. Upon the trial plaintiff, W.B. Hunter, testified, in substance, that Hulse wanted him to go his security; and he told Hulse to get Harris on the note and then he would sign it; that he paid the judgment obtained, and has not been reimbursed. Arthur D Hulse testified, on behalf of plaintiff, to the effect: That after Hunter signed the note he took it to Harris, who said "There is no place on the face to sign it; where will I sign it?" That, upon being advised to do so, he signed it upon the back. Hulse stated that he wanted to buy a span of horses, and that Hunter said he would sign for them if Harris would and that the latter agreed to sign the note if Hunter would.

The note was introduced in evidence, a copy of which, with indorsements, is as follows: "$270.00. Lostine, Oregon July 6, 1908. Six months after date, without grace, I promise to pay to the order of J.W. Cook, at Lostine, Oregon, two hundred and seventy dollars, in gold coin of the United States of America, with interest thereon in like gold coin at the rate of 10 per cent. per annum from date until paid, for value received. Interest payable when due, and in case suit or action is instituted to collect this note, or any portion thereof, I promise to pay such additional sum as the court may adjudge reasonable as attorney's fees in said suit or action. [ Signed] Arthur D. Hulse. W.B. Hunter." On the back: "[Signed] D.H. Harris. July 7, 1908, received on within note, $41.00, May 6, 1909, received on within note $100.00."

At the close of plaintiff's case, counsel for defendant moved the court for a nonsuit, on the grounds: (1) That there was no evidence to show that the plaintiff and defendant were jointly liable, and hence that defendant is not liable to contribution; (2) that there was no contract as between plaintiff and defendant that they were to be jointly liable; and (3) that there was no evidence to support the allegation of the complaint to the effect that defendant signed on the back of the note with intent to become liable as an accommodation maker. Counsel for defense stated that defendant would stand upon the motion. Counsel for plaintiff moved the court for a directed verdict. The court granted defendant's motion for a nonsuit.

Thos. M. Dill, of Enterprise, for appellant.

A.S. Cooley, of Enterprise (Sheahan & Cooley, of Enterprise, on the brief), for respondent.

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

The defendant, Harris, who was an apparent stranger to the note, signed the instrument on the back thereof, prior to its delivery, without receiving value therefor, and for the purpose of lending his name to Hulse. Under the plain definition in section 5862, L.O.L., he was an accommodation party. So, also, was Hunter. For a determination of this case, we should, if possible, look to our negotiable instruments law, which was intended by the Legislature to be a complete and comprehensive rule upon the subject. That act provides, in part, as follows: 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. Section 5862, L.O.L. A person placing his signature upon an instrument otherwise than as a 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. Section 5896, Id. Where a person, not otherwise a party to an instrument, places thereon his signature in blank before delivery, he is liable as indorser in accordance with the following rules: (1) If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties; (2) if the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer; (3) if he signs for the accommodation of the payee, he is liable to all parties subsequent to the payee. Section 5897, Id. The person "primarily" liable on an instrument is the person who by the terms of the instrument is absolutely required to pay the same. All other parties are "secondarily" liable. Section 6023, Id. As respects one another, indorsers are liable prima facie in the order in which they indorse; but evidence is admissible to show that as between or among themselves they have agreed otherwise. Joint payees or joint indorsees who indorse are deemed to indorse jointly and severally. Section 5901, Id.

It has been decided by the court that, under the negotiable instruments law, an accommodation maker is primarily liable as a principal debtor notwithstanding an indulgence given to the indorser or drawer for whose benefit he became a party to the instrument. Lumbermen's National Bank v. Campbell, 121 P. 427; Cellers v Meachem, 49 Or. 186, 89 P. 426, 10 L.R.A. (N.S.) 133, 13 Ann.Cas. 997; Murphy v. Panter, 125 P. 292; White v. Savage, 48 Or. 604, 87 P. 1040. It is said, in regard to such a party (7 Cyc. 664), that, "where the note is payable to a designated person or order, such signature before the payee has indorsed the paper is anomalous on its face and has been variously held to be that of an indorser, maker, surety, or guarantor. This apparent divergence of opinion is due in large part to the difference in the questions presenting themselves for decision in the different cases." Respecting the liability of a party who, as an apparent stranger to a negotiable instrument, writes his name on the back of it, as to whether he is a joint maker, a guarantor, or an indorser, Mr. Justice Moore, speaking for the court in Lumbermen's National Bank v. Campbell, supra, at page 428 of 121 Pac., said: "The question has generally been determined by considering the intention of the parties at the time the signature was thus affixed. The weight of authority seems to support the rule that if, when the instrument was issued, the name was so written for the purpose of procuring credit for the maker, or if the person so signing received part of the consideration for which the obligation was given, he is regarded as an original promisor. *** As between the parties themselves, parol evidence is admissible to show that the liability of an irregular indorser is not that which it appears from his signature, but depends upon the intention of such parties. 1 Am. &...