Iowa Valley State Bank v. Sigstad

• Decision Date: 14 December 1895
• Parties: IOWA VALLEY STATE BANK v. SIGSTAD ET AL.
• Court: Iowa Supreme Court

96 Iowa 491

65 N.W. 407

IOWA VALLEY STATE BANK

v.SIGSTAD ET AL.

Supreme Court of Iowa.

Dec. 14, 1895.

Appeal from district court, Wright county; D. R. Hindman, Judge.

Action on a promissory note. Trial to jury as to defendant Bangs. Verdict for plaintiff by direction of the court, and defendant Bangs appeals. Affirmed.Ladd & Rogers, for appellant.

W. E. Bullard and Nagle & Nagle, for appellee.

KINNE, J.

1. The petition alleges that the defendants Sigstad executed and delivered to the defendant Bangs their promissory note for $225, dated October 23, 1891, and due October 23, 1892, and drawing 8 per cent. interest; that Bangs sold and delivered the note to the Valley Bank, and said bank sold the same to the plaintiff; that Bangs, when he sold the note, guarantied the payment of the same. Other necessary allegations are made as to the incorporation of plaintiff, that the note is unpaid, etc. The note reads as follows: “$225. Belmond, Iowa, Oct. 23, 1891. On or before the 23rd day of October, 1892, I, we, or either of us, promise to pay to B. M. Bangs, or bearer, two hundred and twenty-five ($225) dollars, value received, payable at the office of Jamison, at Belmond, with interest at the rate of 8 per cent. per annum, from date, payable annually. Should any of the interest or principal not be paid when due, it shall bear interest at the rate of 8 per cent. per annum, and a failure to pay any of said interest within five days after due shall. at the option of said obligee or his legal representatives, cause the whole note to become due and collectible at once. The makers, indorsers and guarantors of this note agree to pay all expenses of collection, including attorney's fee, if suit is brought hereon, and hereby waive presentment of payment, notice of nonpayment, protest, and notice of protest, and due diligence in bringing suit against any party thereto, and sureties consent that the time of payment may be extended without notice thereof. [Signed.]” On the back of the note the following appears: “Pay Iowa Valley Bank, or order. Payment guarantied. Belmond, Iowa. B. M. Bangs.” “Pay Iowa Valley State Bank. Iowa Valley Bank, by G. H. Richardson.” To the petition the defendant Bangs pleads three defenses: (1) He denies that he guarantied the payment of the note, and avers that he indorsed the same in blank for the sole purpose of transferring the ownership thereof, and that when he thus indorsed it no words were on the back of the note except his name; that at said time it was the understanding and agreement that said indorsement was without recourse, and defendant was not to be held for its payment, and that plaintiff had notice thereof before acquiring ownership of the note. (2) He pleads that the note has been materially altered, without his knowledge or consent, since he indorsed it, by placing above his signature the words, “Pay Iowa Valley Bank, or order. Payment guarantied. Belmond, Iowa,”--and said note is therefore void. (3) That when said note became due there was no demand made on him for payment, no notice of nonpayment by the makers thereof, and no steps were taken to collect the same or to reduce it to judgment until long after it became due; that when it became due the owner and holder, the makers, and defendant were all residents of Wright county, Iowa, and said makers then had property in said county, not exempt from execution, sufficient to have paid the note and interest thereon, and for some time after same was due said property was still in said county, and subject to execution; that the makers have since become insolvent. He then avers that, if proper diligence had been exercised by the plaintiff, the whole note and interest could have been made from the makers thereof; that if he is now compelled to pay it, he will be remediless, and is therefore damaged to the full amount of said note. Plaintiff demurred to the second division, because the words claimed to have been written over the defendant's signature do not constitute a material alteration, and do not affect the defendant's liability; and to the third division, because the matters therein pleaded constitute no defense, for the reason that demand and notice of nonpayment were waived in the body of the note, which by the indorsement became a part of the contract of indorsement, and a failure to sue the makers was likewise waived. This demurrer was sustained, and an exception taken. Upon the issues, as presented by the petition and the first division of the answer, a trial was had to a jury, and at its conclusion the court, on motion of plaintiff's counsel, withdrew the case from the jury, and rendered a judgment against defendant Bangs for the amount claimed.

2. The first question presented is as to whether the writing of the words, “Pay Iowa Valley Bank, or order. Payment guarantied,”--on the back of the note above defendant's signature is a material alteration? The rule in this state is that any alteration which does not give the instrument a different legal effect is not a material alteration, and will not avoid it. 1 Greenl. Ev. § 565; Robinson v. Insurance Co., 25 Iowa, 430;Robinson v. Reed, 46 Iowa, 219;Briscoe v. Reynolds, 51 Iowa, 673, 2 N. W. 529;Rowley v. Jewett, 56 Iowa, 492, 9 N. W. 353;Starr v. Blatner, 76 Iowa, 356, 41 N. W. 41. Did the writing of the words set out give to the indorsement of the defendant a different legal effect? Did they in any way increase or affect his liability as an indorser which he entered into when he wrote his name on the back of the note? If not, then defendant cannot complain. It will be observed that the body of the note contained this provision: “The makers, indorsers and guarantors of this note * * * hereby waive presentment of payment, notice of nonpayment, protest, and notice of protest, and due diligence in bringing suit against any party thereto.” When the defendant put his name on the back of the note, without more, he became a party to the paper, and was bound by all of its provisions. These provisions of the note then formed a part of his contract of indorsement, and he was as fully bound by them as he could have been had they been placed upon the back of the note, and his name then been written under them. Tied. Com. Paper, § 363; 2 Daniel, Neg. Inst. § 1092; Lowry v. Steele, 27 Ind. 170;Bryant v. Lord, 19 Minn. 405 (Gil. 342); Bank v. Ewing, 78 Ky. 266;Bryant v. Bank, 8 Bush, 43; Smith v. Lockridge, Id. 431; Philips v. Dippo (Iowa) 61 N. W. 217. Now, this indorsement in blank of this note by the defendant authorized the receiver of the note, or any bona fide holder of it, to write over the defendant's name an indorsement in full, to himself or to another, or any contract not inconsistent with the character of such an indorsement. 1 Daniel, Neg. Inst. (3d Ed.) § 694. The indorser, in this case, being the payee of the note, the case is not within the provisions of the statute making an indorser in blank a guarantor of the paper. Code, §§ 2089-2091.

Now, to determine whether the matter written over defendant's name was consistent with the obligation he had assumed as an indorser, we must look to the body of the note, as well as to the liabilities which the law merchant attaches to one who indorses a note in blank. Under his contract as an indorser, he became liable to pay the note when it matured, in case the makers failed to do so. He was not entitled to a demand, or to notice of nonpayment, protest, or notice of protest, nor could he require diligence on the part of the holder in the collection of the note from the makers. All these preliminary steps, which might have been necessary, under the law merchant, to hold defendant as an indorser, had been waived in the body of the note, which, as we have seen, became a part of his contract of indorsement, and fixed his liability to pay absolutely on the failure of the makers to pay. It...