Jackson v. Myers

• Decision Date: 21 January 1876
• Citation: Jackson v. Myers, 43 Md. 452 (Md. 1876)
• Parties: ELISHA JACKSON and PRISCILLA JACKSON, his Wife, v. JAMES A. MYERS and JACOB MYERS, Jr., trading as MYERS BROTHERS.
• Court: Maryland Court of Appeals

43 Md. 452

ELISHA JACKSON and PRISCILLA JACKSON, his Wife, v. JAMES A. MYERS and JACOB MYERS, Jr., trading as MYERS BROTHERS.

Court of Appeals of Maryland

January 21, 1876

APPEAL from the Superior Court of Baltimore City.

This was an action of assumpsit brought by the appellants against the appellees as endorsers of the following promissory note:

$900.Baltimore, June 21st, 1873.

Sixty days after date, Old Town Permanent Building Association, promises to pay to the order of Myers Brothers, nine hundred 00/100 dollars, with interest for value received, payable at the German Savings Bank.

Thomas H. Boyer, Prest.

Robt.L. Dickey, Secy.

A S. Miles, Treas.

G. S. Windsor,

Martin Zirpe,

John A. Stokes, Directors.

(Seal of Old Town Permanent Building Association.)

On the margin of the note was the memorandum:

"This note is issued on mortgage of Myers Brothers, left for record June 18th, 1872."

The words of the note italicised were written with a pen, and the words or portions not italicised were printed: and the circle around the words; "Seal of Old Town Permanent Building Association," as well as the words themselves, were printed; and it was proved that the said words and circle, and other printed portions, constituted a printed form used by the officers of the corporation in writing the promissory notes issued under Articles nine and eleven of the Constitution, and that many such notes had been issued and negotiated.The genuineness of the signatures to the note, as also of the endorsement of the defendants thereon, was proved by the plaintiffs.

It was admitted that the Old Town Permanent Building Association was incorporated on the 31st of August, 1872, under the Act of 1868, ch. 471, the general incorporation law of the State.Article IX of the Constitution of the Association was as follows:

Sec. 1.The Board may issue promissory notes on mortgage only, and must always be drawn to order of mortgagor.When a transfer of mortgage is executed, all notes must be lifted or new ones drawn to order of the new mortgagor, and in case of renewal of notes the new ones must also be drawn to order of the mortgagor, and mortgagor must in all cases endorse the notes when to his or her order.

Sec. 2.The Board may accept or negotiate promissory notes of any good, responsible building association or other corporation in good standing and credit, in payment for stock in this Association, and on terms to be arranged by the Board.

Article XI, was as follows:

The president, vice-president, secretary, treasurer, comptroller and directors shall constitute the Board for the transaction of such business as shall be entrusted to them by these Articles, a majority of whom shall constitute a quorum.They may hold special meetings whenever called by the president.They shall have the general supervision of the affairs of the Association, and the duties of its officers.The president, secretary, treasurer, and three directors, shall sign all promissory notes issued and authorized by the Association.They shall incur no expense, except providing for the necessary accommodations of their own and regular meetings, when authorized to do so by a vote of this Association.They shall judge of the sufficiency of all mortgages and other securities offered to this Association.

The plaintiffs proved by one Rennolds that in 1872the defendants told the witness, they had a good Building Association note--naming the Old Town Permanent Building Association as the maker--endorsed by themselves, which they wanted to negotiate; he thereupon informed Miss Priscilla Lynch(since married and one of the appellants) who upon his advice, authorized him to take the offered note; with her money he paid the defendants nine hundred dollars, less an agreed discount, and received the note from them and gave it to the said Priscilla.That the note so negotiated was dated June 18th, 1872, and was payable twelve months after date to the order of the defendants; was endorsed by them in blank, and was otherwise like the note sued on.A mortgage executed to the Old Town Permanent Building Association by the appellees, dated June 18th, 1872, and duly recorded, was offered in evidence, and admitted to be the same mortgage referred to in the margin of both of said notes.When the twelve months' note was about maturing, the appellees applied to Rennolds, as he testified, to have it renewed for sixty days; he saw Miss Lynch and she consented to take a renewal of the note with endorsement of the appellees; that one of the appellees brought him the note sued on, and the original or twelve months' note was surrendered.

The note sued on was presented at maturity, for payment, was dishonored and protested, and notice given by the notary to the appellees as endorsers, and payment duly demanded of them.Rennolds further testified that before the note matured he told the appellees that he intended, on behalf of Miss Lynch, to have it protested if it were not paid, and to hold them responsible; and that was why he had insisted upon their endorsing it; they never denied their obligation to pay the note; but after it was due, admitted they owed the money, promised to pay it, and said they were making negotiations to raise money for the purpose, and requested that no suit should be brought upon the note; and it was upon their request that suit was not sooner brought.

Thomas H. Boyer on the part of the defendants, testified that in 1872 and subsequently he was President of the Old Town Permanent Building Association; that the note dated June 18th, 1872, was issued to the defendants under Article IX of the Constitution on the mortgage offered in evidence; that no money was paid by the Association to the defendants, but the note was accepted by them as money.

The witness further testified, subject to exception, pointing to the printed impression on the note sued on, "that is the seal of the Association--that is our seal; we had no other seal; we recognized and adopted that seal when the note was filled up; that particular seal in that particular case was recognized as ours: all the officers who signed that note recognized that as our seal."

On cross-examination, the witness testified; "There was no action of the Board of Directors, that I know of, recognizing the seal; the only recognition of it was the issue of the notes with it upon them."

Prayers were offered on both sides, but their insertion is deemed unnecessary.The defence set up was that the note in question was to be regarded as a sealed instrument, and that therefore the defendants were not legally responsible on their mere endorsement; and this defence was sustained by the rulings of the Court.The verdict and judgment were for the defendants, and the plaintiffs appealed.

The cause was argued before BARTOL, C.J., STEWART, MILLER, ALVEY and ROBINSON, J.

William A. Fisher and Arthur W. Machen, for the appellants.

The writing in question, upon the evidence, was a promissory note, and not a specialty.The instruments, the Board of directors of the association were authorized to issue, were called promissory notes; and the definition of a promissory note is a promise in writing payable to order or bearer, and "signed but not sealed."Byles, ch. 2.Farther, it is expressly said that they are to be drawn to order; which cannot effectively be done unless the instrument is negotiable.It is required that they shall be drawn to the order of the party to whom they are issued, and that he must endorse them; and "the effect of endorsing is a conditional contract on the part of the endorser, to pay the immediate or any succeeding endorsee or bearer, in case of the acceptor or maker's default."Byles, ch. 1, page 2.If we look at the course of dealing, it is even more apparent that nothing capable of affecting the negotiability of the instrument could have been designed.In lieu of money, which ordinarily the borrower would be entitled to receive, the Association gave its note.That the note should be seen to have a substantial guaranty it bore in the margin a statement that it was issued on a mortgage executed by the payee.The mortgagor was required to endorse it.Issued in place of money, it was expected that it would be discounted, so as to enable the payee and endorser to obtain that use of money which was the only object he could have had in creating an encumbrance upon his property.Such, accordingly, was the consequence.The notes were negotiated like other commercial paper upon the combined credit of the two parties who made themselves responsible upon it by their signatures--the Building Association as maker, the borrowers as endorsers.In addition, the note had the strength derived from the fact that real property, of supposed equivalent value, was pledged for the payment of the debt represented by it-- not directly as in the common case of a mortgage and mortgage note, but circuitously by being made to the maker, as an indemnity against the consequences of the liability assumed in giving such a note.The effect of the whole was to make the endorser the party primarily liable, while the association stood as an accommodation maker, secured by the mortgage.

But is there any principle or "stubborn rule of law," which prevents this instrument from having the effect it was designed to have, and which the conduct of the parties shows that they all originally contemplated?On the contrary, it is a well recognized principle, that if a seal is added to an instrument which does not require it, and the presence of the seal operates to prevent the writing from having the effect it was intended to have, such seal may be treated as surplusage and disregarded.Hunter vs. Parker,7 M. & W., 322;Wood vs. Auburn &...