Johnston v. Schnabaum

• Decision Date: 20 April 1908
• Citation: 109 S.W. 1163,86 Ark. 82
• Parties: JOHNSTON v. SCHNABAUM
• Court: Arkansas Supreme Court

109 S.W. 1163

86 Ark. 82

JOHNSTON v. SCHNABAUM

Supreme Court of Arkansas

April 20, 1908

Appeal from Randolph Circuit Court; John W. Meeks, Judge; reversed in part.

Judgment reversed and affirmed and cause dismissed.

Appellants pro se.

The Bank of Maynard is not liable. It is shown in evidence that its indorsement on the note was without consideration to it and was made for the purpose of collection only. Parol evidence was admissible to show the character of the indorsements, why and for what purpose they were made. 2 Enc. of Evidence, 521, 537, 255; 27 Ark. 329; 15 Ark. 372; 29 Ark 501; Joyce on Defenses to Com. Paper, §§ 212, 255.

J. B McCaleb and Witt & Schoonover, for appellee.

The fact, if true, that the Bank of Maynard received no consideration for its indorsement is no defense except as against the accommodated party. Joyce on Defenses to Com. Paper, 279. It appears that the Redwine indorsement was made without authority, and since the Bank guarantied that indorsement it should be held liable for that reason. 3 Am. & Eng. Enc. of L. 831. One who indorses a note after maturity is liable on it as an indorser to his immediate indorsee and to subsequent holders. 7 Cyc. 826.

OPINION

MCCULLOCH, J.

J. L. Johnston and G. H. Counts, together with G. S. Johnston, now deceased, executed to one Redwine as guardian of an infant their negotiable promissory note for the sum of $ 197 with interest from date, and at or before maturity of the note Redwine delivered it, bearing his blank indorsement, to the Bank of Maynard for collection and deposit of the proceeds to his credit. Appellants J. L. Johnston and Counts were sureties on the note for G. S. Johnston, the principal obligor. Subsequently, and after the maturity of the note, the Bank of Maynard, which was located at Biggers, Randolph County, Arkansas, received a verbal message from appellee, Schnabaum, requesting the bank to send the note to the Randolph County Bank at Pocahontas, and that he (Schnabaum) would "take it up."

The Bank of Maynard made the following indorsement on the back of the note: "Previous indorsement guarantied. Pay to the order of any bank or banker. (Signed) Bank of Maynard, by J. T. Talbert, cashier."

The note was then fowarded to the Bank of Randolph County for collection; appellee paid the full amount of the note and interest to the bank, and the note was delivered to him without further indorsement thereon, and the amount so paid was sent by the collection bank to the Bank of Maynard, and the latter in turn paid it over to Redwine.

Appellee held the note a year or longer, and then instituted this action on the note against the appellants, J. L. Johnston and Counts, as makers and the Bank of Maynard as indorser. Redwine was also sued, but the action was dismissed as to him.

Appellee testified that he instructed Robinson, the person by whom he sent the message to the Bank of Maynard, to request the bank to send the note to the Bank of Randolph County, but not to mark it paid, and that he would "take it up as received and would carry it until Johnston could pay it off." His testimony shows further that he did not, in making the payment, intended to discharge the debt, but intended to purchase the note and hold it for payment by the makers.

Robinson, in his testimony, denied that appellee instructed him to request the Bank of Maynard not to mark the note paid or that he expected to hold the note as secured. He testified that appellee only told him to request the bank to send the note to the Bank of Randolph County, and that he would "take it up." This, the evidence shows, was the only message ever delivered to the bank, and that the note was forwarded in response to this message.

The court instructed the jury that if the Bank of Maynard made the indorsement in question, and the note had not been paid to appellee, the bank was liable. This was equivalent to a peremptory direction to the jury.

We think that, according to the undisputed evidence, the bank was not liable.

So far as the guaranty of the previous indorsement of Redwine is concerned, that amounted only to a guaranty of the genuineness of the indorsement, and did not render the bank liable on the note. The other part of the indorsement was unrestricted, and, unless explained, would render the indorser liable. But it is...