Kent State Sav. Bank v. Campbell

• Decision Date: 05 February 1929
• Docket Number: 39431
• Citation: 223 N.W. 403,208 Iowa 341
• Parties: KENT STATE SAVINGS BANK, Appellee, v. IRA CAMPBELL, Appellee; ROSS HURD REED, Appellant
• Court: Iowa Supreme Court

223 N.W. 403

208 Iowa 341

KENT STATE SAVINGS BANK, Appellee, v. IRA CAMPBELL, Appellee;

ROSS HURD REED, Appellant

No. 39431

Supreme Court of Iowa, Des Moines

February 5, 1929

REHEARING DENIED MAY 17, 1929.

Appeal from Union District Court.--A. R. MAXWELL, Judge.

Action at law upon a promissory note against the defendant Campbell as maker, and the defendant Reed, as indorser, thereof. Only the defendant Reed answered. His defense was, in substance that he indorsed the same for the purpose of transferring title, and under an agreement that it should be without recourse on him. He also averred that he never had any interest in the note, although he was payee thereof, and that there was no consideration for his indorsement. He testified to an oral agreement to that effect. At the close of the testimony, all his evidence of an oral agreement was stricken, upon motion of the plaintiff. A motion by plaintiff for a directed verdict was likewise sustained. The defendant has appealed.

Affirmed.

Wisdom & Wisdom, for appellant.

Camp & Camp, for plaintiff, appellee.

EVANS, J. ALBERT, C. J., and FAVILLE, KINDIG, and WAGNER, JJ., concur.

OPINION

EVANS, J.

I.

The record herein is somewhat confusing. The note in suit was for $ 1,500, drawn to the defendant Reed, as payee. It was apparently indorsed in blank by the defendant Reed to his brother, G. L. Reed, and by G. L. Reed to this plaintiff. G. L. Reed died before the bringing of this suit. The original note, representing the original indebtedness, was given on March 1, 1921, and negotiated to the plaintiff on March 3d of the same year. It was renewed many times in its original form. The note in suit is the last renewal thereof. This defendant testified that the original agreement was repeated at the time of every renewal.

At the early stage of the trial, and while the defendant was putting in his evidence, the trial court appeared to be of the opinion that the oral evidence was admissible. This view would naturally be induced by a consideration of our earlier cases on the subject. After the defendant rested, the court came to the conclusion that oral evidence was not admissible to contradict the blank indorsement and its legal effect, and it ruled accordingly. This ruling was in accord with our holding in Porter v. Moles, 151 Iowa 279, 131 N.W. 23, wherein we held that the Negotiable instrument Act had defined the legal effect of a blank indorsement of a negotiable instrument, and that the legal effect of such indorsement could not be contradicted by oral evidence. The provisions of the Negotiable Instrument Act which are especially applicable are Sections 63 and 66 thereof (Sections 9523 and 9526, Code of 1924). These are as follows:

"9523. When person deemed indorser. A person placing his signature upon an instrument otherwise than as 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."

"9526. Liability of general indorser. Every indorser who indorses without qualification, warrants to all subsequent holders in due course:

"1. The matters and things mentioned in Subdivisions 1, 2, and 3 of the next preceding section; and

"2. That the instrument is at the time of his indorsement valid and subsisting. And, in addition, he engages that on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it."

In short, the legal effect of a blank indorsement is to create a written contract, which incorporates the provisions of Section 66 of the act.

It must be said, therefore, that the trial court ruled correctly in rejecting the oral evidence.

II. It should be added here that the appellant does not challenge the correctness of the rule of law thus adopted by the district court. His complaint is directed to the irregularity of the procedure leading up to such ruling. His contention is that adequate objections were not made when the evidence was introduced, and that much of the evidence was received without objection at all. Most of the objections made by the appellee were in the form of motions to strike the answers of the witness. The contending claim is that the objection should have been made to the question. The infirmity of this contention is that it is not available to an appellant here. The contention could properly have been urged in the district court, and could have been addressed to its discretion. If the contention had been accepted by the district court, and if the plaintiff had been appellant, it would be confronted here with the inadequacy of its objections, if such. But where the ruling complained of is a correct one, we sustain it, regardless of whether the appellee's objection that induced it was adequate or inadequate. Neddermeyer v. Crawford County, 190 Iowa 883, 175 N.W. 339; Worthington v Diffenbach, 184 Iowa 577, 168 N.W. 257; Hanson v. City of...