McKown. v. Silver.

• Decision Date: 28 April 1925
• Docket Number: (No. 5223)
• Court: West Virginia Supreme Court
• Parties: S. H. McKown et al. v. Gray Silver et al., and Gray Silver v. J. C. McKown, Admr., et al.

99 W.Va. 78

S. H. McKown et al.

v.Gray Silver et al., and Gray Silverv. J. C. McKown, Admr., et al.

(No. 5223)

Supreme Court of Appeals of West Virginia.

Submitted April 21, 1925.

Decided April 28, 1925.

1. Bills and Notes Joint Endorser Discharging Obligations of All May Enforce Contribution Against Others, in Absence of Agreement to Contrary.

By section 68 of the negotiable instruments law, joint payees or joint endorsers who endorse are deemed to endorse jointly and severally, unless it is shown that as between or among themselves they have agreed otherwise; and where, in the absence of such agreement, one of the joint endorsers pays off and discharges the obligation of all, he may enforce contribution against the others, (p. 80).

(Bills and Notes, 8 C. J. § 821).

2. Same Joint Endorser Has Burden to Establish by Preponderance of Evidence Contract with Co-Endorsers That He Was to Be Bound Differently from Legal Import of Endorsement.

Where one of several joint endorsers, contrary to the legal effect of his endorsement, asserts that his contract with his co-endorsers was that he was to be bound differently from the legal import of his endorsement, the burden is upon him to establish such fact by a preponderance of the evidence, without which he should not prevail, (p. 80).

(Bills and Notes, 8 C. J. § 1316 [1926 Anno.]).

3. Pleading Amended Answer, Raising New Issues, Should Not Be Allowed on Showing That Party Tendering It Knew Facts Relied On When He Filed First Answer. An amended answer, raising new issues, should not be allowed, where it appears that the party tendering the same knew the facts relied on when he filed his first answer, (p. 83).

(Pleading, 31 Cyc. p. 423).

Note: Parenthetical references by Editors, C. j. Cyc. Not part of syllabi.

Appeal from Circuit Court, Berkeley County. Suit by S. H. McKown and J. C. McKown, administrator of G. W. McKown, deceased, against Gray Silver, consoli- dated with suit by Gray Silver against J. C. MeKown, administrator of G. W. McKown, deceased, and others. From a decree for Gray Silver, plaintiffs in first suit appeal.

Reversed and remanded.

George Poffenbarger and Kilmer & Byrer, for appellants. Martin & Seibert, for appellee Silver..

Miller, Judge:

The decree appealed from was pronounced in the two causes consolidated, brought on the same day, April 1, 1922. By the first named suit the plaintiffs therein, S. H. McKown, and J. C. McKown, Administrator of G. W. McKown, deceased, sought contribution from Gray Silver and others, their joint judgment debtors, by reason of having paid off and satisfied, and obtained an assignment of, the judgment against all of them. By the second suit Silver sought to establish an agreement between him and the other judgment creditors, limiting his liability as an endorser on the note on which the judgment was rendered, and to be relieved of the judgment against him and to have the lien thereof removed as a cloud upon the title to his real estate. The lower court decreed to Silver the relief sought by him; and the plaintiffs in the first named suit have appealed.

The judgment paid off by the plaintiffs to the first suit was obtained by the Shenandoah Valley National Bank of Winchester, Virginia, on the renewal of a note originally made by the Norwalk Motor Car Company to G. W. McKown, S. H. McKown, A. E. Skadden, J. M. Rothwell, S. P. Hopkins, and Gray Silver, and endorsed by the payees therein, and discounted by said bank. Silver's contention is that at the request of the other payees and endorsers, he secured the discount of the note by the bank; that the bank was unwilling to take the note without his endorsement; and that the other endorsers agreed to save him harmless, and that he would not be held liable to them for his endorsement; and that he became a party to the note as an accommodation endorser only to the other endorsers, relying upon the alleged agreement.

The note in question was secured by a deed of trust, executed by the maker, to secure the endorsers; and Silver is named in the deed of trust as one of the beneficiaries thereof. The note, dated December 26, 1912, was renewed from time to time in its original form until September, 1914, at which time, Silver testifies, '' I insisted on some expression that would show my position, and the form of the note was changed so that my name appeared as a signer on the back, at the bottom thereof, and on the face of the note, under 'Credit the Drawer, ' instead of on the back only, but not written on the face with the other endorsers." He further testifies that he went to the bank and discussed with Mr. Rice, the cashier, now deceased, the renewal of the note without his endorsement, and was told that the note must be renewed with his endorsement, or paid. The note was then renewed with Silver's endorsement as formerly. He further says that Mr. Rice said the bank would like to have an agreement as to the relation of the endorsers, and suggested that he would have a memorandum prepared. Such memorandum was in fact prepared by the bank's attorney and forwarded to some one of the parties to the note. After reciting the execution of the note and the several renewals thereof, the discount by the bank, the execution of the deed of trust, etc., the alleged agreement recites that: "Whereas, the parties hereunto doth agree that said Gray Silver may be released as an endorser on said note for twentv thousand dollars in consideration of the signature to this agreement by said Gray Silver;'' and further provides that a new note should be given in renewal, to be made by the Norwalk Motor Car Company, payable to the order of the former payee and endorsers with the exception of Gray Silver; and then stipulates that: "In consideration of the agreement of the parties hereto to release him as endorser on said note for twenty thousand dollars, the said Gray Silver doth guarantee unconditionally the payment of said twenty thousand dollars with legal interest that may be accumulated thereon, evidenced by said note, and secured by said deed of trust, to the Shenandoah Valley National Bank of Winchester, Virginia, when due, and doth guarantee the payment of any renewal of said note that may be accepted by said bank in whole or in part. Witness the following signatures and seals this day of September, 1914." This paper is signed by the The Norwalk Motor Car Company, G. W. McKown, S. H. McKown, S. P. Hopkins and A. E. Skadden. It does not bear the signatures of Silver or Rothwell. But it appears that the renewal executed about the time the written agreement was prepared was endorsed by all the payees in the original note. None of the notes are exhibited with the record; but the record of the bank's suit on the note, brought by notice of motion for judgment, shows that the final note was made payable to the Shenandoah National Bank, signed by the Norwalk Motor Car Company, and endorsed on the back by the six original endorsers, including Silver. And judgment was rendered against all of them.

G. W. McKown, who was president of the Norwalk Motor Car Company, died in February, 1918. A. E. Skadden and S. P. Hopkins have since died, and their estates are insolvent. The plaintiff J. C. McKown is administrator of the estate of G. W. McKown. After the McKowns paid off the judgment against all the endorsers to the note in question, they recovered from Rothwell the sum of $5,439.96. The assets of the motor car company, sold in the bankruptcy proceeding, realized the sum of $5,220.81, which was applied on the judgment.

It is the contention of Silver that the alleged agreement upon which he relies was made before the execution and discount of the original note, and that the written memorandum, though...