Middleton v. Griffith

• Decision Date: 04 March 1895
• Citation: 31 A. 405,57 N.J.L. 442
• Parties: MIDDLETON v. GRIFFITH.
• Court: New Jersey Supreme Court

31 A. 405

57 N.J.L. 442

MIDDLETON

v. GRIFFITH.

Court of Errors and Appeals of New Jersey.

March 4, 1895.

(Syllabus by the Court)

Error to circuit court, Camden county; before Justice Garrison.

Action by Richard Griffith against Melbourne F. Middleton on a note. There was Judgment for plaintiff, and defendant brings error. Affirmed.

J. J. Crandall and T. J. Middleton, for plaintiff in error.

C. V. D. Joline, for defendant in error.

LIPPINCOTT, J. This is an action on a promissory note given by the defendant below, who is here the plaintiff in error, to the plaintiff below, the defendant in error in this court, for the sum of $375, dated April 22, 1889, payable in three months from the date. The note was first Indorsed by Richard Griffith, the plaintiff; then by "The Provident Life and Trust Co. of Philadelphia, May 9, 1889"; then "For collection; remittance to Central National Bank, Philadelphia, Pa. Theo. Kitchen, Cashier." At the time of trial the last two indorsements were erased. The plea was general issue, and a specification of defenses under the general issue was demanded and served. In 1889 the defendant secured a policy of life insurance in the Provident Life & Trust Company of Philadelphia on his own life, for $10,000. The yearly premium was $522. A note was given for this premium, and, when it became due, part was paid, and a new note given. When this second note became due, another part was paid, and the note in suit was given. This last note was for $375, payable to Griffith, who appears to have been the agent through whom the insurance had been obtained. The other notes had also been given to him. The policy of insurance is still in the possession of the defendant, and retained by him. On the trial below, a verdict was directed in favor of the plaintiff, against the defendant, for the sum of $485; being the amount of the note, with interest thereon from the maturity thereof. At the trial the note was proved and offered in evidence, with the two last Indorsements erased. The name of the plaintiff as first indorser was not erased. The defendant objected to the admission of the note with the name of the plaintiff indorsed thereon, and now claims in his first assignment of error, that it should not have been admitted in evidence, for the reason that the plaintiff, by legal import, was not the owner of the note, and had no right of action thereon.

It will be noticed that the Indorsements subsequent to that of the payee had been erased. The promissory note was produced by the plaintiff, and he, during the progress of the cause, testified that he was the owner of the note. Now, it may be observed that to the formal admission of this paper in evidence there could be no objection. The contention made by this assignment of error is that there could be no recovery because the indorsement of the plaintiff was not erased from the note, because the indorsement in law imported a contract which conclusively demonstrated that the note was owned by some one else, who had the right of action on the note. This contention does not appear to be founded upon either reason or authority. There is no reason why evidence is not admissible to show that one who has a promissory note in his possession, and produces it, is the holder of It, and to trace his title to it. Such evidence is held to be competent by numerous adjudicated cases, and it is not evidence which varies the contract implied in the law between the indorser and indorsee. 2 Daniel, Neg. Inst. (4th Ed.) §§ 1181a, 1198. The indorsement of a promissory note by the payee is an order upon the maker of the note to pay the indorsee (2 Burrows, 676: Garretsie v. Van Ness, 2 N. J. Law 25); and the Indorser becomes liable upon the custom merchant or commercial law, and not upon any Implied covenant or promise contained in the indorsement, distinct from that raised by such custom. The right of the indorsee to recur back to the payee or other indorser in case of failure of the maker to pay on demand and notice is purely of mercantile origin. Id. A promissory note only takes effect from delivery. Powell v. Waters, 8 Cow. 670. So a note may be indorsed by the payee; yet, if not delivered to some one as indorsee or holder, the title remains in the payee, who still is its holder, and no contract whatever from such indorsement is created or Implied, unless there be a delivery of the note. State v. High Bridge M. E. Church Ass'n, 44 N. J. Law, 148; Denton v. Peters, L. R. 5 Q. B. 475; Mniler v. Pondir, 55 N. Y. 325. If the note is still in the payee's possession, his blank Indorsement is no evidence of a transfer by him. William v. Smith, 21 Mo. 419; Beeson v. Lippman, 52 Ala. 276; Best v. Bank, 76 Ill. 608. And, if it has been transferred by him by blank indorsement, upon regaining possession in a bona fide manner of the note he may strike out all subsequent Indorsements and his own also, and sue upon it. The payee's possession of a bill or note is prima facie evidence of title in him, whether his own indorsement be erased or not. He need not show, in order to maintain his action, any retransfer of the instrument to himself, and he can at the trial strike out his own or any subsequent blank indorsements. He can strike out his own indorsement at the trial, or at bar, on a motion for a new trial. The general rule of law is— and I think without an exceptional ruling to the contrary, so far as I can discover—that the holder of a bill or note is prima facie its owner, and that a delivery of a note is necessary to its transfer either by indorsement or otherwise, and that the fact that his blank Indorsement is thereon, standing alone, is no evidence that he has transferred the note, or that he is not the owner of it, or that any one else is the owner of it. This rule is entirely applicable to all blank indorsements or indorsements for collection,— the only character of indorsements which were upon the note in question. 2 Rand. Com. Paper, § 717, and cases cited; 2 Daniel, Neg. Inst §§ 1181a, 1198, 1200, and cases cited. The holder's own blank indorsement, left uncanceled on the note, will not in general prevent his recovery, but from his possession it will be presumed that the paper was not delivered under the indorsement, or that, if it was so delivered, it was afterward taken up by him. 3 Rand. Com. Paper, §§ 1645, 1646, and cases cited; Locke y. Silk Co., 37 Mich. 479; Reading v. Beardsley, 41 Mich. 123, 1 N. W. 965.

The practice in this state, universally established, has been for the holder, being either payee or other indorser, to strike out all subsequent blank indorsements or indorsements for collection, and then sue upon the note. I do not think the practice has been universal to strike out his own indorsement. I think it has generally been done, but in many cases, if not quite generally, not until the time of trial. There is no reason manifest why his own blank indorsement should be stricken out. Every subsequent indorsement being stricken out, and the note being in his possession and produced at the trial, it would seem as if no reason could exist for the mere mechanical act of striking out his own name; and of course, the note having matured, there could exist no holder after that who, in the face of the judgment thereon, could maintain a recovery upon the note. There is no reason for a contrary rule, and I think it is established by authority that the fact that the blank indorsement of a holder of a promissory note still remains thereon does not impair his title to it, or defeat his action to recover the amount due. 2 Rand. Com. Paper, § 717; 3 Rand. Com. Paper, §§ 1645, 1646; 1 Daniel, Neg. Inst § 694; 2 Daniel, Neg. Inst. § 1196; Abbott v. Joy, 47 Me. 177; Dollfus v. Prosch, 1 Denio, 367; Chaffee v. Taylor, 3 Allen, 598; Royce v. Nye, 52 Vt 375; Evans v. Gordon, 8 Port. (Ala.) 142; Humphreyville v. Culver, 73 Ill. 485; Black v. Strickland, 3 Ont. 217; Callow v. Lawrence, 3 Maule & S. 95; Dugan v. U. S., 3 Wheat, 172; 2 Am. & Eng. Enc, Law, p. 383.

There is an entire want of reference to authorities upon this assignment of error in the briefs of counsel, but the case of Bright v. Hand, 16 N. J. Law, 273, has suggested itself as Indicating that an Indorser, as payee, could not maintain an action, unless the note had been reassigned to him. The case as an authority is entirely unavailable. It can be concluded from the case that the note was, at the time the suit was brought, in the hands of a third party. The case is very meagerly reported as to facts, and cannot in any sense be applicable to establish a principle so much at variance with the nature and qualities of commercial paper, transferable by indorsement, delivery by the holder, or by delivery only, as where the paper is taken up by the payee or some prior indorser of some subsequent holder. In the case of Dugan v. U. S., 3 Wheat. 172, it was held that "If a person who Indorses a bill to another, whether for value, or for the purpose of collection, comes again to the possession thereof, he is to be regarded, unless the contrary appears in evidence, as the bona fide holder and owner of such bill, and is entitled to recover thereon, notwithstanding there may be on it one or more indorsements in full, without producing any receipt or indorsement back to him from either such indorsees, whose names he may strike from the bill, or not, as he thinks proper." The first assignment of error is therefore not sustained.

The second and only other assignment of error la that the trial Judge refused to admit the evidence of a certain agreement between the maker and payee of the note. This alleged agreement was in the shape of an offer of evidence, and overruled by the trial justice. The note in question was given for a premium on a policy of life insurance upon the life of the maker of the...