Moore v. Altmyer
| Decision Date | 10 February 1925 |
| Docket Number | 36252 |
| Parties | ERNEST R. MOORE, Appellee, v. JOHN W. ALTMYER, Appellant |
| Court | Iowa Supreme Court |
Appeal from Linn District Court.--ATHERTON B. CLARK, Judge.
ACTION aided by attachment, to recover from an indorser the amount due on a promissory note. The defendant interposed defenses stated in the opinion, to the action on the note, and a counterclaim for the wrongful suing out of the attachment. There was a directed verdict for plaintiff upon the note, and a verdict for plaintiff on the counterclaim. Defendant appeals.
Affirmed.
Stewart Penningroth & Holmes, for appellant.
Deacon Sargent & Spangler and D. C. Hutchinson, for appellee.
The defendant and appellant is the payee and indorser of the note in suit. The note is for $ 7,000, signed by William and Mary Wickham, is dated March 1, 1920, and due, according to its terms, five years from date. It is secured by a mortgage upon land, executed by the makers.
It is undisputed that, shortly after the note and mortgage were executed and delivered to the appellant, he indorsed the note in blank, and put it, with the mortgage assigned in blank, in the hands of one Yeisley, to be sold. On March 2, 1921, Yeisley sold and delivered to the appellee, for $ 5,000, the note so indorsed, and the mortgage. The sale for this amount was authorized by appellant.
On October 26, 1922, appellee commenced this action for the amount of the note against the appellant upon the indorsement, alleging his election, under the terms of the note, to declare the debt due for the failure to pay the interest when due.
The defenses pleaded in the answers were: (1) That the note was indorsed in blank by appellant, and turned over to Yeisley for negotiation and sale by Yeisley for account of appellant, under an agreement with Yeisley that, if the note was sold for its face and accrued interest, it should be delivered to the purchaser with appellant's indorsement in blank; but that, if the note was sold at a discount, or for less than its face and accrued interest, appellant would indorse the note without recourse, and that Yeisley should in such case insert the words "without recourse" in the indorsement. (2) That Yeisley's offer to so dispose of the note was fraudulent, and made for the purpose of enabling him to obtain possession of, and the apparent legal title to, the note, and convert the proceeds to his own use. (3) That there had been a material alteration in the indorsement.
The court refused to admit evidence of the claimed agreement with Yeisley that, if the note was sold for less than its face and accrued interest, Yeisley was to insert the words "without recourse" in appellant's indorsement, and evidence tending to show a fraudulent purpose on the part of Yeisley in making such an arrangement, and instructed the jury to return a verdict for appellee for the amount due on the note. Error is assigned on these rulings.
Counsel for appellant cite and rely upon Section 3060-a16 of the Negotiable Instruments Act, Code Supplement, 1913 (Section 9476, Code of 1924), and cases holding that it may be shown by parol that an instrument was delivered upon a condition, and not to become effective until the condition had been complied with, or was delivered for a special purpose only.
The statute provides, in substance, that every contract upon a negotiable instrument is incomplete and revocable until delivery for the purpose of giving effect thereto, and that delivery may be shown to be conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument. We think that neither this statute nor the cited cases are applicable to the facts of the instant case.
Yeisley was the agent of the appellant to sell the note, and the note was put in his hands for that purpose, with the indorsement of appellant in blank. The controversy here is between the appellee, to whom Yeisley sold and delivered the note, and the indorser. There was no offer to show that the appellee was a party to any parol agreement that, if the note was sold at a discount, the indorsement was to be without recourse, or that he had any knowledge or notice of any such instructions to or limitation upon, the authority of the agent with whom he dealt. While he dealt with the agent, his contract was with the principal, the indorser.
If it should be conceded that parol evidence would have been admissible to show an agreement with appellee that the indorsement was conditional, or for the purpose of passing title only,--a concession which, as we shall see, could not properly be made,--that was not the purpose or effect of the proffered proof. It was only proposed to show that appellant had instructed his agent to make the indorsement provide for no liability on the part of the indorser if the note was sold at a discount. The note, with appellant's indorsement in blank, was in the hands of appellant's agent, who had actual authority to sell the note, and apparent authority to sell it as it stood. Gough v. Loomis, 123 Iowa 642, 99 N.W. 295; Denecke v. West, 184 Iowa 600, 169 N.W. 97; Spence v. Chicago, R. I. & P. R. Co., 117 Iowa 1, 90 N.W. 346; Skinner v. Church, 36 Iowa 91.
But passing that, it had been held in this state, prior to the adoption of the Negotiable Instruments Act, that, as between an indorser and his immediate indorsee, parol evidence was admissible although it tended to vary or modify the...
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