Orrick v. Colston

• Decision Date: 07 December 1850
• Citation: 48 Va. 189
• Parties: ORRICK v. COLSTON.
• Court: Virginia Supreme Court

48 Va. 189

ORRICK v. COLSTON.

Supreme Court of Appeals of Virginia.

December 7, 1850

(Absent Cabell, P. and Brooke, J.)

1. A paper signed in blank and endorsed in blank, may be filled up either as a common promissory note or a negotiable note; and the person who endorsed it in blank will be liable on his endorsement to a holder for value.

2. In such a case, if the paper is filled up as a common promissory note to a third person, who advances the money for it to the makers, be may treat the endorser as an original security, or as a guarantor of the note.

3. If after the note is filled up and delivered to the payee, the holder fills up the blank endorsement with a guaranty, he may afterwards erase it and proceed against the endorser as an original security.

4. In this case the endorsement was filled up after suit brought thereon; and the declaration charged the endorser both as original surety and as guarantor. On the trial the parties agreed a case, on which the Court below gave a judgment for the defendant. On appeal, this Court, without deciding whether the filling up of the endorsement constituted a guaranty or an original security, reversed the judgment, and entered a judgment against the defendant as an original surety, without sending the case back to have the filling up of the endorsement erased, and to have it filled up as an original promise.

Starbuck and Forman were partners and millers in the county of Berkeley; and Edward Colston of the same county was in the habit of endorsing their notes for their accommodation, and also of becoming their security where the evidence of debt was not negotiable. In August 1839 he was their endorser on a note discounted at bank, and a short time previous had given his blank endorsement to the partner Starbuck, for the purpose of renewing said note.

On the 12th of August 1839 the plaintiff Orrick, who lived in the county of Morgan, about twenty-five or thirty miles from the residence of Starbuck and Forman, and about fifteen miles from Colston, received from Starbuck the following note " Dear Sir:--I have for you a blank note at eight months, which I wish you to fill up with as much as you can spare me, and if convenient, enclose a check for the amount to-morrow to Charlestown, where I shall be till Thursday morning. Should you want it at the expiration of the time, I can give it you, but would prefer extending it longer leaving the matter at your option. Yours,

C. C. Starbuck. "

In this note was enclosed a paper signed in blank with the name of Starbuck and Forman, and endorsed in blank by Edward Colston, both the signatures being genuine. On the next day the plaintiff did, in pursuance of this application, advance and pay over to Starbuck and Forman one thousand dollars as a loan, and wrote over their signature the following note: " Eight months after date we promise and bind ourselves, our heirs and assigns, to pay to Cromwell Orrick, his heirs or assigns, the sum of one thousand dollars, with interest from the date hereof, for value received; as witness our hand and seal this 13th day of August 1839.

Starbuck & Forman. "

And after this action was brought he wrote over the blank signature of Colston the following: " In consideration of the loan of 1000 dollars by Cromwell Orrick, I hereby guaranty the payment of the within sum of money.

Edw'd Colston. "

Between March and June 1840, executions amounting to about 5000 dollars, issued on judgments recovered against Starbuck and Forman, went into the hands of the sheriff of Berkeley county, and were levied upon the whole of their personal property, which was not sufficient to satisfy them. They absconded from the State in the early part of June, when they were ascertained to be insolvent; though when they absconded they held in possession a considerable real estate in the county of Berkeley, which was attached by some of their creditors, but was claimed by others, of whom Colston was one, under a deed of trust bearing date the 27th of June 1840, executed by Starbuck in the City of New York.

No communication took place between Orrick and Colston in relation to this transaction before the loan was made and the blank signature used as before stated; indeed, Colston had been absent from the Commonwealth, in the State of Kentucky, for more than a month prior to the 12th of August 1839. And about the time this loan was made Starbuck had, in one or more cases, fraudulently used certain blank endorsements furnished him by persons other than Colston.

In June 1841, Orrick brought an action against Colston in the Circuit court of Berkeley, upon the endorsement aforesaid, and charged him in his declaration both as an original surety and also as a guarantor of the debt. The issue was made up on the plea of non assumpsit; and on the trial, the parties agreed the facts as they have been stated, and submitted the questions arising thereon to the Court. Whereupon the Court gave a judgment for the defendant; and the plaintiff applied to this Court for a supersedeas, which was granted.

Johnson & Johnston, for the appellant, considered first, the question whether Colston was liable to Orrick upon his endorsement. On this point they stated the general principle to be that the delivery of a blank signature binds the deliverer for whatever is written over it consistent with the face of the paper; and that this principle applied to paper that was not negotiable as well as to paper that was. And they referred to Russel v. Langstaffe, Doug. R. 514; Schultz v. Astley, 29 Eng. C. L. R. 414; Lickbarrow v. Mason, 2 T. R. 63; Putnam v. Sullivan, 4 Mass. 53; Violett v. Patton, 5 Cranch's R. 142; Douglass v. Scott & Fry, 8 Leigh 43.

They insisted, that when Colston endorsed the blank paper he authorized Starbuck and Forman to write upon it either a common promissory note or a negotiable note, and that his blank endorsement bound him for either in the character appropriate to the note written. And for this they referred to the cases of Russel v. Langstaffe; Schultz v. Astley; and Violett v. Patton, supra.

They insisted further, that Colston was liable either as an original surety or as a guarantor of the note. That whether as the one or the other, the loan of the money to the makers of the note was a sufficient consideration to bind him; and that he was not released by the failure to prove a demand of payment of the makers and notice of their failure to pay. And they cited Nelson v. Dubois, 13 John. R. 175; Campbell v. Butler, 14 Id. 349; Ulen v. Kittredge, 7 Mass. 233; Moies v. Bird, 11 Id. 436; Violett v. Patton, supra; Watson v. Hurt, 6 Gratt. 633; Russel v. Langstaffe, supra; Schultz v. Astley, supra; Josselyn v. Ames, 3 Mass. 274; Austin v. Boyd, 24 Pick. R. 64; Oxford Bank v. Haynes, 8 Id. 423.

They insisted further, that if Colston was strictly and only a guarantor of the note, in order to release him there must have been not only negligence on the part of Orrick in pursuing his remedies against Starbuck and Forman, but that Colston must have suffered loss by such negligence. For this they cited Allen v. Rightmire, 20 John. R. 365; Fell on Commercial Guaranties, 200, 201, 203, and the notes; Reynolds v. Douglass, 12 Peters' R. 497. And they referred to the facts to shew that it was impossible to have made the money out of Starbuck and Forman after the note fell due.

Robinson, for the appellee, admitted that if Starbuck, to whom Colston had entrusted his blank endorsement, had written on the paper a negotiable note, and Orrick had discounted it, Colston would, in that case, have been liable; his name in that case, would have bound him for the amount for which Orrick trusted Starbuck and Forman. But he insisted that Orrick had no authority from Colston to fill up the paper at all; and that Starbuck had only authority to fill it up with a negotiable note, so as to make Colston liable as endorser; and that he had no authority to subject him as guarantor. And he referred to Jordan v. Neilson, 2 Wash. 164; Tillman v. Wheeler, 17 John. R. 326; Seaberry v. Hungerford, 2 Hill's R. 80; Id. 194; Prosser v. Luqueer, 4 Hill's R. 420.

He insisted further, that if Colston's contract was a contract of guaranty, it was such a contract as that he would be discharged by the neglect of the holder of the note to give Colston notice of the sum advanced on it, or by his neglect to demand payment of the maker and to give the guarantor notice of non-payment. And for this he referred to Douglass v. Reynolds, 7 Peters' R. 113; Lee v. Dick, 10 Peters' R. 482; Oxford Bank v. Haynes, 8 Pick. R. 423; Whiton v. Mears, 11 Metcalf's R. 563. And he referred to the facts to shew that when this note fell due Starbuck and Forman had property from which it might have been paid.

He insisted further, that if Colston was to be held liable as guarantor of a note which was not commercial paper, that there was no consideration for his guaranty, and that he therefore was not bound. Britten v. Webb, 9 Eng. C. L. R. 154; Fitzhugh v. Love, 6 Call 5.

DANIEL J.

Upon the case agreed and submitted to the Court below, and now brought under revision here, two questions arise which have been very elaborately discussed at the bar: 1. Whether the appellee, Colston, by his endorsement, subjected himself to any liability; and 2. If so, whether he is liable in the form of contract and mode in which the appellant seeks to charge him.

It is well settled, that a blank endorsement on a negotiable instrument, blank as to date or amount at the time of the endorsement, if made for the purpose of giving a credit to the drawer, is as effectual to bind the endorser for any amount with which the instrument may be filled up by the drawer, or an innocent holder for value, as if the...