Pattee Plow Co. v. Beard

• Decision Date: 13 September 1910
• Docket Number: Case Number: 575
• Citation: 110 P. 752,1910 OK 283,27 Okla. 239
• Parties: PATTEE PLOW COMPANY v. BEARD.
• Court: Oklahoma Supreme Court

1910 OK 283

110 P. 752

27 Okla. 239

PATTEE PLOW COMPANY v. BEARD.

Case Number: 575

Supreme Court of Oklahoma

Decided: September 13, 1910

Syllabus

¶0 1. PLEADING--Waiver of Error in Sustaining Demurrer. When a demurrer is sustained to a pleading, and the pleader thereupon obtains leave to amend and does amend, he thereby waives the error, if any was committed, in sustaining the objection to his pleading.

2. GUARANTY--Transfer of Non-Negotiable Instruments. The payee of a non-negotiable instrument who writes his name across the back thereof and sells and delivers the same does not thereby render himself liable to the assignee on such note either as an indorser or guarantor.

Error from District Court, Pottawatomie County; W. N. Maben, Judge.

Action by the Pattee Plow Company against H. G. Beard. Judgment for defendant, and plaintiff appeals. Affirmed.

Biggers & Lydick and Warren K. Snyder, for plaintiff in error.--Citing: Daniel, Negotiable Instruments, sec. 1757; Perkins v. Cottin, 11 Conn. 213; Cromwell v. Hewitt, 40 N.Y. 491; Prentiss v. Danielson (Conn.) 13 Am. Dec. 52; Hall v. Monohan (Iowa) 71 Am. Dec. 404; Willis v. French (Maine) 30 Am. St. Rep. 416; Banks v. Spates (W. Va). 56 Am. Dec. 828; Machett v. Anderson (Ind.) 64 N.E. 229; Shaffstall v. McDaniel, 152 Pa. St. 598; Sutton v. Owen, 65 N. C. 123; Wilson v. Black, 6 Blackf. 509 (Ind.); Bean v. Briggs (Iowa) 63 Am. Dec. 464.

B. B. Blakeney and J. H. Maxey, for defendant in error.--Citing: 7 Cyc. 673; Smith v. Myers, 207 Ill. 126; Low v. Bliss, 24 Ill. 168; Kendall v. Parker, 103 Cal. 319; American National Bank v. Sprague, 14 R. I. 410; Smith Sons' Gin & Machine Co. v. Badham, 81 S. C. 63; Gerard v. LaCoste, 1 Am. Lead. Cas., 302; Barry v. Wachosky, 57 Neb. 534; DeHass v. Difert, 70 F. 227; Fear v. Dunlap, 1 Greene (Iowa) 331; Lamb v. Storey, 45 Mich. 488; Haber v. Brown, 101 Cal. 445; Frevall v. Fitch, 5 Whart. (Pa.) 325; Jossey v. Rushin, 106 Ga. 319; First Nat. Bank of San Diego v. Falkenham, 94 Cal. 141; Kirkpatrick v. McCullough, 3 Humphrey (Tenn.) 171; South Bend Iron Works v. Paddock, 37 Kan. 510; Smurr v. Forman, 1 Ohio, 272, Chaddock v. Van Ess, 35 N. J. 517; Third Natl. Bank of Baltimore v. Lange, 51 Md. 138; Tiedman, Commercial Paper, sec. 258; Pratt v. Thomas, 2 Hill (S. C.) 654; Brown v. Hull, 33 Grat. (Va.) 23.

HAYES, J.

¶1 Plaintiff in error, hereinafter referred to as plaintiff, brought this action in the court below against defendant in error, hereinafter referred to as defendant, to recover on an alleged written contract of guaranty whereby defendant guaranteed the payment of two certain notes executed by C. C. Marsh and Seymore S. Price on the 17th day of June, 1899, to defendant, payable nine and twelve months, respectively, after date. On the 10th day of February, 1900, defendant, for a valuable consideration, to wit, in payment of an antecedent debt due by him to plaintiff, transferred the notes to plaintiff and wrote his name in blank upon the backs thereof. Defendant denies the execution of any written contract of guaranty and pleads the statute of limitation. A demurrer to plaintiff's evidence was sustained by the court and judgment rendered in favor of defendant. An objection was sustained by the court to the introduction of any testimony by plaintiff under his original petition. Of this action of the court plaintiff complains in one of his assignments, but it cannot be reviewed. The refusal of the court to permit defendant to introduce evidence was equivalent to sustaining a demurrer to the petition. Plaintiff afterwards obtained leave to file, and did file, a first and a second amended petition, under which last petition the cause was tried. When a demurrer is sustained to a pleading and the pleader thereupon obtains leave to amend, and does amend, he thereby waives the error, if any was committed, in sustaining the objection to his pleading. Board of County Commissioners v. Beauchamp, 18 Okla. 1, 88 P. 1124; Carle v. Okla. Woolen Mills et al., 16 Okla. 515, 86 P. 66; Morrill v. Casper et al., 13 Okla. 335, 73 P. 1102; Berry et al. v. Barton et al., 12 Okla. 221, 71 P. 1074.

¶2 The facts in this case present for our consideration what is the legal effect of a blank endorsement of a payee upon a nonnegotiable instrument. Upon this question both the text writers and decided cases are in irreconcilable conflict. Many of the cases that reach the same conclusion do so upon different reasoning. In Wood's Byles on Bills & Notes, at page 246, it is said:

"But if, nevertheless, the payee do indorse a bill not negotiable, he is liable on his indorsement to this indorsee. For every indorser of a bill is in the nature of a new drawer."

¶3 In vol. 1, Daniel on Negotiable Instruments, paragraph 664, it is said:

"If a note be non-negotiable, because payable to a certain person only, should he indorse it, it will be binding upon him; and his liability to his immediate indorsee will be the same as upon the indorsement of a negotiable note; but the principle is not extended to subsequent indorsees."

¶4 In Randolph on Commercial Paper, the rule is stated as follows:

"The indorser of a non-negotiable note or bill is liable to his immediate indorsee, as in the case of negotiable paper. The indorsee may sue the indorser in his own name, even though the indorsement was in blank and after maturity."

¶5 But in Amer. & Eng. Encyc. of Law, vol. 4, p. 479, it is said:

"It is held accordingly in a majority of the states that the indorsement or assignment of a non-negotiable instrument is merely a transfer of its legal and equitable title, and carries with it no guaranty of its payment, though if the assignor makes his assignment in a form from which an intention to guarantee the payment of the instrument may be inferred, or induces the assignee to take it by an agreement to that effect, he may be held upon his implied or express promise."

¶6 We think the last foregoing statement states the rule that is supported by the better reasoning, and by at least the weight of modern authorities from the state courts, if not by the weight of the earlier cases from the state courts. There can be no indorsement in the strict legal and commercial sense of that term on a note not negotiable or any other instrument of writing, except negotiable paper, unless he who indorses his name upon the non-negotiable instruments undertakes by his written or oral agreement to become responsible as an indorser. Daniel on Negotiable Instruments, par. 709. Non-negotiable instruments do not fall within the pale of the law merchant; and the law, therefore, writes no contract over a blank indorsement on a non-negotiable instrument as it does over a blank indorsement on a negotiable instrument.

¶7 Discussing the two lines of cases upon this question, in Iron Works v. Paddock, 37 Kan. 510, 15 P. 574, it is said:

"We are inclined to the latter view, that the indorsement of a name upon a non-negotiable note simply transfers the title of a party, and does not make him liable as if said note were a negotiable instrument. (Citing authorities.) Such party guarantees the note to be genuine, and that it is what it purports to be; nothing more. He does not guarantee its payment, though he might do this, but to do so would take a contract either expressed in the indorsement or by an independent contract between the parties."

¶8 Story v. Lamb, 52 Mich. 525, 18 N.W. 248, was an action by the indorsee against the payee upon his blank indorsement of a non-negotiable instrument. Speaking of the effect of such indorsement, the court said:

"The so-called note being no more than a simple contract, not a note, and without negotiability, could only be transferred by assignment; and the endorsement 'Pay to Thomas Story,' on the contract, does no more than transfer the right to recover the money payable on the instrument, and the right to sue therefore, to Story. It is not an unusual way of transferring such claims, but such endorsement imports no legal liability on the part of the endorser to pay the amount of the claim in case of failure by the debtor."

¶9 The rule in this case has been uniformly followed in that state. Barger v. Farnham, 130 Mich. 487, 90...