Peterson v. Russell

CourtSupreme Court of Minnesota (US)
Citation62 Minn. 220,64 N.W. 555
PartiesPETERSON ET AL. v. RUSSELL.
Decision Date15 October 1895

OPINION TEXT STARTS HERE

(Syllabus by the Court.)

1. When one not a party to a negotiable note, after it has been delivered to and while it is in the hands of the payee, indorses it in blank upon a valid consideration, for the purpose of assuming the liability of guarantor, such act authorizes the payee to write over the signature the contract of guaranty in full; and, that being done, it is a sufficient note or memorandum in writing to take the case out of the statute of frauds.

2. Nichols & Shepard Co. v. Dedrick (Minn.) 63 N. W. 1110, to the effect that the extension of the time of payment of a past-due note is a sufficient consideration to support a promise to pay it, followed.

Appeal from district court, Marshall county; Frank Ives, Judge.

Action by John Peterson and Peter Miller, copartners as Peterson & Miller, against William Russell. From an order denying a new trial after a verdict for defendant, by direction of the court, plaintiffs appeal. Reversed.

Brown & Carr, for appellants.

A. C. Wilkinson, for respondent.

START, C. J.

Action to charge the defendant as guarantor of the payment of a negotiable promissory note. Upon the trial the plaintiffs offered evidence, and then rested, tending to establish the following state of facts: That on May 4, 1892, Thomas Connors made and delivered to the plaintiffs his note whereby he promised to pay to them or order on November 1, 1892, $145. After the maturity of the note, and on March 31, 1893, the defendant agreed with the payees of the note, the plaintiffs, in consideration of their extending the time of its payment to December 15, 1893, to guaranty the payment of the note, and in execution of his agreement he signed his name on the back of the note in blank, and it was returned to the plaintiffs' agent, and they, by such agent, signed a memorandum on the back of the note in these words: “In consideration of Mr. William Russell indorsing this note, payment of the same is hereby extended until Dec. 15th, 1893.” On January 29, 1894, the defendant refusing to pay the balance then due on the note, the plaintiffs, by their attorney, overwrote the defendant's signature with the formal contract of guaranty, in these words: March 31st, 1893. In consideration of the time of the payment of the within note being extended until Dec. 15th, 1893, I hereby guaranty payment of this note,”-and brought this action on such guaranty. Whether the defendant's agreement was to guaranty the note or to indorse it, in the strict sense of the term, is an open question upon plaintiffs' own evidence, but it was sufficient to warrant a finding by the jury that the contract was to guaranty the payment. The trial court dismissed the action, when the plaintiffs rested, exception by them, and from an order denying their motion for a new trial this appeal was taken.

1. What was the legal liability assumed by the defendant by signing his name in blank upon the back of this note, pursuant to his oral agreement to guaranty its payment? This is practically the only question in this case. It is perfectly manifest that by this irregular indorsement he intended to become responsible to the payees for its payment, in some capacity, as maker, indorser, or guarantor. What liability one who is not a party to a negotiable instrument otherwise than by his indorsement of it, and who is in no manner connected with the title to it or its transfer, assumes by signing his name in blank upon the back thereof, is a question upon which there is much confusion and weighty conflict in the adjudged cases. They cannot be harmonized, and we shall not attempt any analysis of them. In some states, notably in Massachusetts, the question has been put at rest by a statute to the effect that in all such cases, whether his name is placed upon the paper before its delivery to the payee or afterwards, the party shall be charged only as an indorser. This is a certain, practical, and desirable rule; and, if it had been adopted by the courts when the question first arose, it would have saved litigation and some lying. But we cannot now adopt the rule without disregarding well-settled principles and resorting to judicial legislation. The position of the name of such a party upon the paper is in itself one of ambiguity. It is an irregular indorsement, and does not, without parol evidence as to when the indorsement was made and its purpose, indicate the relation of the indorser to the paper or the parties to it. He is not strictly an indorser, for the paper is not negotiated or title made through his indorsement; hence there is a pretty general agreement of the authorities that parol evidence is admissible, as between the original parties, to show the relation of such party to the paper, and to fix his liability as maker, indorser, or guarantor, according to the intention of the parties. Rey v. Simpson, 1 Minn. 380 (Gil. 282), 22 How. 341;Kern v. Von Phul, 7 Minn. 430 (Gil. 341); Good v. Martin, 95 U. S. 90;Coulter v. Richmond, 59 N. Y. 479; Tied. Com. Paper, § 270; 1 Daniel, Neg. Inst. §§ 710, 711. In case of regular indorsements-that is, where the paper is first indorsed by the payee-the law ataches a definite liability to the act, and parol evidence is not admissible to vary it. Knoblauch v. Foglesong, 38 Minn. 352, 37 N. W. 586;Farwell v. Trust Co., 45 Minn. 495, 48 N. W. 326. This rule, however, does not apply to an irregular indorsement, except that this court has held that where it is once shown by parol evidence that the name of an apparent stranger to the paper was signed upon the back of it before its delivery to the payee, to induce its acceptance, he will be held as an original maker, and such evidence is not competent to show that he intended to charge himself as indorser only. Peckham v. Gilman, 7 Minn. 446 (Gil. 355); Robinson v. Bartlet, 11 Minn. 410 (Gil. 302). We have also held that where such an indorsement is made for a valuable consideration, after the delivery of the paper to the payee, but while it is in his hands and before its maturity, and the payee subsequently indorses it to a bona fide holder, the party making the irregular indorsement will, in favor of such holder, be held as an indorser. Buck v. Hutchins, 45 Minn. 270, 47 N. W. 808. Except as limited in these cases, the general rule that parol evidence is admissible to ascertain the intention of the parties to an irregular indorsement is in force in this state; and such evidence was properly received in this case to show the actual relation the defendant agreed to and did assume with reference to the note in question.

This leaves only the question of the statute of frauds to be considered. The defendant's contract of guaranty was a collateral one to answer for the debt of another, and must, to enable the plaintiffs to enforce it, be evidenced by a note or memorandum in writing expressing the consideration. The signature of the defendant alone on the back of the note is not sufficient. Moor v. Folsom, 14 Minn. 340 (Gil. 260). Assuming the facts which the evidence tends to establish, we have a case where the defendant, for a valid consideration, agreed to guaranty the payment of a note then past due, and still in the hands of the payees. His contract excludes the idea that he intended to be held only as an indorser, and, in execution of his contract, he writes his name upon the back of the note, and leaves it with the payees, who overwrite his signature, with the actual contract he has made, which satisfies in form the statute of frauds. The question, then, in its last analysis, is one of agency only. The actual contract is proved for the purpose of showing the authority to overwrite the signature. Were the payees authorized to thus overwrite the signature? The question is an open one in this state, although the case of Moor v. Folsom seems to indicate that an affirmative answer should be given to the question, but the opinion expressly disclaims any purpose to so decide. It was a matter of indifference who wrote out the formal contract of guaranty after the minds of the parties had met, the contract made, and the defendant had signed his name on the back of the note. The writing was only the evidence of what the parties had done. The defendant's signature to it was the material thing. He could sign his name in blank, and authorize the payees or any one else to write his contract over his signature. It was not necessary that the authority to do so should be in writing or expressly given, if clearly indicated by his acts.

In the light of the law and commercial usage, there can be but one reasonable inference to be drawn from the defendant's act in delivering his blank indorsement to the payees in execution of his contract of guaranty. Such act was authority to them to write over his signature anything that was consistent with his undertaking to guaranty the paper.

We are of the opinion upon principle and authority, and so decide, that where one not a party to a negotiable note, after it has been delivered to and while it is in the hands of the payee, indorses it in blank, upon a valid consideration, for the purpose of assuming the liability of a guarantor, such act authorizes the payee to write over the...

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26 cases
  • Peterson v. Russell
    • United States
    • Supreme Court of Minnesota (US)
    • October 15, 1895
  • Bank of Montreal v. Beecher
    • United States
    • Supreme Court of Minnesota (US)
    • May 19, 1916
    ......v. Dedrick, 61 Minn. 513, 63 N. W. 1110), or for a guaranty of the debt (Peterson v. Russell, 62 Minn. 220, 64 N. W. 555,29 L. R. A. 612, 54 Am. St. Rep. 634; that the abandonment of an attachment sued out and about to be levied is ......
  • Bank of Montreal v. Beecher
    • United States
    • Supreme Court of Minnesota (US)
    • May 19, 1916
    ...... as collateral to the debt (Nichols & Shepard Co. v. Dedrick, 61 Minn. 513, 63 N.W. 1110), or for a guaranty. of the debt (Peterson v. Russell, 62 Minn. 220, 64. N.W. 555, 29 L.R.A. 612, 54 Am. St. 634); that the. abandonment of an attachment sued out and about to be levied. is ......
  • Bank of Montreal v. Beecher
    • United States
    • Supreme Court of Minnesota (US)
    • May 19, 1916
    ...the debt (Nichols & Shepard Co. v. Dedrick, 61 Minn. 513, 63 N. W. 1110), or for a guaranty of the debt (Peterson v. Russell, 62 Minn. 220, 64 N. W. 555, 29 L.R.A. 612, 54 Am. St. 634); that the abandonment of an attachment sued out and about to be levied is sufficient consideration for the......
  • Request a trial to view additional results

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