Record v. Rochester Trust Co.

• Decision Date: 04 May 1937
• Parties: RECORD v. ROCHESTER TRUST CO.
• Court: New Hampshire Supreme Court

192 A. 177

RECORD

v. ROCHESTER TRUST CO.

Supreme Court of New Hampshire. Strafford.

May 4, 1937.

[Copyrighted material omitted.]

Transferred from Superior Court, Strafford County; Sawyer, Judge.

Suit by Alice F. Record against the Rochester Trust Company for cancellation of a promissory note and other relief on the ground of fraud. Trial by the court, who found certain facts and transferred the case for rulings of law thereon and on exceptions taken.

Bill dismissed.

Murchie, Murchie & Blandin, of Concord and A. Inghram Bicknell, of Lexington, Mass. (Alexander Murchie, of Concord, orally), for plaintiff. Conrad E. Snow, of Rochester, for defendant.

ALLEN, Chief Justice..

In 1918 the defendant made a loan on a promissory note indorsed by two signers for the maker's accommodation. Over their signatures were written the words "waiving demand and notice." The plaintiff's deceased husband was the second signer. He died before the note became due. It was not paid at its maturity, and the executrix was not served with demand and notice. Thereafter, and within one year from her appointment as executrix, the plaintiff gave the defendant her personal agreement to indemnify it against loss and guaranteeing payment of the note in consideration of its grant of an extension of the note. At a later time, the note remaining unpaid, she gave her personal note for its amount with interest added, and at various times furnished security for it. This note she has partly paid.

The plaintiff claims that her note was fraudulently obtained, and she seeks its cancellation, the return of the security still held for it, and repayment of the payments made. Briefly stated, the charge of fraud is that an officer of the defendant whom she consulted and relied upon for assistance in the settlement of her deceased husband's estate took advantage of her trust and confidence in him and did not deal fairly with her in matters between the estate and the defendant, misleading her and making misrepresentations.

An important question is whether the plaintiff's deceased husband in indorsing the original note waived demand and notice. The waiver was written above his signature, but another indorser's signature which was written below the waiver preceded his. The note was locally payable and is therefore to be interpreted according to local law.

Primarily the question is one of construction of a writing, but bearing on the question the meaning of a statutory rule of construction is involved. By the negotiable instruments law notice of dishonor may be waived. P.L. c. 312, § 109. By the ensuing section (section 110), "where the waiver is embodied in the instrument itself it is binding upon all parties; but where it is written above the signature of an indorser it binds him only." The waiver here was not thus embodied, and it is the plaintiff's position that by the statute the indorser whose signature immediately follows the waiver is the only one subscribing to it.

Decision is here confined to the special features of the indorsement. Both indorsers signed beneath the waiver at the same time, before delivery of the note to the payee, and for the maker's accommodation. As to the payee, it had no understanding of any difference between the indorsers in the liability each assumed to it, and it was wholly a matter of circumstance, with no intended legal effect, which signature preceded the other. No claim is made, and no evidence is presented to show, that the payee believed there was any variation in the terms of the contracts of the indorsers with it, or even that it had any doubts or question on the point. As the findings are understood, it was the payee's practice to treat an indorsed waiver as given by all indorsers signing below it unless it was specially indicated that they did not subscribe to it.

Under normal rules of construction in conformity with common understanding and universal business usage, when two or more persons sign a statement with no apparent difference in interest or application, the order in which they sign is of no effect in determining their resulting legal obligations. This principle is so axiomatic as a precept of common sense and is so imperatively demanded by considerations of business convenience that an exception to it can hardly be justified by anything less than an explicit legislative command.

But the question remains whether by statutory order a special exception is created by which precedence in signing is decisive of liability. Does the statute limit subscription to an indorsed waiver to the indorser whose signature immediately follows it? The statutory reference to the indorser in the singular instead of in the plural is not significant. In the construction of statutes, "Words importing the singular number may extend and be applied to several persons or things." P.L. c. 2, § 3. The statute does not in explicit terms say that only the first indorser is held to the waiver. It binds an indorser only when it is written above his signature. In ordinary and general meaning an indorser is any indorser; and the waiver is written above the signature of a second indorser as well as above that of the first. To import in the statute a meaning that the waiver is the agreement of only the first indorser, when others are not shown to have indorsed in any difference of relation or understanding, would produce a rule with no fair reason to support it. "Waiving demand and notice" is naturally read "we waive demand and notice" when the waiver appears to be subscribed by more than one in equality of relation. No one signing above the waiver subscribes to it, and no one in an exceptional position or using words excepting its application to his signature is bound by it. The statute is considered to impose no further limitation. Certainly no demand of justice may be urged for a more restrictive construction, and no business usage or convenience is known or brought to notice to make such a construction reasonable. The "custom of merchants" and banking practice have not been shown to favor or observe a rule so peculiarly at odds with the way in which business in general is done.

It is recognized that the negotiable instruments law is legislation within the policy of country-wide uniformity. Cooperation among the states by enactment of the law secures uniformity in a large measure. The law itself is an attempt to codify and standardize the common law on the subject. It does not seek to alter the common law except to meet the exigencies of conflicting rules in different states. The objective of consistency and harmony requires that the construction of the legislation in other states be treated and receive authority as a part of their body of unwritten law. The decisions in other states upon the section of the law here under consideration have accordingly been examined. They are found to be in conflict with the weight of authority appearing to deny the plaintiff's position. Some of the cases are declaratory only of the common law, but as the legislation is designed to express it and not derogate from it, such cases may fairly be grouped with those which pass upon the legislation. In support of the view here taken these may be cited: Parshley v. Heath, 69 Me. 90, 31 Am.Rep. 246; Johnson v. Parker, 86 Mo.App. 660; Central Nat. Bank v. Sciotoville Milling Co., 79 W.Va. 782, 91 S.E. 808; Confidential Finance Co. v. Monastersky, 106 N.J.Law, 14, 148 A. 183; Farmers Exch. Bank v. Altura Gold Mill & Mining Co., 129 Cal. 263, 61 P. 1077; Loveday v. Anderson, 18 Wash. 322, 51 P. 463; Portsmouth Sav. Bank v. Wilson, 5 App.D.C. 8. Reference is also made to Williston, Conts. (Rev.Ed.) § 1186.

A leading case upholding the rule that, prima facie at least, an indorsed waiver is the contract of only the person whose signature immediately follows it, is that of First Nat. Bank v. Wolfson, 271 Mass. 292, 171 N.E. 460, 461. The reasoning of the opinion is not convincing. The view was properly taken that the waiver was not "embodied in the instrument." But the court did "not intend to intimate that all indorsers would not be bound by signing under one waiver if it is so expressed as to indicate that all intend to be bound by its terms." The waiver in that case, as here, was neutrally singular or plural in its terms. Logically, and as language is customarily used, it applied to a number of indorsers as much as to one only. But the waiver would then be no more "embodied in the instrument" than if only one indorser subscribed to it. To invoke the statute to hold only the first indorser a party to a waiver above his name, and at the same time to say that the waiver may be so phrased as to make other indorsers parties to it, seems to adopt a construction which is unreasonably technical. The issue whether "waiving" denotes the singular or plural is thought to be determinable by common-law rules of construction, and not by ascribing to the statute the force of a prescriptive edict to limit the terms of a waiver to a singular application if it does not clearly and definitely show a plural one. Of the rule that only the first indorser agrees to a waiver over his name when by its terms or otherwise it does not appear that other indorsers adopt it, there can be no just criticism. But that the statute lays down any rule for construing the terms of the waiver in saying what signers below it agree to it is thought to clothe the statute with a force and weight it was not intended to have.

In Zisman v. Gateman, 200 N.E. 556, a later Massachusetts case, a second indorser was held to have waived when it appeared that he intended to do so. The conclusion in First Nat. Bank v. Wolfson, supra, that the second indorser's subscription to the waiver was not apparent, seems to amount to a disregard of purpose and understanding. When, upon the issue of a subsequent indorser's agreement to a waiver above his signature, it is once admitted that parol evidence may be...