Ryan v. Security Savings & Commercial Bank

• Decision Date: 07 March 1921
• Docket Number: 3449.
• Citation: 271 F. 366
• Parties: RYAN v. SECURITY SAVINGS & COMMERCIAL BANK.
• Court: U.S. Court of Appeals — District of Columbia Circuit

271 F. 366

RYAN v. SECURITY SAVINGS & COMMERCIAL BANK.

No. 3449.

United States Court of Appeals, District of Columbia.

March 7, 1921

Submitted February 11, 1921.

Appeal from the Supreme Court of the District of Columbia.

J. S Easby Smith and Ralph B. Fleharty, both of Washington, D.C for appellant.

Milton W. King, Theodore D. Peiper, and L. Koenigsberger, all of Washington, D.C., for appellee.

SMYTH Chief Justice.

The appellee, which we shall call the bank, brought suit against Ryan on a promissory note, and filed an affidavit of merit under the seventy-third rule of the trial court. Ryan pleaded in bar, and in due time filed an affidavit of defense, then a substituted one, and finally the one which is now before us. The bank moved for judgment; the court granted the motion on the ground that Ryan's affidavit did not state a defense and gave judgment for the bank, from which Ryan appeals.

Was Ryan's affidavit sufficient? Since it represents his third attempt, it must be assumed that it says all that can be said in his behalf. From it we gather the following: A corporation known as Ryan's Auto Service was indebted to the bank on four notes, aggregating $7,900, which Ryan 'had signed as indorser.' Ryan was the chief, if not the sole, stockholder of the corporation. Certain parties purchased the business of the corporation and assumed all its liabilities. Between these parties, the bank, and Ryan there was an agreement by which Ryan was not to further indorse the notes of the corporation. Two of the notes which he had indorsed-- one in the sum of $2,300 and another in the sum of $800-- became due. Renewal notes for the amounts evidenced by them, and signed by the corporation and third parties, were taken by the bank. Ryan did not indorse them. Later the other two notes, one in the sum of $2,500 and the other in the sum of $1,900, became due, but were not paid; nor were they extended.

About three months after this Ryan was called to the bank and told by the vice president that he must put his notes in bankable shape, and that if he would sign a note for $7,500-- the four notes having been curtailed in the sum of $400 at some time not stated-- it would be all right. Ryan hesitated, and said he was no longer liable as indorser upon any of those notes; but the vice president insisted that he was, and added that the assets of the corporation were sufficient to pay them; that he needed the $7,500 note only to enable the bank to pass the examination of the bank examiner, who was then in the bank, and that Ryan would not be called upon to pay it. Relying upon these representations, Ryan signed the note and delivered the same to the vice president. This is the note in suit. The notes for which this note was given were not delivered to Ryan when he executed it, but he does not say they were not surrendered later.

With respect to the claim that the defendant was not to be held liable for the note, for the reason given, it must be put aside at once as devoid of merit. It contradicts the terms of the note, and this is not permissible. Specht v. Howard, 16 Wall. 564, 21 L.Ed. 348; Brown v. Spofford, 95 U.S. 474, 24 L.Ed. 508; Martin v. Cole, 104 U.S. 30, 36, 26 L.Ed. 647. There is nothing in Bluthenthal & Bickart v. Carson, 37 App.D.C. 118, to the contrary. It was there held that the defendants could show under section 1333 of the Code that they were accommodation indorsers, without consideration, for the benefit and at the request of the plaintiff. Clearly it has no bearing here.

Ryan urges that he was induced to give the note in question upon the representation by the vice president that he was indebted to the bank on the four notes we have mentioned. He says this representation was untrue as to two of the notes; that is, the two for which renewals were taken and which he did not indorse. His argument is in effect that he was only an indorser upon the original notes; that the extension of the time of payment of the debt for which they were given, by the taking of the renewals without his consent, released him, and to that extent there was a partial failure of consideration. If this were true, it would be a defense pro tanto to the note. Code Sec. 1332.

But the argument assumes that he was an indorser within the meaning of the law, and that the affidavit shows it. The allegation relied on is that the bank held a number of the notes of the Auto Service corporation, 'which notes the defendant had signed as indorser. ' The mere fact that he wrote his name on the back of the notes does not show even prima facie that he was a technical indorser. It is important to know when and under what circumstances he wrote his name there. If it was before or near the time the notes were delivered, or after they were delivered, but for the purpose of strengthening the credit of the note, and before the payee had indorsed, he would be a maker, and not entitled to any of the rights or privileges of an indorser.

The affidavit shows that the notes were never transferred from the payee bank, and that it never indorsed them. He was the only indorser. A fair construction of the affidavit warrants...