Swenson v. Stoltz

• Decision Date: 20 December 1904
• Citation: 78 P. 999,36 Wash. 318
• Parties: SWENSON et al. v. STOLTZ et ux.
• Court: Washington Supreme Court

78 P. 999

36 Wash. 318

SWENSON et al. v. STOLTZ et ux.

Supreme Court of Washington

December 20, 1904

Appeal from Superior Court, Spokane County; Geo. W. Belt, Judge.

Action by Simon Swenson and another against George A. Stoltz and wife. From a judgment in favor of plaintiffs, defendants appeal. Modified.

John M. Gleeson, for appellants.

L. J Birdseye and Harris Baldwin, for respondents.

HADLEY J.

This action is based upon an alleged oral guaranty of a promissory note. The note contained a promise to pay to the order of George A. Stoltz, for value received, the sum of $1,500, and was executed by Charles T. Uhlman and Halcyon, Uhlman. The complaint alleges, in effect, that, as payment to plaintiffs of $1,500, for value received, by George A. Stoltz, and in consideration thereof, the said Stoltz transferred and delivered said note to the plaintiffs, and orally guarantied to them that the note was perfectly good--as good as gold--and would be paid by said makers when it became due that plaintiffs then received and accepted said note and said guaranty from said Stoltz; that, at the maturity of the note plaintiffs presented it to the makers and demanded payment but they failed and refused to pay it; that immediately thereafter they notified said defendant Stoltz of the nonpayment of the note, and demanded of him that he pay the amount thereof; that thereafter, and prior to the commencement of this suit, said demand was repeated, but said Stoltz neglected and failed to pay the amount, or any part thereof. Judgment is demanded for the amount, with interest, less a credit of $93.60. The answer denies the material allegations of the complaint. A trial was had before the court and a jury, which resulted in a verdict against the defendant George A. Stoltz for the sum of $1,695.94. Judgment was thereafter rendered for the amount against George A. Stoltz, and against the community composed of the defendants, George A. Stoltz and Lucy Stoltz, his wife. The defendants have appealed from the judgment.

The main contention of appellants is that the court erred throughout its entire conduct of the case, including the overruling of the demurrer to the complaint, by holding that the facts stated are sufficient to make appellants liable. As far as controverted facts are concerned, they have been settled by the jury in favor of respondents, and against George A. Stoltz. We shall therefore confine ourselves to the matter of their sufficiency to entitle respondents to recover. Appellants insist that, under our statute relating to negotiable instruments (sections 30, 31, c. 149, p. 347, Sess. Laws 1899), the title to the note did not pass to respondents in the absence of the payee's indorsement thereon. Those sections are as follows:

'Sec. 30. An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder completed by delivery.

'Sec. 31. The indorsement must be written on the instrument itself or upon a paper attached thereto. The signature of the indorser, without additional words, is a sufficient indorsement.'

It will be observed that the two sections, taken together, provide that an instrument, when payable to order, is negotiated by the indorsement of the holder, completed by delivery, and that the indorsement must be written upon the instrument itself, or upon a paper attached thereto. Section 49 (page 349) of the same act, however, provides as follows: 'Where the holder of an instrument payable to his order transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferrer had therein, and the transferee acquires, in addition, the right to have the indorsement of the transferrer. But for the purpose of determining whether the transferee is a holder in due course, the negotiation takes effect as of the time when the indorsement is actually made.' It is thus clear that, while sections 30 and 31 state how the negotiation may be completed, yet section 49 expressly says that mere delivery of an instrument payable to order vests title in the transferee and also carries with it the right to compel the indorsement of the transferror. In the event of a suit upon the note itself, and against the makers, the necessity for such indorsement might become material, in order to maintain the suit as upon an assigned instrument, under the terms of section 4835, 2 Ballinger's Ann. Codes & St. But this is not a suit against the makers of the note.

Appellants next call attention to section 18 (page 345) of said act of 1899, which is as follows: 'No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided. But one who signs in a trade or assumed name will be liable to the same extent as if he had signed his own name.' It is argued that, under the terms of the above section, considered also together with sections 30 and 31, set out above, there can be no liability here in the absence of appellants' signatures upon the note. It will be observed that section 18 says that no person is liable 'on the instrument' whose signature does not appear thereon. This is not a suit on the instrument, but upon the guaranty of appellants that the amount the note represented would be paid when due. The guaranty of a note is not a promise to answer for the debt of the maker, and is not within the statute of frauds, when it is negotiated in consideration of value received by the guarantor, but it becomes the original and absolute obligation of the guarantor himself, whereby he promises to pay his own debt to the guarantee; that is to say, the debt he owes his guarantee for what he has received from the latter. The note meanwhile is delivered and held as collateral to the promise of the guarantor. If the maker pays it at the date of its maturity, the guarantor's obligation is by that fact discharged; but, if the maker fails to pay, the guarantor remains liable upon his own obligation, which is absolute and independent of the note itself. Cardell v. McNiel, 21 N.Y. 336; Milks v Rich, 80 N.Y. 269, 36 Am. Rep. 615; Bruce v. Burr, 67 N.Y. 237; Holm v. Jamieson (Ill.) 50 N.E. 702, 45 L. R. A. 846; Delsman v. Friedlander, 40 Or. 33, 66 P. 297; Kierman v. Kratz, 42 Or. 474, 69 P. 1027, 70 P. 506. That an oral guaranty under such...