Sykes v. Everett
| Decision Date | 25 November 1914 |
| Docket Number | 317. |
| Parties | SYKES ET AL. v. EVERETT. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Durham County; Lyon, Judge.
Action by R. H. Sykes and W. P. Clements against R. O. Everett. Judgment for plaintiffs, and defendant appeals. Reversed, and action dismissed.
A "surety" is considered as a "maker" of a note and undertakes primarily to pay if the debtor does not and the debt becomes his own as between himself and the creditor when the debtor fails to pay it, and the creditor may sue upon it as soon as it becomes due and dishonored.
This action was brought to recover the sum of $10,144.50, as due upon four several notes indorsed in blank by the defendant. The case was referred to Hon. Howard A. Foushee, who made his report, in which, after finding the facts and stating his conclusions of law therefrom, he recommended that judgment be rendered in favor of the plaintiffs, and against the defendant, for $10,144.50, the amount due on the notes, with interest on $7,144.50 from March 20, 1911, and on $3,000 until paid, together with the costs of the action, and further recommended that no execution be issued on said judgment until May 1, 1915, and that the three F. A. Moore notes, and the assignment from him securing the same, and the Louis Moore note with the assignment securing the same, should all be delivered by the said trustee to the clerk of the superior court of Durham county, state of North Carolina, to be held by him until such time as said R. O. Everett pays said judgment, at which time the same shall be delivered to him. Defendant excepted to the conclusions of law of the referee.
The material facts are as follows: On the 20th day of March 1911, F. A. Moore executed and delivered to the defendant, R O. Everett, three demand notes aggregating $7,144.50, and the same are set out in the record. As stated, the notes were payable on demand and were secured by an assignment of an interest of F. A. Moore in his share and portion of the estate of John Annin of New York City. This assignment, which was deposited with R. O. Everett as collateral for the payment of said notes, in addition to transferring and assigning an interest to secure said notes, constituted and appointed the defendant, R. O. Everett, or any person whom he might substitute as his lawful attorney, to collect said interest in said estate and apply the same to the discharge of said indebtedness. On the 8th day of April, 1911, Louis Moore executed and delivered to R. O. Everett and G. C Farthing his promissory note for $3,000, payable on the 1st day of September, 1911, and to secure said indebtedness transferred and assigned to R. O. Everett an interest in the estate of John Annin, and appointed R. O. Everett, or any person whom he might substitute as attorney, to collect the same and discharge said indebtedness. The Louis Moore note and the assignment appear in the record. On or about the 11th day of April, 1911, R. O. Everett, by indorsement, duly transferred and delivered to G. C. Farthing, for valuable consideration, the four notes above referred to, together with his interest in said assignments (which were given as collateral therefor). At the time these four notes were so indorsed and transferred to G. C. Farthing, there was an agreement between R. O. Everett and G. C. Farthing that, if F. A. Moore and Louis Moore did not pay and the money was not realized on the assignments of their interest in the Annin estate, R. O. Everett would be ultimately responsible for the payment of said notes, but he would not be called upon to pay the same until the estate of John Annin had been exhausted. G. C. Farthing held the notes so indorsed to him from April 11, 1911, until the 23d day of August, 1912, when the said Farthing executed and delivered to R. H. Sykes and W. P. Clements, trustees, a deed of trust conveying his property to them, and, among other things, all the right, title, and interest of G. C. Farthing in and to the above-described notes and collateral assignments, and on said date the trustees took possession of said papers and retained them until the commencement of this action. Said trustees of G. C. Farthing made demand upon F. A. Moore and Louis Moore, but they failed to pay said notes, and the estate of John Annin has not been wound up. Demand was then made by the plaintiffs, Sykes and Clements, trustees, upon R. O. Everett for payment, and he declined to pay upon the ground that he was not liable until the Annin estate had been exhausted.
The referee made the following findings of fact, among others:
(7) That at the time said three F. A. Moore notes were indorsed to G. C. Farthing, to wit, April 11, 1911, it was done upon an agreement between R. O. Everett and G. C. Farthing that he would be ultimately responsible for the payment of said notes, but that he (Everett) would not pay the same until the estate of John Annin had been exhausted. In the event there was any trouble about the collection of said notes, that he (Everett) would procure and pay for the services of an attorney, and that he (Everett) would hold Farthing harmless against the cost and expenses of any litigation incident to the collection of said notes. That Farthing did not know anything about the Annin estate, and that Everett told Farthing he had been to New York and he expected the same to be closed up in 60 or 90 days, and that the notes were perfectly good. That Farthing relied upon the representations of R. O. Everett and took over said notes without investigation.
(9) That at the time said Louis Moore note was transferred to G. C. Farthing, as aforesaid, to wit, April 16, 1911, it was agreed between Farthing and Everett that he (Everett) would be ultimately responsible for the full face value of said note, but that Farthing should not call on him to pay the same until the collateral was exhausted, and that, if any attorney was needed to collect the Louis Moore note, he (Everett) would pay the expenses of same, and that Farthing should be held harmless by reason of any litigation concerning the same.
(10) That said estate of John Annin has not been wound up, that R. O. Everett has employed counsel and has made repeated trips to New York to see said attorneys and to expedite the winding up of said estate of John Annin, but so far the end is not in sight, and no one knows when the suits incident to the winding up of said estate will be ended.
The exceptions coming on to be heard before Judge C. C. Lyon, the following judgment was entered thereon:
From this judgment defendant appealed to this court.
Bryant & Brogden, of Durham, and Winston & Biggs, of Raleigh, for appellant.
P. C. Graham, of Durham, for appellees.
WALKER, J. (after stating the facts as above).
The larger part of the argument before us was taken up with a full discussion of the question whether a blank indorsement by the payee, or one of the payees, to a third party, can be explained by oral evidence showing what the special contract between them was, and that it was different from the one implied by law from the mere indorsement of the paper. This is a question of evidence, and the admission of the oral proof could only be incompetent on the ground that it would vary, alter, or contradict the terms of a contract which the parties have reduced to writing as the only expression of their agreement, and would violate the general rule of evidence prohibiting the introduction of such evidence. But there was no exception to the evidence, as there should have been, if that rule was relied upon; but the evidence was admitted without any objection, so far as appears, and the referee found the facts in regard to the special contract. Besides, if plaintiffs had objected, they have not appealed, and the exception to the admission of the evidence would not now be open to them.
But waiving, for the present, this view of the record, and considering the other question argued, we are of the opinion that, by our decisions, although there is some conflict in other states, the evidence is competent. In Mendenhall v Davis, 72 N.C. 150, this court, after stating that when a payee or regular indorsee thereof writes his name on the back of a note, as between him and a bona fide holder for value and without notice, the law implies that he intended to assume the well-known liability of an...
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