Thomas v. Hoebel

• Decision Date: 17 October 1928
• Docket Number: 5180
• Citation: 271 P. 931,46 Idaho 744
• Parties: C. O. THOMAS, Receiver of THE FIRST NATIONAL BANK OF DUBOIS, IDAHO, a Corporation, Respondent, v. OTTO P. HOEBEL and ROBERT WILLIAMS, Executors of the Will of O. P. WILLIAMS, Deceased, Appellants
• Court: Idaho Supreme Court

271 P. 931

46 Idaho 744

C. O. THOMAS, Receiver of THE FIRST NATIONAL BANK OF DUBOIS, IDAHO, a Corporation, Respondent, v. OTTO P. HOEBEL and ROBERT WILLIAMS, Executors of the Will of O. P. WILLIAMS, Deceased, Appellants

No. 5180

Supreme Court of Idaho

October 17, 1928

BILLS AND NOTES-INDORSEMENT AFTER DELIVERY-LIABILITY OF INDORSER-CONSIDERATION-PRESUMPTION-SUFFICIENCY.

1. Under Uniform Negotiable Instruments Law, secs. 17, 63, 64 (C. S., sec. 5884, subd. 5, and secs. 5930, 5931), one signing notes after delivery by indorsing them in blank under agreement made after delivery, held liable as indorser thereon.

2. Where decedent indorsed notes in blank after delivery, but prior to maturity, under agreement supported by valuable consideration, with intent to make notes good and to charge himself to payee, he became liable as indorser by virtue of the contract, irrespective of statute.

3. Indorsements of notes made after delivery by one other than payee or holder, being in writing, there was a presumption of consideration, and burden of showing want of consideration was on party asserting contrary, under C. S., secs. 5663 5664, 5891.

4. Any consideration which would support a simple contract is sufficient to support an indorsement on note made after delivery, under C. S., sec. 5892.

5. Indorsement by national bank stockholder of notes of investment corporation, organized by stockholders of bank to take over slow and bad paper to comply with bank examiner's requirements, which indorsement was executed in consideration of other stockholders taking over bank and all of his stock therein, held supported by sufficient consideration, under C. S., sec. 5892, even though indorsement was executed after delivery of notes.

6. National bank's receiver was entitled to maintain action on stockholder's indorsement on notes held by bank supported by sufficient consideration, as against objection that oral contract under which stockholder indorsed notes was invalid, under C. S., sec. 7976, because there was no note or memorandum thereof and no expression of consideration for indorsement.

APPEAL from the District Court of the Sixth Judicial District, for Butte County. Hon. Ralph W. Adair, Judge.

Action on promissory notes. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs to respondent.

F. J Cowen, Jones, Pomeroy & Jones and Solon B. Clark, for Appellants.

At the time the notes were given on the 9th and 16th of June, respectively, they were signed by the Idaho Realty & Investment Company as the sole maker, and there was no indorsement of any kind on either of them, nor was there any agreement for such indorsement. The agreement to indorse the notes was made more than five months afterward. These indorsers were not parties to the original contracts; they made a new promise, and the law construes this to be a guaranty. (Cripple Creek State Bank v. Rollestone, 70 Colo. 434, 202 P. 115; Campbell v. DeClerque, 231 Ill. 442, 83 N.E. 224; Thompson & Thompson v. Brown, 121 Mo.App. 524, 97 S.W. 242; State ex rel. Shipman v. Allen, 124 Mo.App. 465, 103 S.W. 1090.)

"When it is proved that a signature was written on the back of a note after its final delivery to the payee, and not in pursuance of any prior arrangement so to do, the indorser will be liable only as guarantor, and on proof of some new consideration." (Tenney v. Prince, 21 Mass. (4 Pick.) 385, 16 Am. Dec. 347; Mecorney v. Stanley, 62 Mass. (8 Cush.) 85.)

"Names written upon the back of a promissory note imply a guaranty." (Rogers v. Schulenberg, 111 Cal. 281, 43 P. 899; Condon v. Bruse, 58 Ill.App. 254; Holmes v. Williams, 69 Ill.App. 114; Anderson v. Border, 75 Mont. 516, 244 P. 494.)

"It is generally held that, if the indorsement is made after the delivery of a note, it is not an original contract, but is a contract of guaranty." (8 C. J., p. 83, sec. 130.)

"In an action on a promissory note in which the makers and original indorsers filed cross-complaint against indorsers after execution and delivery, but before maturity, it was incumbent upon cross-complainants to allege facts showing an independent consideration to support such indorsements separate and distinct from the original loan, the consideration for the making and delivery of the note." (Hilgemeier v. Bower Mfg. Co., 81 Ind.App. 191, 139 N.E. 691.)

"And, though a different rule prevails where the guaranty is indorsed before delivery, it has been held that as a guaranty written on a promissory note, after the note has been delivered and taken effect as a contract, requires a distinct consideration to support it, yet if such a guaranty does not express any consideration, it is invalid, where the statute of the state requires the consideration to be expressed in writing." (25 R. C. L., p. 519, sec. 104; Moses v. Lawrence County Bank, 149 U.S. 298, 13 S.Ct. 900, 37 L.Ed. 743.)

Where a contract is made for the benefit of a third party, such third party is not entitled to enforce the contract unless there was some obligation between the promisee in the contract and the beneficiary which the promisor obligated himself to pay. (Williams v. Hasshagen, 166 Cal. 386, 31 Am. St. 745, note, 137 P. 9; Sherwood v. Lowell, 34 Cal.App. 365, 167 P. 554; Biddel v. Brizzolara, 64 Cal. 354, 30 P. 609; 4 Page on Contracts, sec. 2397; 6 Cal. Jur. 469, secs. 279, 280; Kramer v. Gardner, 104 Minn. 370, 116 N.W. 925, 22 L. R. A., N. S., 492; Jefferson v. Asch, 53 Minn. 446, 39 Am. St. 618, 55 N.W. 604, 25 L. R. A. 257.)

John W. Jones, Guy Stevens, Peterson, Baum & Clark and G. W. Soule, for Respondent.

The Uniform Negotiable Instruments Law conclusively determines the liability of those who indorsed these notes on the back thereof.

C. S., sec. 5930. "A person placing his signature upon an instrument otherwise than as maker, drawer or acceptor is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity."

"The beneficial effect of the Negotiable Instruments Law in producing uniformity, where before there was hopeless confusion and conflict among the decisions of the several states, is more clearly evidenced in connection with the rule provided for therein fixing the liability of irregular and anomalous indorsers than in any other respect. The liability is now settled beyond dispute by the express provisions thereof in the states which have adopted that statute. . . . Rule applied in Florida, Idaho, Kentucky, Louisiana, Maryland, Massachusetts, Missouri, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Rhode Island, Tennessee and in the federal courts, these statutory provisions, or at least some of them, have been recognized or applied by holding the liability to be that of indorser, and where the liability was previously held to be other than that of indorser in the particular state, it has been universally held that the negotiable instruments law abrogates the old rule." (8 C. J., p. 75, sec. 122.)

"Under the applicable provisions of the Negotiable Instruments Law, . . . . a person placing his signature upon an instrument otherwise than as maker, drawer, or acceptor is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity, and whether he signs the instrument before or after its delivery does not affect his legal status as such." (Krumm v. El Reno State Bank, 83 Okla. 177, 201 P. 364; Morley v. Dula (Ariz.), 253 P. 899; First State Bank of Laramie v. Rock Creek Producers' Oil Co., 34 Wyo. 405, 244 P. 372.)

"The note and indorsement thereon, being in writing, are presumed to be upon a valid consideration, and in a suit thereon it is unnecessary to set forth the consideration." ( McAtee v. Shade, 185 F. 442, 107 C. C. A. 512, and cases cited.)

"In an action upon any instrument, which by statute imports a consideration, it is not necessary to set out the consideration." (Frick Co. v. Hoff, 26 S.D. 360, 128 N.W. 495, and cases cited.)

"A sufficient consideration is: A benefit to the party promising, or a loss or detriment to the party to whom the promise is made." (13 C. J., p. 311, sec. 144.)

HARTSON, District Judge. Wm. E. Lee, C. J., and Givens and Taylor, JJ., concur. Budge, J., took no part in the decision.

OPINION

HARTSON, District Judge.

--The action was originally commenced by The First National Bank of Dubois, Idaho, as payee, on two notes, for $ 25,000 and $ 10,000 respectively, executed by the Idaho Realty & Investment Company, a corporation, and indorsed by O. P. Williams, deceased, and five others. The bank became insolvent before trial and the receiver was substituted as plaintiff.

In May, 1923, O. P. Williams, now deceased, James Denning, S. K. Clark, C. A. Doschades, J. P. Jacoby and T. E. Wood (hereinafter called Dubois stockholders), and others, were stockholders of the bank. Then or later E. M. Kennedy, now deceased, L. C. Collins, Alex Younie and others, of Blackfoot, Idaho, became stockholders. On or about May 26, 1923, the bank was in financial distress and its stockholders incorporated the Idaho Realty & Investment Company as a holding company to take over some of the bank's slow and bad paper, in order to comply with examiner's requirements, and to substitute notes of the Investment Company. The latter company and the bank had the same amount of authorized stock, and each bank stockholder subscribed to a like amount of stock in the Investment Company.

On June 9, 1923, the latter company took over certain assets, to the amount of $ 25,000, and executed its note to the bank in that sum. Thereafter, on June 15, 1923, it took over other assets for $ 10,000, and executed its note to the bank for that amount. Both notes were...