Van Marel v. Watson

• Decision Date: 18 April 1925
• Docket Number: Civil 2271
• Citation: 235 P. 144,28 Ariz. 32
• Parties: G. P. VAN MAREL, Appellant, v. H. G. and L. A. WATSON, Doing Business Under the Name and Style of WATSON BROTHERS, Appellees
• Court: Arizona Supreme Court

235 P. 144

28 Ariz. 32

G. P. VAN MAREL, Appellant, v. H. G. and L. A. WATSON, Doing Business Under the Name and Style of WATSON BROTHERS, Appellees

Civil No. 2271

Supreme Court of Arizona

April 18, 1925

APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Affirmed.

STATEMENT OF FACTS.

This is an action to recover the sum of $918.27, the balance alleged to be due on a promissory note signed by G. P. Van Marel and made payable to Watson Brothers, at the office of the Western States Securities Company, Phoenix, Arizona. The note is dated November 12, 1920, is for the principal sum of $1,250.27, and payable in eight monthly installments, the first of which became due two months after date. Upon it are the following indorsements:

"For value received, we, and each of us, jointly and severally guarantee payment of the principal and interest of the within note, and of an extension thereof in whole or in part waiving presentment, demand, notice, protest, or notice of protest.

"[Stamped] WATSON BROS.

"[Signed] L.A. WATSON.

"[Canceled revenue stamps -- 24c]

Due.

Paid.

Prin.

Balance.

04/11/21

50.00

05/10/21

50.00

1,150.27

Proceeds

09/20/21

222

918.27

Sale."

Upon demand of the Western States Securities Company, and after maturity, Watson Brothers paid that company the balance due on the note; whereupon it was redelivered to them, and they immediately brought this action, setting up the usual allegations in a suit on a promissory note.

The defendant demurred to this complaint and by way of answer alleged that he paid the obligation sued on in full on September 1, 1921. The court overruled this demurrer and thereafter sustained plaintiff's demurrer to the answer but granted defendant leave to amend. He did so, alleging that he had paid the obligation sued on in full by delivering to the plaintiffs in settlement of his obligation the property mentioned in their complaint and that it was at that time of the value of the amount sued for by them. A demurrer to this answer was also sustained; whereupon defendant filed a second amended answer, in which he alleged that a certain automobile sold to him by plaintiffs, and for which the note was given, was delivered to plaintiffs at their request, and that at the time of said delivery the automobile was equal to the amount asked for by plaintiffs, who accepted it in full payment of said note and in satisfaction of his obligation to them.

Plaintiffs offered the note in evidence, but it was rejected upon the ground that it had been transferred and delivered by plaintiffs to the Western States Securities Company and there was no allegation of ownership in the plaintiffs. By permission of the court the complaint was amended by inserting the clause "that plaintiffs are now the owners and holders of said note"; whereupon the note was admitted in evidence and the plaintiffs, after showing the amount due thereon, rested.

The defendant offered to show that the car was taken back in payment of the amount due and that it was at that time of the value of the amount sued for by plaintiffs, but the court refused to admit evidence as to the value of the car, upon the ground that it was immaterial; whereupon counsel for defendant stated that they could not prove an agreement between plaintiffs and defendant or anyone else to retake the car in payment of the balance due on the note. Thereupon the court granted plaintiffs' motion for a directed verdict and, from the judgment entered thereon, as well as from the order denying his motion for a new trial, the defendant appeals.

Mr Weldon J. Bailey and Mr. John W. Ray, for Appellant.

Messrs. Kibbey, Bennett, Gust & Smith and Mr. Scott L. Norviel, for Appellees.

OPINION

McALISTER, C. J.

(After Stating the Facts as Above.) The first assignment is that the court erred in overruling the demurrer to the complaint. This contention is based on the fact that Watson Brothers, the payees in the note, assigned and transferred it to the Western States Securities Company and guaranteed its payment, and, when the amount due thereon was paid by them in compliance with their guaranty and the note taken back, the company did not indorse or reassign it.

When suit is brought on a note by the payee thereof, however, it is not necessary that he allege he is its owner and holder, but it is sufficient if he plead "the execution and delivery of the note to plaintiff, . . . since it will be presumed that the payee of a note in possession thereof is the owner." 8 C.J. 886; Dysert et al. v. Weaver et al., 46 Cal.App. 576, 189 P. 492. And, even though the payee had indorsed the note to a third party, it is not required that he allege ownership or the manner in which he became reinvested with title, since the presumption is that the note has been retransferred to him, or that the transfer by him was not completed by delivery. 8 C.J., p. 895, par. 1176; Id., p. 372, par. 554; Id., p. 587, par. 822; Pinney v. McGregory, 102 Mass. 186; Dugan v. United States, 3 Wheat. 172, 4 L.Ed. 362; Holbrook v. Usher et ux., 39 Minn. 122, 39 N.W. 74, 140; Todman v. Purdy, 5 Nev. 238; Lonsdale v. Brown, 15 Fed. Cas. 851, No. 8492, 3 Wash. C.C. 404. In Anniston Pipe-Works v. Mary Pratt Furnace Co., 94 Ala. 606, 10 So. 259, the court said:

"If the paper, though indorsed and transferred, gets back into the hands of the payee, the presumption is that he has paid the sum evidenced by it to the indorsee, and thus become prima facie again the legal owner. Dugan v. United States, 3 Wheat. 172 (4 L.Ed. 362); Herndon v. Taylor, 6 Ala. 461; Oil Co. v. Perry, 85 Ala. 158, 4 So. 635. And upon such title he may maintain an action on the note against the maker. Pinney v. McGregory, 102 Mass. 186; Oil Co. v. Perry, supra. It results necessarily from these principles that, where the note is in the possession of the payee, the law converts that possession into a prima facie legal title, upon which suit may be prosecuted wholly regardless of the condition of the paper as to indorsements, and puts the onus of the showing the absence of the title on the defendant."

There was therefore no error in overruling defendant's demurrer, and the same reasoning disposes of the third assignment, which is based upon the order permitting plaintiffs to amend their complaint during the trial by inserting the allegation that they were the owners and holders of the note. If such an amendment had been necessary it is difficult to see wherein it could have prejudiced the defendant in the presentation of his defense. Appellant, however, while assigning this order as error, contends that the amendment was without effect because the proof shows that the note was paid by the plaintiffs to the Western States Securities Company, its owner and holder, and that the effect of such payment was to discharge the note. He admits that the guarantors became the owners and entitled to the possession of the paper evidencing their obligation when they paid it, and that a right of action of some kind against the maker of the paper guaranteed inured thereby to them, but claims that the payment itself did not, under the conditions, constitute them the owners of the indebtedness evidenced by the note. Such a .contract of guaranty, it is true, is separate and distinct from that of the instrument upon which it is written, and is in the nature of a warranty that the thing guaranteed to be done by the principal will be done, but in no sense does it constitute a joint agreement by him and the principal to do it. The promise or undertaking of a guarantor differs from that of surety, in that it is always to pay the debt of another, while that of the surety is to pay, a debt which becomes his upon the principal's failure to pay. His responsibility to his guarantees, or their assigns,...