Walker v. Dunham

• Decision Date: 26 January 1909
• Citation: 135 Mo. App. 396,115 S.W. 1086
• Parties: WALKER v. DUNHAM et al.
• Court: Missouri Court of Appeals

115 S.W. 1086

135 Mo. App. 396

WALKER v. DUNHAM et al.

St. Louis Court of Appeals. Missouri.

January 26, 1909.

1. BILLS AND NOTES (§ 243) — INDORSERS — LIABILITY.

Negotiable Instruments Act (Act April 10, 1905; Laws 1905, p. 251) § 63 (Ann. St. 1906, § 463-63), providing that one signing an instrument other than as maker is deemed to be an indorser unless he clearly indicates his intention to be bound in some other capacity, abrogates the former rule that persons not payees indorsing their names on the back of an instrument were prima facie joint makers.

2. PAYMENT (§ 50)—DEBT PAID BY NOTE.

At common law the payment of a debt by a note extinguishes the debt.

3. BILLS AND NOTES (§ 138)—NEGOTIABLE INSTRUMENTS ACT—APPLICABILITY TO RENEWAL NOTES.

The negotiable instruments act (Act April 10, 1905; Laws 1905, p. 243 [Ann. St. 1906, §§ 463-1 to 463-197]) governs a renewal note executed after the taking effect of the act, though the original note was given before the act, especially where there were two new indorsers on the renewal note, thus making it in law a new contract.

4. COURTS (§ 231)—COURT OF APPEALS—APPELLATE JURISDICTION — CONSTITUTIONAL QUESTIONS.

The Missouri Court of Appeals has no jurisdiction of a case involving a constitutional question.

5. APPEAL AND ERROR (§ 170) — REVIEW — QUESTIONS NOT RAISED BELOW.

On appeal to the Court of Appeals, the question cannot be raised for the first time and by brief that a given construction of an act would make it unconstitutional as impairing the obligation of contracts.

6. CONSTITUTIONAL LAW (§ 150) — IMPAIRMENT OF CONTRACT OBLIGATIONS—NEGOTIABLE INSTRUMENTS.

A construction that the negotiable instruments act (Act April 10, 1905; Laws 1905, p. 243 [Ann. St. 1906, § 463]) governs a renewal note executed after the taking effect of the act, though the original note was given before the act, does not make it unconstitutional as impairing the obligation of contracts, since the old debt was extinguished by the renewal note.

Appeal from Circuit Court, Phelps County; L. B. Woodside, Judge.

Action by J. Ellis Walker against Alonzo Dunham and others. From a judgment for plaintiff, defendants appeal. Reversed and remanded.

On the 25th of February, 1906, respondent instituted suit against appellants, in the circuit court of Phelps county, Mo., on the following note:

                         "Rolla, Missouri, July 13, 1906
                

"One year after date for value received, I promise to pay to the order of J. Ellis Walker, one hundred and ten dollars, at the National Bank of Rolla, with interest from maturity at the rate of eight per cent. per annum.

                                        Alonzo Dunham."
                

On the back of this note appeared the signatures of John W. Cooper, J. A. Watson, Wm. J. Salts, A. B. Hale, David E. Cowan, O. P. Margedant, the appellants here. The defendant Dunham filed no answer, but the other appellants filed an answer, which, after admitting that they had signed the note sued on and denying all other allegations in the petition, continues:

"Further answering, these defendants say that at the time they placed their names on said note, to which they were strangers, it was understood and agreed between themselves, the maker and payee of said note, that they, these defendants, signed said note as securities for Alonzo Dunham, the maker thereof, and that they were only undertaking and were only to be held to the responsibility of indorsers thereon. That no demand of payment of said note was made according to law, nor were they notified of the presentment and nonpayment of said note, and that by the failure of the plaintiff to give to these defendants notice of the presentment, demand, and nonpayment of said note they have been discharged from all liability thereon.

"For another and further answer and defense, these defendants say that they `placed their names upon said note otherwise than as maker, drawer, or acceptor,' and that at the time they placed their names thereon they did not `indicate in appropriate words' in writing to be bound otherwise than as indorsers, by reason whereof these defendants say that by virtue of section 63 of an act entitled `An act relating to negotiable instruments,' passed by the General Assembly of Missouri, and approved April 10, 1905 (Laws 1905, p. 251 [Ann. St. 1906, § 463-63]), they `are conclusively presumed to be endorsers' on said note, and that by the failure of the plaintiff to notify them according to law of the presentment, demand, and nonpayment of said note they have been discharged from all liability thereon.

"Wherefore, these defendants, having fully answered, ask to be discharged with their costs."

To this answer a reply was filed, which, after denying all allegations of new matter in the answer continues:

"Plaintiff alleges that defendants Dunham, Watson, Hale, Cowan, and Margedant received the consideration for the signatures to said note in their release from a note for the sum of $110, due plaintiff by them at the date of the note herein sued on, and of which note this note is a renewal. Plaintiff states that all of defendants were makers of the note in this cause filed for suit, and were so taken and accepted by plaintiff."

At the trial of the case, which was before the court without a jury, it appeared that this note was given in renewal of one of date July 13, 1903, for the same amount. The old note contained the signatures of all of the appellants on the back of it except the appellants Salts and Cooper. These had not signed the original note, but were on the new note. The testimony of the respondent, who was the only witness examined in the case, was to the effect that one Dunham, the maker of the original note, came to respondent along in July, 1903, and asked him if he had money to loan, and respondent told him that he did. "There was not anything said about makers or indorsers or security," and Dunham brought respondent the note in July, 1903, with his name on the face of it, and the names of the other appellants, except Salts and Cooper, on the back of it. Some time after this first note fell due, and along about the 13th of July, 1906, Dunham came to respondent and handed him this present note. Respondent testifies that nothing was said in regard to it; it was simply renewed, and brought to him; he gave the old note to Mr. Dunham when the new one was given, and it passed out of his (respondent's) hands and control: "Gave it to Mr. Dunham." On cross-examination he stated that when the first note came due he notified Dunham of it and asked who he should notify, and afterwards Dunham came to him with this new note with the same names on it that were on the first one, with the addition of the names of Messrs. Cooper and Salts; respondent had never said a word to any of the parties, other than Dunham, about the note being past due and not being paid; had not told Dunham when he let him have the money—that he would loan the money if he would go out and get some man to indorse his note; did not know or think that he was loaning the money to Dunham alone, as maker, on the reliance of the other defendants (appellants here) as indorsers; considered every one of them makers on that note; and said witness, on further cross-examination and in answer to the question by Mr. Watson, one of the respondents, who was also an attorney in the case, if he did not know that he had loaned the money to Dunham "on the fact that the appellants had indorsed his note?" "No, sir; I didn't know. I considered every one of you makers on that note, and that is the reason I let the money go;" that he had loaned the money because the names of appellants were on the note; admitted that he would not have let Dunham have the money on his own name; that the note had to be a good note; did not know then, and does not know now, that appellants were not getting the money. When this present note became due, Mr. Dunham was in St. James, and respondent notified him some time in June that it would be due, and he said that he had sent word to Mr. Margedant and everything would be fixed up; had not notified the appellants until several months after the note became due that it was due and unpaid.

This was substantially all the testimony in the case. At the conclusion of the evidence the appellants asked the court for the following declaration of law: "Under the provisions of section 63, p. 251, Acts 1905, a person who places his signature upon the back of a note is deemed to be an indorser unless he clearly indicates his intentions to be bound in some other capacity, and is not liable upon the note unless the same is duly presented, demand of payment made thereon of the maker, protested for nonpayment, and notice thereof given; and in this case it appearing that the defendants only signed the note by placing their names on the back thereof, and gave no indication of being bound otherwise than indorsers, and no demand, protest, or notice of nonpayment being shown, the finding should be for the defendants." The court refused this declaration and appellants duly excepted.

Thereupon the court of its own motion gave the following declaration of law: "Prior to the passage of the act of 1905, regarding negotiable instruments, a person who wrote his name on the back of a note before delivery, of which he was neither the payee or indorsee, was held prima facie to be a maker, and not an indorser. The mere signing the note on the back imports that he was a maker. He could show by extrinsic evidence that he was an indorser only, but the signature itself made him a maker. Section 63, p. 251, Acts 1905, provides that `A person placing his signature on an instrument other than as maker is deemed to be an endorser unless he clearly indicates by appropriate words his intention to be bound in some other capacity.' There is no significance given by this section as to where he signs it. If the Legislature had intended by this section to make a person who signed on the back...