Young v. Sehon

• Decision Date: 11 April 1903
• Court: West Virginia Supreme Court
• Parties: YOUNG. v. SEHON et al.

44 S.E. 136
53 W.Va. 127

YOUNG.
v.
SEHON et al.

Supreme Court of Appeals of West Virginia.

April 11, 1903.

NONNEGOTIABLE NOTE—PAROL EVIDENCE— CO-PROMISORS.

1. Where a nonnegotiable note bears on its back the signatures of the promisee and another person in such manner as would make them first and second indorsers, respectively, if the note were negotiable, the parties so signing are not deemed to have thereby made a complete and specific contract, analogous to the contract of commercial indorsement, making them liable as guarantors in the order of their signatures; and parol evidence is admissible to show the relation which they bear to one who asserts a liability against them on such note.

2. When such paper does not represent an existing debt, but is made for the purpose of obtaining on it a loan of money for one or all of the parties to it, a person who makes such loan on the faith of it and takes it may, in the absence of an agreement to the contrary, of which he has notice, treat those whose names are on the back of it as co-promisors with him who signed on its face, or as guarantors, at his election.

(Syllabus by the Court)

Error to Circuit Court, Mason County; Warren Miller, Judge.

[44 S.E. 137]

Action by Sarah F. Young against Columbus Sehon and others. Judgment for plaintiff, and defendants bring error. Affirmed.

John W. English and Rankin Wiley, for plaintiffs in error.

C. E. Hogg and J. U. Meyers, for defendant in error.

POFFENBARGER, J. J. N. Camden and J. P. R. B. Smith complain on a writ of error of a judgment rendered against them in the circuit court of Mason county, and in favor of Sarah F. Young, on a nonnegotlable promissory note for $1,000, payable one year after date, to the order of said Smith, dated December 12, 1893, and signed on the face thereof by C. Sehon and on the back thereof first by J. P. R. B. Smith and then by J. N. Camden. The trial was by the court in lieu of a jury, and the oral evidence consisted of the testimony of said Smith and James L. Knight. The former testified that the note had been mailed to him from Huntington by Sehon, fully made out, with the request that he indorse it, and write a letter to Camden, asking him to indorse it, which was done. Upon the return of the note by Camden, Smith took it, and went to Knight for the purpose of obtaining the money on it for Sehon. Knight testified that he had in his hands, for the purpose of loaning it, $850, belonging to Mrs. Young, the plaintiff, to which he added $150 of his own money, took the note, and delivered to Smith his check for $1,000, payable to Sehon, which was sent to him by Smith; and that afterwards, on the repayment by Mrs Young of the $150, he delivered the note to her. The action was assumpsit against Sehon, Smith, and Camden, treating Smith and Camden as original promisors with Sehon for his accommodation, and to enable him to obtain upon the note said loan. Plaintiffs in error plead nonassumpsit, and Sehon interposed a special plea, setting up his discharge in bankruptcy, and judgment was rendered against the plaintiffs in error only.

Against this judgment it is urged by the attorney for Smith that plaintiffs in error, by placing their names on the back of the note, became guarantors, and could not be sued jointly with the principal debtor, the contract of guaranty being collateral, and binding the guarantor only in the event of the failure of the party owing the debt to pay it and the exercise of due diligence on the part of the holder to collect from him. For Camden it is contended that he and Smith became indorsers or guarantors in the order in which their names are signed on the back of the note. In the absence of any parol evidence, the note indicates that it was made by Sehon to Smith, by whom it was assigned to Camden. Was parol evidence admissible to show the relation of the parties to the note? "Whatever diversities of interpretation may be found in the authorities, where either a blank indorsement or a full indorsement is made by a third party on the back of a note payable to the payee or order, or to the payee or bearer, as to whether he is to be deemed an absolute promisor or maker or guarantor or indorser, there is one principle upon the subject almost universally admitted by them all, and that is that the interpretation of the contract ought in every case to be such as will carry into effect the intention of the parties; and in most instances it is conceded that the intention of the parties may be made out by parol proof of the facts and circumstances which took place at the time of the transaction." Mr. Justice Clifford, in Rey v. Simpson, 22 How. 341, 349, 16 L. Ed. 260. In the syllabus of that case it is held that the weight of authority is in harmony with the principle that parol proof of the circumstances under which such indorsement was made is admissible. In 4 Am. & Eng. Enc. Law (2d Ed.) 488, it is said that: "In all the states it would seem, however, that between the immediate parties evidence is admissible to show the actual time of indorsement." There can be no doubt that parol evidence was admitted for that purpose in Kearnes v. Montgomery. 4 W. Va. 29, Burton v. Hansford, 10 W. Va. 470, 27 Am Rep. 571; Long v. Campbell, 37 W. Va. 665 17 S. E. 197; Thomas v. Linn, 40 W. Va. 122, 20 S. E. 878; Goff v. Miller, 41 W. Va 683, 24 S. E. 643, 56 Am. St. Rep. 889; Roanoke Co. v. Watkins, 41 W. Va. 787, 24 S. E. 612; and Miller v. Clendenin, 42 W. Va. 416, 26 S. E. 512. The report of the case in Bank v. Hysell, 22 W Va. 142, indicates that no parol evidence was offered in that case. In Quarrier v. Quarrier, 36 W. Va. 310, 15 S. E. 154, the parol evidence offered to establish facts fixing upon one of the parties to the note liability as an original promisor was excluded because of the incompetency of the witness to testify against the alleged co-promisor, he being dead, and the transactions to which the witness proposed to testify having been personal between them. Such is the rule in Virginia also. Hopkins v. Richardson, 9 Grat. 485; Welsh v. Ebersole, 75 Va. 651. This doctrine is so well settled that it is useless to cite authority upon it, but the following may be consulted as leading cases on the subject, all holding that parol evidence is admissible for such purpose: Good v. Martin, 95 U. S. 90, 24 L. Ed. 341; Cavazos v. Trevino, 6 Wall. 773, 18 L. Ed. 813; Hopkins v. Leek, 12 Wend. 105; Essex Co. v. Edmands, 12 Gray, 273, 71 Am. Dec. 758; Hall v. Cazenove, 4 East, 477; Cooper v. Robinson, 10 Mees. & W. 694. Moreover, it is well settled by the decisions of this court, as well as by those of the courts generally, that any agreement between the parties to a note bearing irregular indorsements as to the extent of their liability on the note may be shown by parol evidence, and will be enforced as to all who are parties to the agreement. Long v. Campbell, 37 W. Va. 665, 17 S. E. 197; Miller v. Clendenin, 42 W. Va.

[44 S.E. 138]

416, 26 S. E. 512; Burton v. Hansford, 10 W. Va. 470, 481, 27 Am. Rep. 571; Watson v. Hurt, 6 Grat. 631; Roanoke v. Watkins, 41 W. Va. 787, 24 S. E. 612.

Before attempting to ascertain the law applicable to this case, it is proper to state that the facts upon which this judgment is predicated differ somewhat from those of other cases which have been decided by this court, in which the maker and indorsers have all been held liable as co-promisors. In those cases the indorsements were made before the notes were indorsed by the payees. Here the note itself imports, and the evidence shows, that the payee indorsed first. In the absence of parol evidence showing a different agreement or facts from which the law would raise a different obligation, the undertaking on the part of Smith and Camden would be collateral, and not joint with Sehon. Quarrier v. Quarrier, 36 W. Va. 310, 15 S. E. 154. In Burton v. Hansford, Miller v. Clendenin, Long v. Campbell, and Roanoke Co. v. Watkins, in all of which the indorsers were held to be co-promisors, the third parties indorsed before the payees did so. In most, if not all, of them, the payees became the holders of the notes for value, and did not indorse at all. In each of these cases, the paper itself disclosed the irregularity of the indorsements on the back. Being in the hands of the payee as holder for value, and without his indorsement on the back of it, the theory of successive indorsements or assignments corresponding to the positions of the names on the back of it was negatived try mere inspection of the instrument; and upon a showing by parol evidence that the indorsements were made before delivery the law holds that the indorser is prima facie an original promisor or guarantor, as the payee may elect, on the legal presumption that one who indorses, at the time it is made, a note not made payable to him, thereby indicates an intention to bind himself for the payment of it in some form, and that if in such case he has failed to indicate in what form he intends to bind himself it is fair to presume that he intended to be bound in any manner that the payee might elect. The necessity for the admission of parol evidence where the instrument itself shows the irregularity of the indorsements is apparent. Here, however, the positions of the names on the paper indicate that Sehon executed his note to Smith, and that Smith assigned it to Camden, and Mrs. Young comes forward claiming to have acquired it for a valuable consideration. If she had shown that she had given Camden the money on it, without more, his undertaking would have been collateral.

No irregularity...