94 Law that: "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." "4 The rules here stated would seem to be the result of a consideration of somewhat conflicting authorities respecting the effect of the signature upon commercial paper of a person other than the holder or maker. It has always been held in New York State that when any one, other than the maker or holder, signs his name in blank upon the back of a negotiable note, the inference is that he intends to become liable as indorser.95 But in Massachusetts a different rule has existed; it has there been held that a person signing in blank a negotiable note to which he is not a party, is liable not as an indorser, but as a maker, or as a surety, according to the nature of the transaction.96 A number of States had followed Massachusetts in this respect. 97 The Negotiable Instruments Law has evidently changed the Massachusetts rule, as will be noticed hereafter. h. Words "I promise to pay" in instrument signed by two or more persons. It is also provided in the Negotiable Instruments Law that "Where an instrument containing the words 'I promise 94. Neg. Inst. Law (N. Y.), § 113. See Appendix for same section in statutes of other States. 95. Phelps v. Vischer, 50 N. Y. 69; Bacon v. Burnham, 37 N. Y. 614; Spies v. Gilmore, 1 N. Y. 321. In the case of Coulter v. Richmond, 59 N. Y. 478, 481, Church, Ch. J., said: "There is considerable diversity of sentiment among the courts of the different States as to the nature of the contract implied by a blank indorsement of a negotiable note before delivery to the payee. In some of the States such an indorser is prima facie regarded as a guarantor, in others an indorser, and in others a joint promisor. In this State it has been repeatedly held, and is too strongly settled by authority to be disturbed, that a person making such an indorsement is presumed to have intended to become liable as a second indorser, and that, on the face of the paper, without explanation, he is to be regarded as second indorser, and, of course, not liable upon the note to the payee, who is supposed to be the first indorser. As the paper itself furnishes only prima facie evidence of this intention, it is competent to rebut the presump. tion, by parol proof that the indorsement was made to give the maker credit with the payee." See also Moore v. Cross, 19 N. Y. 227. 96. Mois v. Bird, 11 Mass. 436; Union Bank v. Willis, 8 Metc. (Mass.) 504; Riley v. Gerrish, 9 Cush. (Mass.) 104; Pemberton Bank v. Lougee, 108 Mass. 371. It must be noticed, however, that the doctrine prevailing in Massachusetts, that a person whose name is written on the back of a note may, by implication of law, be charged as a maker or upon a guaranty, has often been disapproved by the Supreme Court of that State, and it has intimated that, if it were not so firmly established, such a person might more properly be regarded as a second indorser. Union Bank v. Willis, 8 Metc. (Mass.) 504. 97. Massey v. Turner, 2 Houst. (Del.) 79; Sturtevant v. Randall, 53 Me. 149, 155; Colburn v. Averill, 30 Me. 310; Woodman v. Boothby, 66 Me. 389; Walz v. Alback, 37 Md. 404; Stagg v. Linnenfelser, 59 Mo. 336; Rothschild v. Grix, 31 Mich. 150; Peckham v. Gilman, 7 Minn. 446. 666 to pay' is signed by two or more persons, they are deemed to be "jointly and severally liable thereon." 98 A similar provision is contained in the English Bills of Exchange Act.99 There is no doubt that the rule of construction as thus declared in the statute is the general rule as established by the authorities.' It may be well to note, as will be more fully discussed hereafter, that in an action upon an instrument, signed by two or more comakers, one may aver and prove by parol evidence that he signed merely as surety, and that such fact was known to the plaintiff, before the equities arose, through which such evidence becomes admissible. This is because the parol contract of suretyship is merely collateral to the written contract.2 § 48. Liability of person signing in trade or assumed name. a. Statutory provision.- The Negotiable Instruments Law provides that "No person is liable on the instrument whose signature "does not appear thereon, except as herein otherwise expressly "provided. But one who signs in a trade or assumed name will be "liable to the same extent as if he had signed in his own name.' 98. Neg. Inst. Law (N. Y.), § 36, subd. 7. See Appendix for same section in statutes of other States. 99. English Bills of Exchange Act, 1882, § 85 (2). 1. "I promise to pay," signed by two or more makers. Monson V. Drakeley, 40 Conn. 552, 16 Am. Rep. 74. In this case the note was in the following form: "WOODBURY, March 17, 1868. "GEORGE A. MONSON, "STILES F. MONSON, "ROBERT I. DRAKELEY." The court said: "An inspection of the paper discloses nothing inconsistent with the fact that the signatures were all written at the same time, upon the same consideration, and for the same purpose. Although the promise is expressed by the use of the singular pronoun "I," the intention of all the signers to become joint and several original makers is uncontradicted by anything on the face of the 3 note, and such is the legal interpretation of such a promise signed at the same time by several, when the character and object of their signatures is unexplained." See also the following cases: Indiana.- Maiden v. Webster, 30 Ind. 317; Groves v. Stephenson, 5 Blackf. 584. V. Massachusetts. Hemmenway 35; Hopkins v. Lane, 4 Thomp. & C. South Carolina.- Barnett v. Skinner, 2 Bailey, 88. Vermont. Arbuckle v. Templeton, 65 Vt. 205, 25 Atl. 1095. Wisconsin.- Dill v. White, 52 Wis. 456, 9 N. W. 404. See cases cited in Century Digest, Vol. 7, Bills and Notes," § 257. 2. Gillett v. Taylor, 14 Utah, 390, 46 Pac. 1099, 60 Am. St. Rep. 890. 3. Neg. Inst. Law (N. Y.), § 37. See Appendix for same section in statutes of other States. This is substantially the same as a provision of the English Bills of Exchange Act.* b. Reason and application of rule.- No person is liable as drawer, indorser, or acceptor, or maker of a bill, or note, unless he has signed it as such; but signing a trade or assumed name is as binding as a man's real name.5 A person may become bound by any mark or designation he thinks proper to adopt, provided it be used as a substitute for his name, and he intends to bind himself thereby. This rule only applies to cases where the assumed name is one by which the signer intends to bind himself, or where the name is one under which he has held himself out to the world or 6 carried on business." If a person signs an assumed name under other circumstances he is liable ex delicto for deceit, or in an action for breach of warrant of authority, where he signs as an agent for a fictitious principal. 4. English Bills of Exchange Act, 1882, § 23 (1). 5. Byles on Bills (16th ed.), § 38. 6. Signing in trade or assumed name.- One ing of the court below. They show, I think, that a person may become bound by any mark or designation he thinks proper to adopt, provided it be used as a substitute for his name, and he intend to bind himself." held that a mark was a good signing within the Statute of Frauds; and the court refused to allow an inquiry into the fact whether the party could of the leading New write, saying that would make no difYork cases on this subject is that ference. Baker v. Dening, 8 Ad. & of Brown v. Butchers & Drovers' Bank, El. (Eng.) 94. And see Harrison 6 Hill (N. Y.), 443. Brown was sued v. Harrison, 8 Ves. (Eng.) 186; as indorser of a bill, upon which the Addy v. Grix, 8 Ves. (Eng.) 504. indorsement was made with a lead These cases fully sustain the rulpencil, and in figures, thus, "1. 2. 8.," no name being written. Evidence was given strongly tending to show that the figures were in Brown's handwriting, and that he meant they should bind him as indorser, though it also appeared he could write. The court below charged the jury that, if they believed the figures upon the bill were made by Brown, as a substitute for his proper name, intending thereby to bind himself as indorser, he was liable. The jury found a verdict for the plaintiffs below, on which judgment was rendered, and brown thereupon brought error. Nelson, Ch. J., in his opinion, said: "It has been expressly decided that an indorsement written tious payee. in pencil is sufficient (Geary v. Physic, 5 B. & C. [Eng.] 234), and also that it may be made by a mark. George v. Surrey, 1 Moo. & M. (Eng.) 516. In a recent case in the King's Bench, it was In Jones v. Home Furnishing Co., 9 App. Div. (N. Y.) 103, 41 N. Y. Supp. 71, a note made payable to the "National Publishing Company," which was a name assumed by the plaintiff in carrying on his business and represented nothing else, was given for value. It was held that the defendant was estopped from alleging that the notes were made payable to a ficti 7. Melledge v. Boston Iron Co., 5 Cush. (Mass.) 158; Bartlett v. Tucker, 104 Mass. 336, 6 Am. Rep. 240; Bank of Genesee v. Patchin Bank, 19 N. Y. 312. CHAPTER IV. Consideration. $49. Necessity of Consideration. a. In general. b. Want or failure of consideration as a defense. c. Statutory rule as to absence or failure of consideration. d. Requirement of consideration in case of acceptance or indorsement. $ 50. Sufficiency of Consideration. a. Consideration must be valuable. b. Statutory provision as to valuable consideration. c. Adequacy. d. Where rights, interests, or property are valueless. e. Exchange of commercial paper. f. Love and affection. g. Agreement to marry. h. Gratuities and agreements to contribute. i. Moral obligation as consideration. j. Advancements to heir. k. Notes for patent rights. 1. Acts and services deemed sufficient consideration. m. Release and waiver of rights or interests. n. Pre-existing or antecedent debts. (1) In general. (2) When holder is holder for value. o. Debt of a third person. p. Debts against estate of decedent. q. Settlement of doubtful claim. r. Forbearance. s. Extension of time. t. Fluctuating balances. 51. Illegality of Consideration. a. In general. b. Immorality. c. Against public policy. d. In violation of statute. § 52. Fraud and Mistake. a. Fraud. b. Fraudulent as to creditors. 53. Presumption of Consideration. a. Statutory rule. b. Presumption as to nonnegotiable instruments. c. Expressed consideration. d. Burden of proof. $ 54. Holder for Value. a. Statutory provision. b. Necessity of payment of value. c. What constitutes value. d. When lien on instrument constitutes lienor a holder for value; statutory provision. e. Holder of paper transferred in payment of pre-existing debt. 855. Accommodation Paper. a. Statutory provision. b. Nature and object. c. Revocable until negotiated. d. Unauthorized diversion. e. Holders of accommodation paper transferred before maturity. f. When paper is transferred after maturity. g. Rights and liabilities of accommodation party. h. Accommodation party as surety; subrogation; contribution. 8 49. Necessity of consideration. a. In general. Whatever may be the law as to the presumption existing in favor of the validity and value of the consideration of commercial paper it must not be thought that, as between the immediate parties to a negotiable instrument, an actual, valid, and valuable consideration can be dispensed with.8 The presumption as to the validity and value of the consideration only affects the proof; the burden of proof being thereby shifted from the person to whom the instrument is payable, to the person who is liable thereon. In seeking to recover on a simple contract, it is a general rule that the plaintiff must allege and prove that the 66 8. Story on Promissory Notes, note was given for such a considera§ 181. And see Oldacre v. Stuart, tion; and the burden of proof rests 122 Ala. 405, 25 South. 38. upon the other party to establish the 9. Story says, in his work on Prom- contrary, and to rebut the presumpissory Notes, § 181: Promissory tion of validity and value, which the notes, like bills of exchange, enjoy, law raises for the support of negoas has already been suggested, the tiable paper. Still, however, this does privilege, conceded to no other un- not dispense, as we shall presently sealed instruments, of being presumed see, with the existence of an to be founded upon a valid and valu- actual, valid, and valuable conable consideration. Hence, between sideration to support the note; but the original parties, and, a fortiori, it only shifts the burden of proof between others, it is wholly unneces- from the plaintiff to the defendsary to establish that a promissory ant." |