conflict of authority, some of the courts having followed the earlier English rule, others having followed the later one,1 while still others have adopted a middle course. It will only be necessary to state the rule adopted by courts taking the middle ground. According to that rule, the indorser is a competent witness to impeach the validity of the paper, if the plaintiff took with notice, otherwise not. But the better and more general rule treats him as competent in either case. The rule of exclusion applies in any case only in regard to facts of the time of the execution of the contract sued upon.* § 9. APPARENT BUT NOT REAL INDORSEMENT (INTER PARTES). What appears on its face to be an ordinary indorsement, and therefore, prima facie, is indorsement, may often, between the Evidence to control indorsement. parties thereto and subsequent holders in like case, be shown to be something else, and that consistently with regarding the terms to be supplied by law, in order to make out the contract, as fixed; for that assumes that there is nothing in the circumstances, as distinguished from the actual terms, of the contract to affect it. Thus while evidence should not be admissible to show simply that what appears to be an indorsement in blank was understood to have been intended as indorsement without recourse, evidence of the time and circumstances under which it was made is admissible, between immediate parties, and this may vary its effect materially, even to making it on the one hand practically an indorsement without recourse, or on the other of raising the grade of liability, or indeed of modifying it in any one of several ways. 1 Treon v. Brown, 14 Ohio, 482. 2 Townsend v. Bush, 1 Conn. 260; Cases, 94; Haines v. Dennett, 11 N. H. 180; Stafford v. Rice, 5 Cowen, 23; Williams v. Walbridge, 3 Wend. 415; Freeman v. Brittin, 2 Harr. (N. J.) 192; Taylor v. Beck, 3 Rand. 316; Stump v. Napier, 2 Yerg. 35. Thayer v. Crossman, 1 Met. 416; Newell v. Holton, 10 Gray, 349; Clapp . Hanson, 15 Maine, 345. See Davis v. Brown, 94 U. S. 423. Woodhull v. Holmes, 10 Johns. 231; Skilding v. Warren, 15 Johns. 270; Strong v. Wilson, Morris, 84; Drake v. Henly, Walker (Miss.), 541. Witherow v. Slayback, 158 N. Y. 649. Thus, an indorser may show against his own indorses that his own indorsement was made at the same time with that of one or more other indorsements, as part of one common transaction by which the parties named became jointly bound. That could not be done against a holder for value without notice; but it could be shown against one who had taken the paper with notice, so as to require him to sue them all together, if at all. And it could be shown between such indorsers themselves, if one of them, having taken up the paper, should call upon another to pay as a prior indorser; for we have already seen that joint indorsers are not indorsers at all between themselves.1 What appears to be the ordinary contract of indorsement unmodified, may be shown to be something else also in the following cases: The relation of principal and agent may be shown to exist between the plaintiff and the defendant; in such a case the agent acquires nothing of his own, he merely holds in right of his principal. Again, it may be shown that the paper was indorsed to the holder for some special purpose, and is held in trust, as where it was indorsed for collection merely. And again the relation of principal and surety may be shown to exist between the parties, as where the indorsement was made by the defendant at the request and for the accommodation of the plaintiff; that too would defeat liability altogether. Or it might be shown, with the same result, that both plaintiff and defendant were co-sureties on the paper for another person. Or again, it might be shown that there was a defence arising from a transaction of which the giving the instrument was only a part, the transaction including an agreement that the instrument should be taken in sole reliance upon the responsibility of the maker or acceptor, and that it was indorsed in order to transfer the title in pursuance of such agreement, so that the attempt to enforce payment of the defendant would be in the nature of a fraud. 1 See Shaw v. Knox, 98 Mass. 214 2 Case v. Spaulding, 24 Conn. 578. Upon this whole subject, see Dale v. Gear, 38 Conn. 15; Downer v. Cheseborough, 36 Conn. 39, Chaddock v. Vanness, 35 N. J. 517; First Na tional Bank v. National Marine Bank, 20 Minn. 63. These are the chief cases in which what appears to be an ordinary indorsement may be shown to be something else, or rendered inoperative towards giving the immediate indorsee a right of action thereon. But where the defendant or the plaintiff makes an attempt to prove that what stands as a clear and unambiguous contract of indorsement was not intended to be such, merely by the declarations of the parties made at the time, as by showing that the defendant in indorsing understood that he was not to be liable, and that the plaintiff received the indorsement accordingly, that attempt, according to the current of authority, will not be allowed to succeed." The law merchant has a sufficient and an exclusive way of exempting indorsers from liability, to wit, by requiring them to write 'without recourse or the like words in connection with their indorsement. It matters not therefore whether the indorser's contract be called a written contract; the 'parol evidence' rule of the common law has nothing to do with it. 2 - 1 Bank of United States v. Dunn, 6 Peters, 51; Davis v. Brown, 94 U. S. 423 (permitting evidence of contemporaneous written agreement); Bigelow v. Colton, 13 Gray, 309; Hitchcock v. Frackelton, 116 Mich. 487; Dale v. Gear, 38 Conn. 15, explaining Case v. Spaulding, 24 Conn. 578; Charles v. Denio, 42 Wis. 56; Eaton v. McMahon, id. 484; Rodney v. Wilson, 67 Mo. 123; Doolittle v. Ferry, 20 Kans. 230; Martin v. Lewis, 30 Gratt. 672; Woodward v. Foster, 18 Gratt. 200; Citizens' Bank v. Walton, 31 S. E. (Va.) 890; Clarke v. Patrick, 60 Minn. 269; Kulenkamp v. Groff, 71 Mich. 675; Phelps v. Ab bott, 114 Mich. 88; Doom v. Sherwin, 20 Cal. 234; Citizens' Bank v. Jones, 121 Cal. 30. See Equitable Ins. Co. v. Adams, 173 Mass. 436, as to the mere understanding of an indorser. The courts of some States would admit evidence of the kind if the indorsement were in blank. Ross v. Espy, 66 Penn. St. 481; Harrison v. McKim, 18 Iowa, 485; Iser v. Cohen, 1 Baxter, 421; Rogers v. Bedell, 97 Tenn. 240; United States Bank v. Geer, 55 Neb. 462; True v. Bullard, 45 Neb. 409. These cases stand upon the erroneous notion that the 'parol evidence' rule of the common law applies to the case. Ante, PP. 5, 6. 2 See ante, pp. 5, 6. CHAPTER IX. INDORSER'S CONTRACT CONTINUED: PROCEEDINGS BEFORE DISHONOR. § 1. PRESENTMENT AND DEMAND DISTINGUISHED: MODE OF THE STEPS. THE first thing to be done to fix the liability of an indorser is to make presentment and demand; which in the case of promissory notes or cheques will be for payment; Presentment in the case of bills of exchange may be either for and demand required. acceptance or for payment, according to circumstances. In ordinary cases it is not necessary to draw any distinction between presentment and demand, and therefore the two are often treated as one, either term presentment or demand-being used indifferently as including all that the law so far requires. In point of fact, however, the two are separate and distinct steps, and the law requires both or some equivalent or substitute. Sometimes it may accordingly be necessary to distinguish between the two, as where the defendant contends that one or the other was omitted. Hence the nature of each should be pointed out. the acts. But the terms themselves fairly indicate their ordinary meaning. Presentment is the act of handing over the paper to the maker, drawee, or acceptor, or at least of ex- Meaning of hibiting it to him, with a view to payment or acceptance according to the case and the purpose; demand is a request upon the party, at the same time, to accept or pay, according to the case and the purpose. That is the ordinary meaning of the terms; and the ordinary meaning is now the subject for consideration: excuses of presentment and demand will be considered in another place. Presentment is required by law, not indeed to charge the party primarily liable1 (unless there be a clear condition to that effect), but― (1) To enable the party called Why required. upon to judge of the genuineness of the paper, for which purpose (and for the next one) he may keep it for a short time; (2) To enable him to judge of the holder's right to the paper; (3) Where presentment is for payment, that on payment he may have possession of the paper as a voucher, or for any other needful purpose.2 Demand is necessary to show the holder's purpose to require the maker, drawee, or acceptor to do what has been undertaken for. There need not be any words of demand or request, however, or of presentment, if the act of the holder in presenting is understood to mean what such words would only in another way convey; not the form, but the substance, is what the law requires.3 An equivalent to handing over or exhibiting the paper may, as we have intimated, satisfy the law in regard to presentment. In the case of paper not payable on its face or by notice at some bank, there can hardly be an equiv Equivalents of presentment and demand. alent to the handing over; there may be a waiver, of which hereafter; but waiver dispenses with the requirement instead of being equivalent to it. But in the case of paper payable at bank the law permits an equivalent, or rather a substitute, for what is naturally meant by presentment; the fact that the paper is in the bank at maturity, to the knowledge of the bank, satisfies the law, so far as presentment is concerned, where the paper is on its face payable at such bank.* And this upon the plain ground that it would be a mere ceremony, in most cases of the kind, to require the holder to come to the 1 N. I. L. § 77. 2 Musson v. Lake, 4 How. 262; N. I. L. § 81. See also Arnold v. Dresser, 8 Allen, 435. The interest of the maker or acceptor in presentment is important to remember, for it explains how such party can by waiver at ma turity cut down rights of an indorser; the maker or acceptor waives his own rights, and the corresponding oues of the indorser are gone, by necessary consequence. Waring v. Betts, 90 Va. 46. Chicopee Bank v. Philadelphia Bank, 8 Wall. 641. |