L-83-302 | Ohio Ct. App. | Jan 27, 1984
This case is before the court on appeal from a judgment of the Lucas County Court of Common Pleas.
On July 29, 1982, Keith Alves, plaintiff-appellee herein, filed a complaint in the trial court seeking to collect on a promissory note in the amount of $15,000, plus interest. Defendants-appellants thereafter filed an answer to *188 said complaint. On January 5, 1983, Alves filed a motion for summary judgment with supporting materials. On February 18, appellants filed a cross-motion for summary judgment, accompanied by an affidavit and supporting memorandum. The trial court granted Alves' motion for summary judgment, in part, and denied appellants' motion for summary judgment. Thereafter, the case proceeded to trial on the remaining issues, after which the court entered judgment in favor of Alves.
The pertinent facts giving rise to this litigation are undisputed. In January 1973, Alves loaned $15,000 to appellants Beatrice and William Baldaia. Said appellants, in return, executed a promissory note payable to Alves' wife, Joyce Ann Alves (now Joyce Schaller), also an appellant herein.
In February 1978, Alves and Schaller were divorced. The separation agreement between the parties provided, in part, that:
"Wife agrees to assign to Husband any and all right, title, and interest she may have in a certain note, executed by her parents, dated January 3, 1973 on or before date of final hearing."
The promissory note, in relevant part, contained the following language:
"Pay to the order of Keith R. Alves.
"/s/ Joyce Ann Alves"
Sometime later, Alves sought to collect payment on the note from the makers, Beatrice and William Baldaia. When they refused to pay the sum covered by the note, Alves notified his former spouse that the makers had dishonored the instrument. Payment was thereafter sought from her on the theory that she was secondarily liable as an endorser. In the trial court, Schaller claimed that her transfer of the promissory note to Alves, pursuant to the separation agreement, constituted an "assignment" of her rights and interests therein, not a formal negotiation of the note. As indicated above, both parties filed cross-motions for summary judgment. In granting Alves' motion on this issue, the trial court held that, as a matter of law, "Joyce Schaller's signature on the note operated as an indorsement."
In bringing this appeal, appellants present a single assignment of error for review:
"It was error for the trial court to deny defendant Joyce Schaller's motion for summary judgment."
Appellant Schaller maintains that the separation agreement's specific reference to the promissory note establishes that the transfer was an assignment only, not a negotiation of the instrument. While it appears that the separation agreement was executed contemporaneously with the transfer of the note, the terms of the note do not in any way refer to the separation agreement, and this is the crucial point.
R.C.
"As between the obligor and his immediate obligee or any transferee the terms of an instrument may be modified or affected by any other written agreement executed as a part of the same transaction, except that a holder in due course is not affected by any limitation of his rights arising out of the separate written agreement if he had no notice of the limitation when he took the instrument."
Although R.C.
The "four corners" of this promissory note neither expressly nor impliedly indicate anything about the separation agreement. Cf. R.C.
In this same context, and insofar as the collateral separation agreement purports to be evidence that the transfer of the promissory note was an "assignment," the more fundamental objection is that the agreement was inadmissible to show that Schaller signed the promissory note in any capacity other than that of an endorser. See R.C.
As matters stood, however, the promissory note here contained the words: "Pay to the order of Keith R. Alves," below which Schaller signed her name. This constituted a special endorsement by the payee, see R.C.
Having concluded that she endorsed the promissory note, we now turn to Schaller's liability on her contract of endorsement, which is an analytically separate question. The contractual effect of an endorsement is controlled by R.C.
"Unless the indorsement otherwise specifies, as by such words as `without recourse,' every indorser engages that upon dishonor and any necessary notice of dishonor and protest he will pay theinstrument according to its tenor at the time of his indorsementto the holder or to any subsequent indorser who takes it up, even though the indorser who takes it up was not obligated to do so." (Emphasis added.)
The Official Comment to this section clearly indicates the only method by which an endorser can avoid (or "disclaim") secondary liability on the instrument if the maker defaults:
"* * * An indorser may disclaim his liability on the contract of indorsement, but only if the indorsement itself so specifies.
Since the disclaimer varies the written contract of indorsement, the disclaimer itself must be written on the instrument and cannot be proved by parol. The customary manner of disclaimingthe indorser's liability under this section is to indorse`without recourse.' Apart from such a disclaimer all indorsersincur this liability, without regard to whether or not the indorser transferred the instrument for value or received consideration for his indorsement." (Emphasis added.) Official Comment 1 to R.C.
Thus, when Schaller signed the promissory note, she contracted to pay the instrument, according to its tenor, to the holder thereof if the maker dishonored the note at maturity. R.C.
Accordingly, appellants' sole assignment of error is not well-taken.
On consideration whereof, the judgment of the Lucas County Court of Common Pleas is hereby affirmed. This case is remanded to said court for execution of judgment and for assessment of costs. Costs assessed against appellants.
Judgment affirmed.
DOUGLAS and RESNICK, JJ., concur.
"Words of assignment, condition, waiver, guaranty, limitation, or disclaimer of liability and the like accompanying an indorsement do not affect its character as an indorsement."
Official Comment 5 thereto states:
"Division (D) is intended to reject decisions holding that the addition of such words as `I hereby assign all my right, title and interest in the within note' prevents the signature from operating as an indorsement. Such words usually are added by laymen out of an excess of caution and a desire to indicate formally that the instrument is conveyed, rather than with any intent to limit the effect of the signature."
Thus, even if actual language of "assignment" had accompanied Schaller's signature on the note, this would still not have altered its character as an endorsement. See, also, R.C.