59 Kan. 361 | Kan. | 1898
The defendant in error obtained judgment- against the Commercial Bank, for $2685, on a guaranty^ in the following form, indorsed on a negotiable promissory note executed by Daniel Dart:
“For value received, the Commercial Bank hereby guarantees prompt payment of the interest on the within obligation and the payment of the principal at maturity. Witness our hands this 12th day of May, - 1886. Geo. T. Gunersey, Cashier. L. U. Humphrey, President.”
The note was made payable to the order of the Topeka Investment & Loan Company, and was by it indorsed before maturity to the Cheshire Provident Institution. The petition alleges that, at the time the
The first point presents the most important question in the case, and one on which the authorities are conflicting. It will be noticed that the guaranty under consideration in this case contains no words of negotiability, but is indorsed on a negotiable instrument. In Daniel on Negotiable Instruments, the conflicting views of the courts and text writers are summarized; and, in section 1777, the author says :
“ On the other hand, there are cases which maintain that, although the guaranty on the paper, written at the time of delivery, specifies no person to whom the guarantor undertakes to be liable, and has no negotiable words, it runs with the instrument to which it refers, partakes of its quality of negotiability, and any*363 person having the legal interest in the instrument takes in like manner the guaranty as an incident, and may sue thereon. And it has been said in such a case, ‘ this view is consistent with the nature of the transaction, the evident intention of the parties, and the objects and uses of commercial paper.’ This seems to us the better doctrine. By writing the guaranty on the paper, the guarantor evidences his intention to guarantee the contract of the maker. That contract being negotiable, is made with any and every person who may be the holder, and the guarantor is thus brought in privity with any and every "person who becomes the holder.”
This view of the law seems to us supported by reason and the weight of authority. A guaranty indorsed on a negotiable instrument is to be construed with the language of the instrument. The one under consideration in terms names no guarantee. The evident intent was to guarantee the payment to the legal holder of the note. We are unable to perceive any good groimd for the position, taken by some of the authorities, that the guaranty inures to the benefit of the first holder of the paper, only. The transfer of the note by indorsement must certainly operate as at least an assignment of the guaranty. We think it does more, and that the guaranty passes by the indorsement as fully as the note itself. The Commercial Bank by its guaranty became a party to a negotiable instrument. It employed no words limiting its liability, and it must make good' the terms of its promise to the legal holder of the paper. This view of the law is sustained by the following authorities : Story on Bills of Exchange, § 458; Webster v. Cobb, 17 Ill. 459; Phelps v. Sargent, 71 N. W. 927; McLaren v. Watson’s Executors, 26 Wend. 425; Partridge v. Davis, 20 Vt. 499; Jones v. Berryhill, 25 Ia. 289; Brandt on Suretyship and Guaranty, § 47.
The view opposed to the negotiability of a guar
The record before us does not contain any of the evidence offered at the trial. The general finding resolves all doubts as to the facts against the plaintiff in. error. We must, therefore, presume that the guaranty was executed for a valuable consideration, by the duly authorized officers of the Bank, and in due course of business. The claim that a banking institution dealing in commercial paper is without authority to bind itself by a guaranty thereof, has nothing to commend it to especial favor. It is true that in this case the paper itself does not indicate that the Commercial Bank ever owned it. Nevertheless it may have received the proceeds and the guaranty may have been made strictly in the interest of the Bank. Attempts of corporations, organized solely for profit, to avoid their obligations on the ground that they are
The general finding in favor of the plaintiff below is a complete answer to all questions urged on our consideration, except that as to the negotiability of the guaranty and the effect of the indorsement of the paper as an assignment of it.
The judgment is affirmed.