182 Iowa 1044 | Iowa | 1917
Tliis action is brought to recover on a promissory note, executed by defendants herein as accommodation makers, and by them delivered to one Austin for his accommodation, and endorsed and delivered by Austin to the plaintiff as collateral security for loans made by the plaintiff to Austin.. The note, at the time it was delivered to Austin by the defendants, and at the .time it was endorsed by Austin to the plaintiffs, was in due form of a promissory note, except that no payee was named therein. The note in suit, at tire time it was delivered by the defendants to Austin, and by Austin endorsed to the plaintiff, so far as material to this controversy, read as follows:
“$500.00 ' • July 13, 1914.
“'Thirty days after date, for value received, we or either of us, promise to'pay to the order of................Five Hundred Dollars, payable at the office of W. J. Austin, with interest at the rate of......per cent, per annum' from .......................until paid. Interest if not sooner paid shall be due and payable.. . i...................and ....................annually thereafter until paid, and if not paid when due shall become as principal and bear the same rate of interest, payable in the same manner.”
The action was originally brought at law, the parties appeared, a jury was waived, and the cause proceeded to trial. After the introduction of plaintiff’s evidence, the defendants moved for a verdict. The grounds upon which the motion rested do not appear. The plaintiff thereupon filed an amendment to its petition, praying for equitable relief, and moved to transfer the cause to equity. The court thereupon transferred the cause to the equity side of the calendar for trial.* This was on January 10, 1916. Thereafter on September 11, 1916, the plaintiff filed its amended and substituted petition in equity, to which the defendants appeared and filed answer. Upon this petition and ánswer, the case was tried, and a decree entered for
In the amended and substituted petition upon which the trial was had, the plaintiff alleged'the execution of the note as the joint note of these defendants; that, subsequent to the execution of the note, the plaintiff became a holder thereof in due course, by endorsement from Austin; that the note, or instrument, whatever it ■ may be, was originally signed by th'e defendant Etta Brown, on the blank printed form, on the 13th day of July, 1911, and by her delivered to her codefendant, A. R. Brown, to be by him filled out and used as accommodation paper for the acctimmodation of Austin. After she had signed and delivered the same to her son, Brown, he filled the blanks, to make the same available as accommodation paper for the use of Austin, by signing his own name thereto as joint maker. It was after this that it was endorsed by Austin and delivered to the plaintiff. In so filling out and using said instrument as accommodation paper, Brown and Austin carried out the purpose for which the defendant Etta- Brown placed her signature upon the paper, and. the object and purpose for which she intended and understood the same was to be used. A. R. Brown, her son, was acting for her as her agent, or with her implied authority, in filling out the blanks and in delivering the paper. It was delivered by Etta Brown to her son, A. R. Brown, with the purpose and understanding that he was to fill in the blanks, and do whatever was necessary to make the same available to Austin as accommo-' dation paper. The failure or omission of -the defendant A. R. Brown, in filling the blanks in said instrument, to insert the name of said Austin, or some other proper person, as payee, in the blank space reserved therefor, was the
Plaintiff prays that the instrument be reformed by inserting as payee, in the appropriate blank, the name of Austin, for whose accommodation said instrument was executed, if the court should deem such reformation necessary, and that it have judgment for the amount of said note, with six per cent interest from the time it became due.
The defendant interposed several defenses, among which appears a claim that the note was materially altered, after Etta Brown's name was signed to it, in that the name of A. R. Brown, as joint maker, was attached without her knowledge - or consent; that the instrument is not the instrument signed by her, and is not filled up or used in the form or manner as authorized by her; that said instrument was never completed, and no payee is named in said instrument, and an unreasonable time has elapsed, and the name of the payee cannot now legally be inserted; that the plaintiff had full knowledge of the fact that no payee was named, and was grossly negligent in taking said instrument; that the plaintiff is now estopped from claiming the right to have said instrument, reformed. Further, defendants allege that suit was brought at law upon this identical instrument, asking for a recovery of a money judgment at law in. its present form, and plaintiff elected to pursue its remedy at law upon the instrument as made, and it waived its right to have the instrument reformed.
While the defendants filed separate answers, the above statement covers the issues presented in their several answers.
Etta Brown was called as witness on the part of the defendants, and testified that she signed the instrument now in suit; that it was presented to her by her son; that there was no date on it when she signed it; that she gave it to her son as accommodation paper for Mr. Austin; that
“You understood from what your 'son said that you were giving this note as an accommodation note for Mr. Austin, and you didn’t get any consideration yourself at all? A. That was my understanding. I was not to get any consideration; I was not thinking of it. It was an accommodation for Mr. Austin. He said, if he could help Austin, he would be glad to do it. I put my name on a blank note and delivered it to my son. He asked me if I would help Austin out with my name. That was all. He didn’t tell me what he was going to do with the note. He just asked me if I would help Austin out with my name.”
A. R. Brown, one of the defendants, testified that he was a son of the other defendant; that he had his office with Austin in the Farmers Loan & Trust Building; that, after he secured the instrument sued on, he turned it over to Mr. Austin; that he wrote in the date July 13, 1914, the figures 500, appearing in the corner, and the name of-Austin, as it appears, and that he signed his name above his mother’s; that he did all this before he turned the note over to Austin, except the signing of his name as joint maker; that his mother signed the blank note at his request. He testified:
“I told her I wanted to help Austin out, and that was my purpose in getting the note.. I didn’t notice, when I turned the note over to Austin, that I had failed to enter his name as payee. That was an oversight.” .
He was asked this question:
“When you had your mother sign this and deliver it to you, it was the purpose then to fill it out and do whatever was necessary to make it available to Mr. Austin for accommodation paper if he needed it, was it? A. I expected him to' use it. That was the reason I got it.”
As to the defense interposed that the note was materially altered, in that the defendant A. R. Brown signed the same after it was delivered, and caused, as plaintiffs claim, a material alteration of the instrument, defeating a right of recovery, we have to say that the court below found against this contention, and an examination of the record leaves us satisfied with the finding of the court; and we assume, in the further disposition of the case, that A. R. Brown signed the paper before it was delivered to Austin.
There is no contention by the defendants that the plaintiff is not entitled to recover the full amount of the note, if it is entitled to recover at all.
“If a blank is left for the name of the payee, the holder may put his own name into the blank and sue upon the instrument as payee, or he may fill it with that of a third person.”
The statute says (Section 3060-al4, Code Supplement, 1913) :
“Where the instrument is wanting in any material particular, the person in possession thereof has a prima-facie authority to complete it by filling up the blanks therein. And a signature on a blank paper delivered by the person making the signature in order that the paper may be converted into a negotiable instrument operates as a primafacie authority to fill it up as such for any amount. In order, however, that any such instrument when completed may be enforced against any person who became a party thereto prior to its completion, it must be filled up strictly in accordance with the authority given and within a reasonable time. But if any such instrument, after completion, is negotiated to a holder in due course it is valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority given and within a reasonable time.”
“An accommodation bill or note, then, is one to which the accommodating party puts his name without consideration, for the purpose of accommodating some other party who is to use it, and who is expected to pay-it.”
In Winter v. Home Ins. Co., 30 Iowa 172, it is said:
“In the hands of the party accommodated, the defense of want of consideration is good. But in the hands of a third party, who purchases in' good faith for value, the defense does not obtain. The accommodation maker intends to lend his credit to a party who pays nothing, and the holder takes the paper and pays value for it upon faith of the credit thus loaned.” See also Stephens v. Monongahela Nat. Bank, 88 Pa. St. 157 (32 Am. Rep. 138).
On the whole record, we find no ground for interfering with the decree of the district court, and it is, therefore,— Affirmed.