18 Iowa 485 | Iowa | 1865
We have said that the question is a new one in this State. And this is true, though counsel refer to some cases which, they insist, are analogous, if not directly applicable. Of these, Sands v. Woods, 1 Iowa, 263, is the’ leading one. There, however, the indorsement was in
The case of Bean v. Briggs and another, 1 Iowa, 488, only announces the general proposition found in Story on Prom. Notes, § 188, and in all the authorities, that a blank indorsement creates the same liability from.the indorser to indorsee, as if it was full, giving the holder the power to demand payment, or make it payable at his pleasure to himself, or to any other person or his order. But this does not decide that, as between the immediate parties to the contract (the indorser and indorsee), it is competent to write anything which shall not be in exact conformity to the agreement under which the indorsement was made. That question did not arise, and, of course, was not considered.
Friend & Co. v. Beebe, 3 G. Greene, 279, is more like Sands v. Woods, swpra, than the case now before us. There the note was made to the indorsers or order, and indorsed as follows: “Pay the within note to Jesse Beebe. J. H. Friend & Co.and it was held competent to show that the indorsers, at the time of the transfer of the note, requested the indorsee not to enforce collection until some months after its maturity, and that if, during such delay, the maker became insolvent, the indorsers could not avail themselves of such delay as a defense. At the conclusion of the opinion we find this language: “ If a solemn, written agreement may be waived, and proof of that waiver be made in parol, certainly a mere indorsement of assignment on a note may be qualified by the express agreement, in parol, of the parties, at the time of making it; and parol evi
■ This reasoning reaches the question now before us; but while, as applied to that case, the conclusion may be ever so correct, the suggestion is warranted, that the position assumed (to the extent above quoted) was unnecessary to the disposition of the case; that it does not agree with Sands v. Woods, nor does it seem to fully appreciate the legal distinction between a full indorsement and one in blank. So that, really, it oan hardly be accepted as decigive of the present inquiry. And see the reasoning in Myers v. Sunderland, 4 G. Greene, 567.
In Cousins v. Westcott, 15 Iowa, 253, an accmmi was assigned, and the facts and oiroumstances were such that nothing there ruled can be regarded as applicable to the case at bar.
. And these being all the cases in this State which, by analogy or otherwise bear upon the point now under discussion, we are left free to examine it upon principle and the authorities in other States. Upon authority, the question is left in doubt; and we are in but little if any better condition, if we look at the reasoning used by the several courts. The cases are numerous, and the discussions in some of them able and almost exhaustive. It is not our. purpose to refer to them in detail, nor to quote at length from these discussions. The substance of the argument on either side, and the leading authorities, will be found iu 2 Parsons N. & B,, 519, from which we quote as follows;
On the other hand (continues Mr. Parsons), in some States, and especially New York, the indorser in blank of a promissory note makes a full, legal indorsement, and the contract cannot be turned into a guaranty or any other different contract whatsoever, either by construction of law or by proof of extrinsic facts. The earlier decisions in New York, and those of most of the other States, are not followed there now. This rule puts all indorsements on. the same footing. The ground is, that if an indorser does not choose to fix his own liability, the court will fix it for him. And since the contract evidenced by a blank indorsement is ascertained by the law, the contract being settled must not be unsettled by the law. And since the same injurious results would flow from permitting the legal effects of an indorsement in blank to be destroyed, as if it were an indorsement in full, no indulgence should be granted to the former contract over the latter. Otherwise, indeed, no one can ever know how or to what extent an indorser in blank is bound. (Citing Hall v. Newcomb, 7 Hill, 416; Spies v. Gilmore, 1 Comst., 321; Rank of Albion v. Smith, 27 Barb., 489; Cottrell v. Conklin, 4 Dunn, 25; Wilson v. Black, 6 Blackf., 509; Crocker v. Getchell, 23 Me., 292; Sankersley v. Graham, 8 Ala., 347; Stabbs v. Goodall, 4 Ga., 106; Watson v. Hart, 6 Gratt., 633; Rice v. Rayland, 10 Harph., 545.) And see Moore v. Cross, 19 N. Y., 227, and cases cited by appellant’s counsel.
We have thus stated the argument on both sides of this much controverted question, as given by one among the
In this conclusion I do not concur. The other view, to my mind, is more in accordance with the reason of the law, and what I regard long and well settled principles, and is not unsustained by the cases and books. More than' this we need not say. Let the judgment be affirmed.
The conclusion announced by the Chief Justice as that of the majority is entirely satisfactory to us, and in accord with the result of our consultation, which was had without an opportunity of examining Mr. Parsons’ work on notes and bills. And, while we would -not undertake to controvert the correctness of the reasoning stated by Mr. Parsons, as being the basis upon which is rested the cases holding that parol proof is admissible to show that the actual agreement, in a case of blank indorsement, is other than the law usually implies; yet we do not wish to be understood as holding that to be the stronger or better ground of such ruling.
We prefer to place our decision upon a broader and firmer ground, and one not in conflict with the well recog-.
Our judgment of affirmance in this case is placed upon the ground that, while a blank indorsement is in law an authority to the indorsee to fill it up as absolute and unconditional, yet, where the actual agreement between the parties has limited that authority, the filling of the blank 'by the indorsee in any other manner than according to that agreement is a fraud upon the indorser, which vitiates the writing, and, of course, opens the door for proof as to I what the real contract was. Just as where one person, being indebted to another, at the request of the creditor, who has an opportunity to use such indebtedness to an uncertain amount in payment of a liability of his own or other purpose, executes to his creditor a note with the amount in blanlc, but with an agreement that such blank may be filled with any amount not exceeding his indebtedness ; and such creditor fills the blank with a much larger amount, and then brings suit upon it himself, it may, in such case, be shown by parol that the actual contract was different from the written one. And although the execution of the note in blank was an authority to fill such blank, yet, when it is filled in violation of the agreement, it is a fraud upon the maker, and the real facts may be shown by parol.
The right of the maker or indorser to avail himself of this defense, is, of course, limited in commercial cases to the parties to the agreement, or to those charged with notice of it. Fraud vitiates the most solemn written agreements ; and fraud may be shown by parol evidence, without any violation of the rule which prohibits the introduction
Without, therefore, controverting the soundness of the reasoning as stated by Mr. Parsons, we prefer to place our affirmance upon this latter ground.
Affirmed.