138 Ga. 473 | Ga. | 1912
Bauhard Brothers brought suit against the makers of a promissory note payable to the order of Bridges & Flora. On the back of it was this entry: “For value received, we hereby warrant the makers of this note financially good on execution. Bridges & Flora.” The defendants demurred to the petition on. the grounds, that it set out no cause of action; that it showed on
On the subject of indorsements like the one here involved there are two conflicting lines of authority. On the one hand, it has been held by the Supreme Court of the United States and some inferior Federal courts, and by the courts of two or three States, that an entry of a guaranty followed by the signature of the payee on the back of a note payable to order does not amount to such an indorsement as to carry title and cut off defenses existing against the payee. Central Trust Co. v. First National Bank, 101 U. S. 68 (25 L. ed. 876); Snevily v. Ekel, 1 Watts & S. 203; Edgerly v. Lawson, 176 Mass. 551 (57 N. E. 1020, 51 L. R. A. 432), though some of the earlier decisions in Massachusetts seem inclined to take a contrary view. The leading case on this side of the question (discussing it with reference to the common law) is the one decided by the Supreme Court of the United States. It cites the Snevily case, supra, and two cases from New York. The reasoning
At common law (though not so under the statute of this State) the general rule was that ehoses- in action were not assignable so. that the assignee could sue in his own name. He acquired only an equitable title, had to sue in the name of the assignor for his use, and was subject to the defenses which could be made against the assignor. Growing out of the necessities of commerce, there was an exception to- this rule in favor of negotiable instruments. They were transferable by indorsement and delivery, and the indorsee could sue in his own name. Those payable to bearer required no indorsement. A bona fide indorsee for value, before maturity, and without notice of any defense, was protected. No particular.form was necessary to constitute an indorsement. The mere signing of the name of the person to whose order the note was payable, upon the back of it, was sufficient. In 2 Parsons on Notes and Bills, 14, it is said: “Although it is generally true that no particular and precise form of words is necessary to constitute a note or bill or an indorsement, yet this principle must be regarded as subject to some qualification. So far as the matter of transfer is concerned, the proposition is almost absolutely true. But as to the obligations cast upon the indorser by the act of indorsement, it is clear that these may vary with the form of the indorsement.” This recognizes clearly the fact that no particular form is necessary for the transferring of title, although the obligation of the indorser may be varied. In Dunham v. Peterson, 5 N. D. 414 (67 N. W. 293, 36 L. R. A. 232, 57 Am. St. R. 556), the opinion was well reasoned. It was held that where a person to whose order a note was payable wrote on the back thereof a contract of guaranty of payment, and signed it, he became an indorser with enlarged liability, and that the mere writing of a guaranty above his name did not affect the character of his act as an indorser. The indorsement there considered was, “For value received I hereby guaranty the within note, waiving notice of protest and demand,” beneath which was signed
We now come to consider more particularly the statute and decisions in this State. By the Civil Code, § 4275, it is declared that
In connection with the decision of the Supreme Court of the United States in the case mentioned,..attention may be called to the case of Snevily v. Ekel, 1 Watts & S. 203, supra, which was there cited as authority. In that case a promissory note was made by John Smull, paj^able to Jphn Snevily or order. On the back of it were written the words: “I transfer the within note to John Ekel and guarantee the pajonent of the same,” after which was signed the name of John Snevily, and below it the name of John Ekel. It was held that this was a special guaranty of payment, and could not be treated as a blank indorsement so as to enable any holder to sue the guarantor in his own name. If this ruling was based on the ground that it was a transfer and contained a guaranty of payment, it was directly in conflict with the ruling of this court in Vanzant v. Arnold, supra. Note also Dunning v. Heller, 103 Pa. 269, 272.
In Baldwin Fertilizer Co. v. Carmichael, 116 Ga. 762 (42 S. E. 1002), an entry was made on the back of a note by the payee thereof, or his. attorney, in these words: “Eor value received, I transfer the within note to Baldwin Fertilizer Co., and guarantee it as free from any defense that could be made under sec. 2785 of the Code of Georgia, and also guarantee payment in full on the day it is due.” It was held that this was a contract of indorsement. In the opinion Mr. Justice Cobb said: “Under the former decisions of this court, the contract sued on seems to be one of indorsement. It was made, according to the allegations of the petition, for the purpose of transferring the note to the plaintiff in satisfaction of a claim held by it against the defendant, and the mere use of the word ‘guarantee’ will not make the contract one of guaranty. The case of Pattillo v. Alexander, 96 Ga. 60, seems to be controlling in principle on the question.”
The note now under consideration was payable to the order of the payees. When they wrote upon the back of it that for value received they warranted the makers of the note financially good on execution, and sold and delivered it for value to a third person,, with no other indorsement (save an entry of a credit), it must be aRsnmp.fl that they intended to accomplish something by so doing. They did not intend to warrant to themselves the financial standing of the makers, nor did they mean that they had received value
Judgment affirmed.