253 P. 166 | Cal. Ct. App. | 1927
On the third day of April, 1920, B.R. Smith and wife executed and delivered to the defendant, Julia Mackie, a promissory note for three thousand dollars. This note was secured by mortgage upon certain real property in San Bernardino County, state of California. On the thirtieth day of June, 1920, Julia Mackie transferred said note to the Globe Land Company, a corporation, by a written indorsement on the back thereof in the following *770 words: "Pay to the order of Globe Land Co. Julia Mackie." Thereafter and on or about July 13, 1920, said Globe Land Company transferred the note to the plaintiff by written indorsement on the back thereof in these words: "Without recourse, pay to the order of C.R. Nuetzel Globe Land Company by Harry B. Goodman, President Manager." The indorsements above mentioned were for a valuable consideration, interest being unpaid, the plaintiff declared the note due and payable according to the terms thereof, demanded payment of the makers and, upon dishonor, caused the note to be protested and notice of protest and nonpayment given to the defendant. Thereafter this action was brought against the defendant to recover upon her indorsement. Upon the foregoing facts, the court rendered judgment for the defendant and plaintiff appeals.
Two questions are presented for consideration: 1. By indorsing the note in the form above set forth, did the defendant assume any liability to the indorsee of the Globe Land Company? And 2. Does section
[1] The note in question was secured by a mortgage under the terms of which said note was rendered non-negotiable. The liability of the defendant depends upon the question of her intent, as evidenced by the form of indorsement used by her in the signing of the note to the Globe Land Company. In many of the states the defendant would be liable though the indorsement were in blank; in others, when the indorsement is in blank, the payee is not liable to a remote indorsee. In 8 C.J., under the title of Bills and Notes, sections 73, 74, and 75, the decisions of the various courts to be considered here, is thus epitomized: "The liability of a regular indorser of a non-negotiable note, to his indorsee, is the subject of much conflict in the decisions. While it would seem that a party indorsing a non-negotiable note cannot but intend to make himself liable in some capacity, it is often held that he is not liable, or, at least, not to the same extent, as is the indorser of a negotiable note." States are then named in which it is held that the indorser is a mere assignor and not liable to the indorsee on the contract of indorsement; following which, states are named in which it is held that an indorser is liable to the indorsee, either as indorser or as guarantor. *771 The text-writer then states: "However, all the courts agree that a payee of a non-negotiable note may become liable as an indorser by expressing such intent in his indorsement or otherwise, or by inducing the assignee to take it by an agreement to that effect."
The text-writer further states that in many of the states apparently no distinction is made in the decisions concerning irregular indorsers between instruments which are negotiable in their character and those which are not, the presumptive liability of the indorser being the same in either case.
[2] In many of the cases cited, the decision turns upon the ascertained intent of the indorser, as evidenced by the form of the indorsement. In 19 Cal. Jur. 885 the liability of an indorser on negotiable paper is thus stated: "Although it has been said that as between the immediate indorsee of the payee of a non-negotiable instrument, and the payee, the rights and liabilities of the parties are the same as in the case of a negotiable instrument, it seems clear, in general, that the payee who indorses a non-negotiable instrument is to be regarded as the mere assignor of the paper, and he is not liable to the indorsee of his indorsee where the indorsements are in blank or `without recourse.' However, as in the case of other contracts, it is competent for the parties to make any contract they choose; and in case they clearly express intention to be bound in the same manner as the indorsers of negotiable instruments, the court will give effect to their intention." In 3 R.C.L. 876 the rule is thus stated: "Although an instrument as originally made is not negotiable for lack of words of negotiability, yet if it is indorsed to `order' or `bearer,' it becomes as between the indorser and subsequent holders a negotiable instrument and subject to the principles and usages of instruments of that character." And on page 1161 of the same volume, the text reads: "Non-negotiable instruments do not fall within the pale of the law merchant; and the law, therefore, writes no contract over a blank indorsement on a non-negotiable instrument as it does over a blank indorsement on a negotiable instrument. The reasonable presumption as to what was intended as an indorsement, in the absence of evidence showing a different intention, is that the indorser intended to do only that which was necessary *772
to transfer the title to the assignee; and the indorsement standing alone, creates no liability against him. Of course, if the indorser expressly agrees, or the form of the indorsement is such as to show an intention on the part of the indorser, that he shall be held liable for payment in case the maker defaults, such effect will be given to the indorsement. If the indorser of a non-negotiable note writes over his indorsement the words `pay to B or order,' the note will become negotiable as between the indorser and B or any subsequent holder." To the same effect is the decision of the supreme court of Wisconsin in Carruth v.Walker,
In the case of First National Bank, etc., v. Falkenhan,
[3] In Kendall v. Parker,
[4] In the recent case of Quinn v. Rike,
[5] As to the right of the plaintiff to maintain this action, the answer turns upon whether section
This precise question was before the court in the case ofMurphy v. Hellman Commercial Trust Savings Bank,
It follows from what has been stated that the judgment of the trial court must be reversed, but, as the findings of the trial court show all the facts necessary to be found for the entry of judgment in favor of the plaintiff, save and except the amount of interest to be added to the principal of the note, it is hereby ordered that the judgment of the trial court is hereby reversed and the cause remanded to the trial court, with directions to ascertain, by calculating the amount of interest due, add the same to the principal, and to then enter judgment for the plaintiff.
Buck, J., pro tem., and Finch, P.J., concurred.
A petition by respondent to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on March 21, 1927. *776