Smith v. Bayer

79 P. 497 | Or. | 1905

Mr. Justice Bean

delivered the opinion of the court.

The record bristles with assignments of error. Indeed, it would seem that almost every step in the progress of the trial was objected to by the defendants, and exceptions saved to the rulings of the court. The questions thus raised are embodied in the record and discussed more or less in the brief. They are, however, mostly technical and without merit. There was, in our opinion, sufficient proof of the genuineness of the indorsement on the promissory note offered in evidence to make a prima facie ease in favor of the plaintiff. The plaintiff, testifying in his own behalf, said that he was familiar with the signature of the loan and trust company, knew that the man who signed the indorsement was an officer of the company and had been doing business for it for many years, and that his signature to the indorsement was genuine. The weight to be given to this testi- ■ mony was, of course, for the jury.

The only points of real importance on this appeal are: (1) Whether the indorsement, being on its face "for collection and return” to the payee, vested plaintiff with such a title as will enable him to maintain an action thereon in his own name; and, if so, (2) whether the court erred in admitting parol testimony tending to show that plaintiff was in fact the owner of two sevenths of the note, and in instructing the jury that, if such was the ease, any settlement with the. payee or assignee subsequent to the date of the indorsement to plaintiff would be no defense as against plaintiff’s two-sevenths.

1. The indorsement of a promissory note by the payee with the words "for collection,” or the like, is not strictly a contract of indorsement, but rather the creation of a power, the indorsee being the mere agent of the indorser to receive and enforce payment for his use. The title to the note and the proceeds thereof remain in the payee, and he may maintain suitable actions and proceedings to enforce his right: White v. National Bank, 102 U. S. 658 (26 L. Ed. 250); Commercial Bank of Penn. v. Armstrong, 148 U. S. 50 (13 Sup. Ct. 533, 37 L. Ed. 363); Sweeney v. Easter, 68 U. S. (1 Wall.) 166, (17 L. Ed. 681); Williams v. Jones, 77 Ala. 294; People’s Bank v. Jefferson County Sav. Bank, 106 Ala. 524 (17 South. 728, 54 Am. St. Rep. 59); Central Railroad v. First Nat. Bank, 73 Ga. 383.

2. There is, in the absence of a statute, some conflict in the decisions as to whether such an indorsee can sue in his own name. The weight of authority seems to be in favor of his right to do so : 4- Am. & Eng. Enc. Law (2 ed.), 274; Freeman v. Exchange Bank, 87 Ga. 45 (13 S. E. 160); Roberts v. Parrish, 17 Or. 583 (22 Pac. 136); Falconio v. Larsen, 31 Or. 137 (48 Pac. 703); Selover, Bank Col. § 28.

3. .It is now so provided by statute in this State: B. & C. Comp. § 4439; Selover, Neg. Inst. Law, § 155; Crawford, Neg. Inst. Law, § 67. We are therefore of the opinion that the present action was rightfully brought in the name of the plaintiff.

4. It was open, however, as against him, to all defenses which could have been made if the notes had remained in the hands of the indorser, and the action had been brought by it: Wilson v. Tolson, 79 Ga. 137 (3 S. E. 900); Leary v. Blanchard, 48 Me. 269. The indorsement did not pass the title, nor did it deprive the defendants of any defense they may otherwise have against the note. It merely created the plaintiff the agent of the payee for collection with the right to sue in his own name. The plain meaning of such an indorsement, as said by Mr. Justice Miller (White v. National Bank, 102 U. S. 658, 26 L. Ed. 250), is that the maker of the note “is to pay it to the indorsee for the use of the indorser. The indorsee is to receive it on account of the indorser. It does not purport to transfer the title of the paper or the ownership of the money when received. Both these remain, by the reasonable and almost necessary meaning of the language, in the indorser.”

5. Such being the effect of the restrictive indorsement and the character of the title acquired by the plaintiff by reason thereof, it necessarily follows that the court was in error in admitting evidence to contradict the contract of indorsement by showing that the note was not transferred to the plaintiff for collection as shown on its face, but that he actually owned two sevenths thereof in his own right, and in instructing the jury that a settlement made with the payee after the indorsement to plaintiff would he no defense against plaintiff’s two sevenths. The contract of indorsement is in writing. The terms thereof are plain and unambiguous, and parol evidence Is not admissible to vary or contradict it: White v. National Bank, 102 U. S. 658 (26 L. Ed. 250); Leary v. Blanchard, 48 Me. 269; Howe v. Taylor, 9 Or. 288.

6. The plaintiff’s action is based on the indorsement, and not on any interest he may have in the note. He is made'by the indorsement the mere agent of the payee for its collection. The defendants’ obligation, notwithstanding the indorsement, is to the payee or subsequent owner of the note, and not to the plaintiff. If they settled and paid the note to the payee or assignee, such settlement is a complete defense to an action thereon by plaintiff as a mere agent for collection.

7. It may be suggested that, because the jury found a .verdict in favor of plaintiff for the entire amount sued for, they must have found that the settlement alleged as a defense was never made, and therefore the error of the court in charging the jury in relation thereto was harmless. The ruling of the court upon this point and its instructions to the jury injected into the case an issue not proper to be tried, the result of which was to confuse and mislead the jury, and we do not think it can be said that the error was harmless.

From these views it follows that the judgment of the court below must be reversed, and a new trial ordered. Many of the other questions, argued in the briefs will probably not arise on a retrial, and need not, therefore, be noticed at this time.

Reversed.