1 Hall 336 | The Superior Court of New York City | 1828
delivered the opinion of the court.
This is an action of assumpsit on a promissory note by the holders, against the endorsers. The note was made by one Richard H. Arnold, for the payment of $169 89-100, to the defendant ninety days after date, and dated January 19th, 1828.
It was admitted that the name of the defendant endorsed upon the note, was not written by the defendant himself, but by Arnold, the maker. And it was alleged, that the same was so written and endorsed by Arnold, with the assent and by the authority of the defendant, and proof was offered to show the authority.
I state the exception in the terms of the case; but it is observable, that the facts disclosed to us do not bear out the position it assumes, that the note in question was given for the debt of a third person, within the meaning of the statute. On reference to the case, it appears that the note was drawn by Arnold in favour of Trout, the defendant, and passed by the maker with the name of Trout upon it, as endorser to the plaintiffs—for what consideration, whether in payment of an antecedent debt, or for value received upon the credit of the paper I'lcelf, at the time of the negotiation for it, does not appear. But it ic a negotiable note in the hands of an endosee, and in the absence of all proof to the contrary, must be taken to have been negotiated by the maker for value in the usual course of business, and the question will be whether payment of such a note can be successfully resisted by the defendant on the ground taken upon the argument.
In support of the objection, it is contended, I. as a general proposition, that the engagement of the endorser of a promissory note, is a collateral undertaking within the statute, to answer for the debt of another, and to be obligatory, must be in writing.
III. If such parol authority is good, it can only be so when given to a third person, who is not to be benefitted by the exercise of the power; and from these premises the conclusion is drawn, that the authority in this case being by parol and to the person, whose debt the endorsement guaranteed, that authority was invalid.
I cannot accede to the views taken by the defendant’s counsel of the nature of the endorser’s engagement, nor to, the opinion, that the authority to endorse the note was void, because it was by parol. The only engagement of the endorser is for the payment of the note he endorses; and when he is the payee, (as, in the regular course of negotiating, the first endorser generally is,) the note is payable to himself, and is his own debt. When he transfers it to another by endorsement he assigns or passes over to his endorser the note or debt thus due, and payable to himself; and the legal effect of his endorsement is to superadd his own personal obligation as endorser for the payment of the note to the endorsee.
This is the process and legal operation of the transfer of the note by endorsement as between the maker, the payee and the endorsee of the note. And to this pure unmixed case of the note of a maker to a payee and endorsed by the payee to an en- . dorsee, who continues as the holder, we must look for the true nature and legal effect of the engagement of the endorser. In it no feature of an undertaking of the endorser to answer the debt of a third person within the meaning of the statute for the prevention of frauds, is discernable. It is the transfer in such cases permitted by law, of the debt (which the note makes payable to him,)by him to the transferee ; and the obligation the endorsement creates is, that the debt thus transferred by him to the endorsee, in case of the non-payment of the maker at the maturity of the note upon demand, shall upon due notice of the maker’s default be paid by him (the endorser) to the holder. There is no debt due, or owing, or about to be contracted by the maker of the note to the endorsee, for which the payee thus gives his en«
Such was in effect the negotiation of this note to these plaintiffs. They received the note, it is true, from the maker, and not from the payee. But the payee having made the maker his agent for the negotiation of the paper with his endorsement upon it, the negotiation of it by the agent was the same as respects the defendant—his constituent, as if he had conducted the negotiation himself in person. Or, if the circumstance differs, the case it makes is still stronger against the defendant. It is in evidence that the note was endorsed by the defendant for the accommodation of Arnold the maker, by Arnold himself, as the agent of the defendant, and was negotiated with the name of the defendant upon it as endorser, by Arnold to the plaintiffs for his own benefit. The negotiation was necessarily of the entire endorsed note, for a consideration to the maker. The delivery of the note to, the plaintiffs gave it no vitality as operative negotiable paper. The only aliment for the promise of the maker, or the engagement of the endorser, was the consideration paid for the note by the plaintiffs. And the endorsement was, under such circumstances, emphatically an original engagement of the defendant, as endorser to the plaintiffs, for the payment of the contents of the note.
The case of Ulen v. Kittridge, 7 Mass. 233. was that of a guaranty by the defendant of his promissory notes, made by one Eliphalet Butman, for one hundred dollars each, payable to Alen or order. The plaintiff declared upon the guaranty, and averred, that in consideration of his forbearance (by his agent) to sue until his return from sea, the defendant promised to guaranty the payment of the notes. It appeared in evidence, that the notes had been left in the hands of an agent for collection during the plaintiff’s absence at sea; that after many fruitless applications to Butman (the maker) for payment, he was notified that the notes would be put in suit, unless they were paid, or the payment of them secured : that Butman and the defendant thereupon went together to the
. The rule is too well settled to be now shaken, that a negotiable promissory note like the present,, in the hands of an innocent holder, who takes it in the usual course of negotiation, for a valuable consideration, without notice of any equity or secret trust to it, is obligatory and conclusive upon all the parties, whose names appear upon the paper, and cannot be affected by any of the considerations which belong to collateral engagements for the debts of third persons. Nor can the facts or circumstances (necessary to be shown for those considerations to arise) be inquired into or shown by the endorser in his defence against his endorsement.
But if the engagement of this defendant could be brought within the statute, its obligation could not for that reason be avoided; for it is in writing, and the sufficiency of the writing has not been drawn in question. The only view in which the application of the statute to the endorsement could be material, is the bearing it may be supposed to have upon the second point, which' predicates of an authority to endorse, that, it must be in writing, because the statute is supposed to require the endorsement itself to be in writing, and a parol authority to endorse would introduce the very mischief, against which the statute was intended to provide. But if the engagement of the endorser is not within the act, if the endorsement of the payee of a negotiable promissory note, (passed in the course of negotiation to an endorsee in good
Tested by these rules, can there he a serious doubt on the point? In an anonymous case in 12 Mod. R. 564. it was expressly ruled by Lord Chief Justice Holt, that an authority to ci'CMjrse a bill of exchange, in another person’s name, may be by Kviol. This rule has often been recognized by judicial opinions, and its soundness has never, I believe, been questioned. But the principle of the rule is admitted. It is conceded, that the delegation by one person to another, of the power of contracting for him, and of signing the name of the constituent to the contract, may be by parol, except in cases to which the statute for the prevention of frauds is held to apply. If I am right in the views I have preeented of the case, that exception, if admitted, would be of no avail to the defendants. But I am not able to discover any solid ground for the exception. And whether the engagement of an. endorser is to be deemed an original undertaking to the endorsee, for a debt or responsibility of his own, or a collateral engagement to answer for the debt of the maker, and as such (within the statute) a parol authority from the endorser to the maker to endorse the note for him, would in either case be valid in law, and sufficient to charge the constituent with a liability as endorser of the note, however desirable it might be, that the authority of an agent, who acts for the principal in cases which fall within the statute, should be in writing. The 11th section of the statute, which relates to collateral undertakings for the debts of third persons, does not require it, and the uniform construction of the courts has been, that the power of the agent in such cases may be by parol.
In the case of Clinan v. Cooke, [1 Sch. & Lef. p. 22.] the leading question Was upon the sufficiency of a parol authority to enable the agent to bind his principal by an agreement
The case referred ’to by the Chancellor was that of Barry v. Lord Barrymore, before Lord Lifford, in Chancery, Michaelmas term, 1770, cited by counsel as furnished by Mr. Fitzgerald, from Mr. Malone’s Notes. In that case, the bill was for the specific execution of an agreement for a lease made by one Underwood, the agent of the defendant. The defendant put in a plea under the statute of frauds to this effect, that the defendant did not put in writing any contract or agreement for making the lease mentioned in thebill, nor lawfully authorise in writing Underwood or any other person as agent for him to make or sign any agreement in writing for any of the lands in the bill, or any memorandum or note for making any lease, otherwise than as the defendant had set forth. The Chancellor held the plea to be evidently bad, because the defendant said that he did not authorize “ in writing;” he held, that the statute does not require the authority to be in writing, and therefore the defendant was not within the statute.
The earlier case of Walker v. Hendon and Cox, [5 Vin. 524. Pl. 45. is to the same point. It was an appeal from the Rolls, in 10th Geo. I. (1724.) The case was, that Hendon, as agent for Cox, entered into a contract in writing with the plaintiff for the purchase of a college-lease, and the bill was against both the principal and agent for a balance due of the purchase money. The decree at the "Rolls was against both to pay the money, and in case Hendon should pay it, then he to be at liberty to prosecute the decree in the name of the plaintiff against the other defendant Cox, who was the principal. Cox appealed, for that he did not give any authority in writing to the defendant Hendon to buy the lease for him, and therefore, by the statute of frauds, he ought not to be held by the contract. But Macclesfield, Chancellor, af
In the case of Ulen v. Kittridge, [7 Mass. Rep. p. 233,] as we" have already seen, the defendant became'the guarantee for the payment of two promisory notes given by one Pitman to the plaintiff, by writing the name of him, the defendant, upon them after they had fallen due upon the consideration of the forbearance of the plaintiff to sue the maker upon them. It was objected that the indorsement or guaranty of the defendant being an undertaking to pay the debt of another, he could not be charged upon the promise because there was no consideration for the guaranty or agreement expressed in writing. To which it was answered, that the forbearance to sue was a valid consideration, and was sufficiently expressed in the agreement, and would be considered at the trial as if written over the defendant’s name, by the witness as his agent, authorized thereto by parol. And the court held, that the defendants signature upon the back of the note was the authority given by him to write over the signature a sufficient guaranty, and such guaranty being accordingly written pursuant to the authority, might be considered as a memorandum signed by the party, within the intent of the statute, as fully as if it bad been written in the, defendants presence, immediately after the sigtia
In the case of Merritt against Clason, [12 John. R. p. 102.,] it was conceded by the counsel, and assumed by the court, that the authorization of the agent under this section of the act, need not be in .writing. In that case, Townsend the broker, who was held, to be the agent of both parties, acted under a parol authority solely, and the sufficiency of his authority to bind the parties by his memorandum in writing, of the agreemeat was expressly admitted. In the case oí Coles v. Trecothick, [9 Ves. p. 249.,] and other equity cases, a written authorization of the agent to write out the contract for the principal, was held unnecessary, and this rule was recognized and sanctioned by the English Court of Common Pleas, in the case of Emmerson v. Heelis, [2Taunt. p. 46.,] and by Chancellor Kent in the Court of Chancery of this state, in the case of McComb v. Dwight, [4 John. Ch. Rep. p. 659.] In commenting on the case from Taunton, the Chancellor approves of the conclusion of the Court of Common Pleas, that the auctioneer is an agent .of the purchaser, and a contract signed by such agent is binding, and that an agent for the buyer need not be authorized in writing. The same rule of constructioi^must apply to the authority of an agent by whom the principal contracts,"and’ becomes answerable for the debt of another, which comes within the same section of the act.
These precedents exhibit a clear, strong and uniform current of judicial opinion for more than a century, in the English Court; and of those of this state, since its organization as such, in favour of the sufficiency of the parol authority of the agent to sign for his|pfincipal; and we cannot against such an unbroken series of decisions in support of it hold it invalid.
The remaining objection to the validity of the authorization in the present case, because it is given to the maker of the note, whose debt was to be guaranteed, is clearly untenable. The interest of the party in the endorsement does not disqualify him for the agency, if the principal is willing to trust him with the powers
The cases cited by the counsel to this point have no application. The case of Wright v. Wardle, [2 Camp. p. 200.,] was an action for the price of furniture supplied the witness, at the request, and on the credit of the defendant. The witness to whom the goods were furnished, and who was then the owner of them, was called to prove that the credit was given to the defendant, and it was objected, that she was not a competent witness without a release, as the goods were furnished to her, and she was prima fade liable for them, and hada direct interest to fix the liability on another. She was on that ground rejected.
Another point was made by the plaintiff on the argument which it may be proper to notice. It was contended that the subsequent assent of the defendant to the endorsement, and his promise to pay the note was a waiver of any exception that otherwise might have been taken to the sufficiency of the authority to endorse; and the cases from 2 Camp. p. 450., and 5 Esp.p. 180., were cited
Motion denied.
[W. H. Bell, AWyforplff. E. Anthon, AWy for deft. J
IfftTB;—Vide Shaw v. Jfndd, 8 Pick. Pep. 9.