Walker v. Dunham

135 Mo. App. 396 | Mo. Ct. App. | 1909

REYNOLDS, P. J.

(after stating the facts) — As wall be seen by the foregoing’statement, the two questions for determination in this case are, first, whether Section 63, of the Act of the General Assembly of this State, approved April 10, 1905, known as “The Negotiable Instruments Act,” abrogates the rule theretofore announced by our courts, that persons not payees in the. bill, endorsing their names on the back of it, were prima facie joint makers, and second, whether, if The Negotiable Instruments Act does change the law, as theretofore declared by our courts in this respect, the provisions of this new act apply to this note, made July 13, 1906, in renewal of a note for the same amount made July, 1903. It is to be observed that prior to the passage of The Negotiable Instruments Act of 1905, we had no statutory law on the subject, our law governing it resting upon the decisions of our courts under their construction of the “Law Merchant.”

Our Negotiable Instruments Act of April 10, 1905, is entitled, “An act relating to negotiable instruments, to revise and codify the law concerning the same and to establish the law uniform with that of other States on the subject.” Section 195 of the act declares that its provisions do not apply to negotiable instruments made and delivered prior to the passage thereof. Section 196 declares that any case not provided for in the act shall be governed by the rules of the Law Merchant, and section 197 repeals all acts and parts of acts inconsistent with the act.

In 1842 the question as to whether a person not the endorsee or payee, but writing his name on the back of the note in blank, is to be held as maker and may be sued as an original promissor, whether the note is negotiable like an inland bill. of exchange or not, came before our Supreme Court and was determined in the case of Powell et al. v. Thomas, 7 Mo. 440. Judge Scott who delivered the opinion, states that it is a case of first impression in that court and that it must be admitted it is not without its difficulties. But following Moris v. Bird, 11 Mass.“440, and Baker and Briggs, 8 Pickering, as well as the New York courts, our Supreme Court held, in this Powell case, that the person so endorsing a promissory note in blank is a joint maker. This has been followed by our Supreme and Appellate Courts without question from that time on. The latest decision that has come to our attention, made prior to the enactment of the law of 1905, being that of First National Bank of Kansas City v. Guardian Trust Co., reported in 187 Mo. 494, decided by the court in banc and which, at p. 519, cites Powell et al. v. Thomas, supra, and the cases following that in support of the rule.

As was true in the Powell case as to the question then before our Supreme Court being one of first impression in that court, so also is this question in this case, now before us, under the Negotiable Instrument Act, so far as we are aware, one of first impression before any of our appellate courts.

It is a matter of common knowledge to the profession that there was no uniformity of decision on this proposition among the courts of the several States, some following one rule, others another. As we have seen, our Missouri courts followed those of New York and Massachusetts in adopting the old rule. Both of these states, along with more than thirty other states of the Union, have adopted this Negotiable Instruments Law, all substantially in the same language as contained in the one adopted, by onr State. In point of fact it is a matter of common knowledge, that this law is the result of the labors of the members of the American Bar Association to produce uniformity between the laws of the different States concerning negotiable instruments, and members of that association have taken up the matter before their respective State Legislatures and secured the adoption of this Iuav by those States. This section of the law has been before the appellate courts of New York and Massachusetts, the decisions of whose courts, as Ave have seen, were accepted in 1842 by our Supreme Court in fixing the rule of our State, and it has also been before the appellate courts of several other States, in which states the rule adopted in Missouri had prevailed, and in all of them it is recognized that the one prominent motive which led to the enactment of this Iuav Aims the desire to establish a uniform law on the subject of negotiable instruments throughout the United States. Wherever these acts have received judicial interpretation, this purpose has been recognized, in fact, that purpose is set forth in the very title of the act itself. It is stated to be “to establish and codify the law concerning negotiable instruments and to establish a law uniform with that of other States on the subject.” In all the courts of the States before which this law has come under consideration, it has been held that the laAV, and especially AAdiat are sections 63 and 64 of our laAV, has changed the rule of 'decision theretofore in force'in those States. The latest case that has come to our attention on the subject is that of Rockfield et al. v. First National Bank, 77 Ohio St. 311, decided December 17, 1907. This was a case in the Supreme Court of Ohio on error to the circuit court of Clark county. The decision of the circuit court of Clark county, reported 28 Ohio Circuit Court Reports, p. 720, is correctly cited by the industrious counsel for respondents as holding that the Negotiable Instruments Act does not change the former rule as to the liability of parties signing on tbe paper wbo were neither makers nor payees thereon. The learned counsel, however, were doubtless not aware of the; fact that the decision of the circuit court in this very case was reversed by the Supreme Court of Ohio, in the 77th Ohio State, supra,, and the sections here under consideration, namely, sections 63 and 64, were held by that court to have abrogated the rule therefore in force in that State. All the questions concerning the effect of this new law on the old rule are so fully discussed and the authorities so thoroughly collated in this Ohio case, that we consider it unnecessary to go into an elaborate discussion of the subject, it being sufficient to say that the view taken by the Supreme Court of Ohio, of this particular provision, in holding that it abrogates the rule formerly in force seems to us the correct view. Decisions to the same effect have been rendered by the courts of other states, which before the act had held to the rule prevailing in this State, and these sections 63 and 64 or similar ones, have been held to revoke the rule formerly prevailing in their States by the Supreme Court of Rhode Island, in Downey v. O’Keefe, 26 R. I. 571; by Massachusetts, in Thorpe v. White, 188 Mass. 333, and Bank v. Law, 127 Mass. 72, and Toole v. Crafts, 193 Mass. 110; by North Dakota, in Farquhar Co. v. Higham, 16 N. Dakota 106; by New Jersey in Gibbs v. Guaraglia, 67 Atl. 81, and Wilson v. Hendee, 66 Atl. 413; by Florida, in Baumeister v. Kuntz, 42 So. 886; by New York in Far Rockaway Bank v. Norton, 186 N. Y. 484; by Iowa, in Vander Ploeg v. Van Zuuk, 135 Iowa 359.

In Far Rockaway Bank v. Norton, supra, decided December 21, 1906, the Court of Appeals óf New York, at p. 485, says: “The note was given in renewal and to take up an earlier note also indorsed by the defendant. To establish the fact that the defendant had endorsed the note with the purpose of giving the maker credit with the payee, proof was given tending to show that default baying been made in tbe payment of tbe earlier note notice of protest thereof was given to tbe defendant. It is urged that tbe evidence as to the protest of the earlier note was not of a proper character. It is unnecessary to consider this question, for since the enactment of the Negotiable Instrument Law (Laws 1897, ch. 612) the law obtaining in the case of such endorsements as that, made by the defendant has been radically changed. Prior to that time the endorser was presumed to be a second endorser and not liable to the payee, though it was competent for the payee to prove aliunde that the intention of the endorser was to give the maker credit with the payee. [Bacon v. Burnham, 37 N. Y. 614, Coulter v. Richmond, 59 N. Y. 478.] Section 114 of the Negotiable Instruments Law prescribes a different rule. It is enacted that ‘Where a person, not otherwise a party to an instrument, places thereon his signature in blank before delivery, he is liable as endorser in accordance with the following rules:

“ ‘1. If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties.’

“This note was made in December, 1898, and, therefore, the proof offered by the plaintiff was not necessary to maintain its cause of action, and the error, if error there was, -was immaterial.” This section 114 of the New York law is identical, in substance, with section 64, of our Negotiable Instruments Law, and section 113 of the New York law is the same as our section 63. Following the construction placed on the effect of these sections, as changing the old rule, by the courts of New York and Massachusetts from which we obtained our old rule, and the courts of the other States named in which that rule also prevailed, we hold sections 63 and 64 of our Negotiable Instruments Law abrogate the rule heretofore in force in our State as to the liability of par-ties on negotiable instruments. The law of 1905 was in force at the time the note in controversy Avas executed and, governed by the provisions of that laAV, and appellants here, except the maker of the note, Alonzo Dunham, are liable on the note as endorsers and not as joint makers. We are led to this vieAV of the case not only by the weight of authority and the plain reading of our OAvn law but by the further consideration that the change in the law made by the Negotiable Instruments Act, in this respect, is eminently a wise one. We agree with the statement made by a commentator on this law (Crawford’s Annotated Negotiable Instruments LaAV (3 Ed.) where he says in a note to his section 114, at top p. 84, that “When a plain man puts his signature on the back of a negotiable instrument he ordinarily understands that he is becoming liable as an endorser; and if he puts it there before the instrument is delivered, he usually does so for the purpose of giving the maker or drawer credit with the payee or other person to whom it is negotiated.”

We are further led to hold these sections as abrogating the former rule for the reason that to do otherwise would be to separate our State from all the great commercial States in the Union on this matter of commercial laAV, a matter of vast importance to all our people. To hold that these sections, particularly section 63, does not govern in our State because, before its enactment, our courts had held otherAvise, would be to perpetuate that very confusion and dissimilarity between our law-merchant and that of the other great commercial States, to obviate which is stated in the title of the act itself is one of the objects of its enactment. Missouri is too important a State, in her great commercial, industrial and mercantile interests, to be fenced off from the other great States of our Union by a construction that would leave her people vexed with the very trouble her laAvmalvers were endeavoring, and as we think successfully, to end.

It appears in the opinion of Chief Justice Cullen, in Far Rockaway Bank v. Norton, supra, that the note iu suit was given in renewal and to take up an earlier note, also endorsed by the defendant, but that the note in suit was made after the enactment of the Negotiable Instruments Law, and the Court of Appeals of New York held in that case, that the Negotiable Instruments Law, having been adopted prior to the making of the renewal note, controlled it. This is a recognition of the general common law rule, that the payment of a debt by a note extinguishes the debt. [Byles on Bills (Sharswood’s 7th Ed.), pp. 240, 390.] To the same effect also, see 2 Daniel’s Negotiable Instruments (5 Ed.), sections 1266 and 1267, in which latter work, however, the rule as to payment of one note by another is correctly said to rest chiefly in the intention of the parties to the transaction. In the case at bar the old note, according to the undisputed testimony, was given up by the holder to the maker when the new note was executed and delivered. That extinguished the old note. While there is conflict in the cases as to the effect of renewals, all hold, so far as we are aware, that if the intent is to extinguish the one by the other, then the renewed note is treated as a new transaction on a new promise. Furthermore, in the note under considera-xion, two new endorsers, in addition to those who had been on the first one appeared and it was in law a new contract with different parties.

In the brief filed in this case, the argument is made that if section 63 of the Negotiable Intruments Act is held to apply to the note in suit, then, as the first note was given prior to the enactment of the Negotiable Instruments Law of 1905, to change the rights of the parties to that note by this new law is an impairment of the obligations of the contract and unconstitutional. If that question had been properly raised on the record in this case, we would have no jurisdiction over this case; but such a question cannot be injected into the record by brief and for tbe first time before this court. Furthermore, holding that the old debt was extinguished by the new one disposes of that proposition as made in the brief, and in the instruction. The declaration of law asked by appellants was substantially correct; those given by the court are, for the reasons above set out, erroneous.

The judgment is reversed'and the cause remanded.

All concur.