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(167 N. O. 600, 83 8. E. 585.) at p. 95, 24 L. ed. 343. In the last 8 Ala. 247; Roads v. Webb, 91 Me. case cited, Justice Clifford quotes 414, 64 Am. St. Rep. 246, 40 with approval this passage from Atl. 128; Taylor V. French, 2 Story on Promissory Notes, § 479: Lea, 257, 31 Am. Rep. 609; Good"Judge Story says that the interpre- rich v. Stanton, 71 Conn. 419, 42 tation ought to be just such as car- Atl. 74; Hirsch v. Kaufman, — R. ries into effect the true intention of I. , 81 Atl. 66; Chapeze v. Young, the parties, which may be made out 87 Ky. 480, 9 S. W. 399; True v. by parol proof of the facts and cir- Bullard, 45 Neb. 412, 63 N. W. 824; cumstances which took place at the Doll v. Getzschmann, Ann. Cas. time of the transaction. If the 1913A, 882, and note (90 Neb. 370, party intended at the time to be 133 N. W. 417); 2 Randolph, Com. bound only as guarantor of the Paper, § 778. maker, he shall not be an original Moffitt v. Maness, 102 N. C. 457, promisor; and if he intended to be 9 S. E. 399, is relied on by plainliable only as a second indorser, he tiffs, but the principle there anshall never be held to the payee as

nounced has no application, and first indorser." It is said in Parson Justice Shepherd, who wrote the on Bills & Notes, $ 520: "In a suit opinion in that case, said, in the between the original parties it is

later case of Southerland v. Freconsidered that the blank name of mont, 107 N. C. 570, 22 Am. St. Rep. the indorser means nothing of it 900, 12 S. E. 237: It is well settled self, but its purpose must be shown, the blank indorser of another's ob

“that the agreement upon which aliunde." And in Fullerton v. Hill, 48 Kan. 558, 18 L.R.A. 36, 29 Pac. ligation signed, and the liability

which he intended to assume, may 583, it is held, in regard to the lia

(at least, between the original parbility upon a blank indorsement, that “parol evidence is received to with notice) be shown by parol evi

ties or those parties and a holder rebut the presumption [arising dence, and he will be held only acfrom the indorsement being in blank] and show what liability it cording to such agreement and in

tention." was intended [by the parties] he

On the same theory that parol should assume, and what relation

evidence is admissible as between he should sustain to the paper.” The the first parties to opinion in that case is a well-con- the blank indorse transferee sidered one, and in the notes to it ment, it is also apmany cases are cited that support plicable as against subsequent holdthe text. In order to show that the ers with notice. 8 Cyc. 266; Davidgreat weight of authority favors son v. Powell, 114 N. C. 575, 19 S. this view, we add the following E. 601. An assignee under a gencases: Johnston v. Schnabaum, 86 eral assignment acquires the propArk. 82, 17 L.R.A.(N.S.) 838, 126 erty of his assignor, AssignmentAm. St. Rep. 1082, 109 S. W. 1163, subject to all equi- right of 15 Ann. Cas. 876. Pike v. Street, 1 ties against him. 4 Moody & M. 226 (Lord Tenter- Cyc. 219; Wallace v. Cohen, 111 N. den); Riley v. Gerrish, 9 Cush. 104; C. 103, 15 S. E. 892; Carpenter v. Hays v. May, Wright (Ohio) 80; Duke, 144 N. C. 291, 56 S. E. 938. Houck v. Graham, 106 Ind. 198, While such a trustee is a purchaser 55 Am. Rep. 727, 6 N. E. 594; for value under 13 and 27 Eliz. Drummond v. Yager, 10 Ill. App. (Revisal 1905, $$ 960, 961), "he 382, citing our cases; First Nat. takes the property subject to any Bank v. Crabtree, 86 Iowa, 731, 52 equity, or other right, that attached N. W. 559; Forepaugh v. Dela- to the same in the hands of the ware, L. & W. R. Co. 128 Pa. 217, debtor," as said by Justice Shep5 L.R.A. 508, 15 Am. St. Rep. 672, herd in Wallace v. Cohen, supra. 18 Atl. 503; Tankersley v. Graham, See also Potts v. Blackwell, 56 N. C.

with notice.


Bills and notes


does not; Principal and

Bills and notes

(3 Jones, Eq.) 449; Small v. Small, 20 N. C. 279 (4 Dev. & B. L. 144). 74 N. C. 16; Day v. Day, 84 N. C. There is a well-defined distinction 408; Brem v. Lockhart, 93 N.C. 191, between a guaranty of payment and and Southerland v. Fremont, 107 N. a guaranty for the collection of a C. 565, 22 Am. St. Rep. 900, 12 S. E. debt, the former being an absolute 237.

promise to pay the debt at maturity, It may be added that plaintiffs if not paid by the principal debtor, acquired the notes by the assign- when the guarantee may bring an ment to them, after their maturity, action at once against the guaranand therefore, in

in tor; and the latter being a promise -assignment

law, with notice of to pay the debt upon condition that after maturity- all equities and the guarantee diligently prosecuted

other rights of the the principal debtor for the recovindorser Everett and consequently, ery of the debt, without success. in law, took subject to them. Causey Jones v. Ashford, 79 N. C. 172; v. Snow, 122 Ñ. C. 326, 29 S. E. Jenkins v. Wilkinson, 107 N. C. 707, 359; Battery Park Bank v. Lough- 22 Am. St. Rep. 911, 12 S. E. 630.” ran, 126 N. C. 814, 36 S. E. 281; See also Mudge v. Varner, 146 N. Taylor v. Lauer, 127 N. C. 157, 37 C. 147, 59 S. E. 540. A surety unS. E. 197; Brooks v. Sullivan, 129 dertakes primarily to pay if the N. C. 190, 39 S. E. 822. So that debtor plaintiffs, as trustees of Mr. Farth- an indorser under- surety-obliga

tion of surety. ing, are bound by the agreement be- takes to do the tween defendant and him to the same thing, after due notice of dissame extent as he was himself. honor, while a guarantor under

What, then, was this agreement? takes to pay if the It is true, as argued by defendant's debtor cannot. Ran- obligation of

indorser. counsel, that the taking of collateral dolph, Com. Paper, Pledge-effect of security does not 2d ed. § 849, note 2; Rouse v. taking collater- suspend the right Wooten, 140 N. C. of action upon the 557, 111 Am. St. -obligation of

guarantor. principal debt, in the absence of any Rep. 875, 53 S. E. stipulation to that effect. Jones, 430, 6 Ann. Cas. 280. The distincCollateral Security, § 590. But that tion may be further illustrated by is not the question, by any means,

the statement that a surety is conas the agreement did not consist sidered as a maker of the note; a merely in the transfer of collaterals. guarantor is never a maker. The It was distinctly understood and surety's promise is to pay a debt, agreed that Mr. Farthing would not which becomes his own, as between look to Mr. Everett for payment him and the creditor, when the until he had exhausted the Annin debtor fails to pay it; and he may estate. This was a valid agreement, be sued upon it as soon as it is due

and Mr. Farthing and dishonored. 2 Parsons, Bills

is bound by it, and & Notes, 1871 ed. at page 118. The look to collater- his trustees as well. contract of Mr. Everett is, there

It bears a close re- fore, analogous to a guaranty of colsemblance to a guaranty of collec- lection, as we have said, and though tion. We said in Cowan v. Roberts,

a party to the note and the indorse134 N. C. at p. 418, 65 L.R.A. 729, ment, he nevertheless has contract101 Am. St. Rep. 845, 46 S. E. 979: ed, as does such a guarantor, that “A guaranty is a promise to answer he will pay, not if the Annin estate for the payment of some debt, or does not, but if it cannot, or not the performance of some duty, in until it is first exhausted, and to case of the failure of another per- the extent only that son who is himself, in the first in

it does not pay, collateral.

-exhaustion of stance, liable to such payment or after being made to performance. Carpenter v. Wall, pay whatever it can. That this parol

al security.

Bills and notes agreement to


(167 N. C. 600, 83 8. E. 585.) agreement is valid, see also Bresee on Mr. Everett the duty of exhaustv. Crumpton, 121 N. C. 122, 28 S. ing the Annin estate, whereas it is E. 351.

plainly stated that Mr. Farthing The cases relied on by plaintiffs, must assume that burden. Mr. holding that a creditor having col- Everett promised to employ and lateral security for his note may, pay attorneys to assist in the matnotwithstanding this fact, sue the ter, and he has done so.

, He has debtor without first resorting to the performed fully his part of the concollateral and exhausting it (Jones, tract, and it is now incumbent upon Collateral Security, $ 686; Silvey v. his indorsee to do his part, by either Axley, 118 N. C. 959, 23 S. E. 933), exhausting the Annin estate and are clearly not in point, because realizing what he can by law, or by here the indorser has not only de- showing that the estate is inposited the collateral, but required solvent. All that appears is that à further agreement that his in- “the end of the settlement of that dorsee should not proceed against estate is not in sight," but this may him until it is exhausted; nor are be due to a lack of diligence on his the cases of Barnard v. Martin, 112 part, and is not to be imputed to Mr. N. C. 754, 17 S. E. 536, and Hins- Everett as the consequence of any dale v. Jerman, 115 N. Č. 152, 20 S. default by him. If

EvidenceE. 294; as it was found in those it would be futile burden of proof cases that the collateral had become to proceed further insolvency of worthless, and the creditor "was against the estate not required to do so vain a thing because of its insolvency, the plainas to seek recovery from an insolv- tiffs should have shown it, as the ent person, who was liable pri- burden was upon them and not upmarily for the debt, or to enforce on the defendant. Plaintiffs, in payment out of valueless and unsal- their brief, state that there was no able stock.” Nor is the doctrine exception to the evidence or the as to extension of time, where there findings of fact, but only to the conis no consideration therefor, for clusions of law therefrom, and this

! payment, applicable to the facts of being the case, they cannot recovthis case.

Here the time was as er, as they have not performed their definitely fixed as was practicable, assignor's part of the contract, they not knowing exactly when the which, as we have shown, is valid estate would be settled, and the and binding. The judgment of the stipulation for the exhaustion of court was based entirely upon the the Annin estate was founded upon wrong theory, and it had no right a sufficient consideration, it being in law to impose terms upon de

the same one which fendant and require him to exhaust -agreement to look to collater supported

the en- the Annin estate by a fixed time, as al-consider- tire contract of ination.

the agreement authorizes no such dorsement and its requirement of him. several parts, the promises being What defendant said as to the mutual and reciprocal. Mr. Farth

Farth- time within which the estate could ing is presumed to have known be settled is not what he was doing, being sui juris, material,


as there and able to take care of himself, the is no allegation or to settlement of parties standing “at arm's length.” contention that He thought he was getting a good there was any false and frauduinvestment for his surplus money, lent representation. It was merely and it may yet turn out to be so. the expression of his opinion or The agreement was a lawful one, “expectation,” and it may have been and there is no reason why he a correct one, if proper diligence should not be bound by it. The rul- had been used in prosecuting the ing below would imply that the case against the estate. He is not contract was thought to impose up- responsible for the delay. Besides,

-statements as

the court had proceeded upon the and we were told on the argument theory that the contract is valid, by that, as a matter of fact, it is not. allowing him more time for the Then why should the terms of the settlement, to which he would not agreement entered into between be entitled if there had been any Mr. Everett and Mr. Farthing be fraud or other equitable ground up- varied by the court, in order to acon which to set it aside.

celerate the time for payment by This view of the case is not only the defendant? If Farthing had in accordance with good law, but sued the defendant Everett upon good morals and manifest justice. these notes, and this agreement When Mr. Farthing accepted the

had been shown, the court would notes from Mr. Everett, he did so

not have sustained his action. with an express agreement, as

It must be declared that there found by the referee. That agree

was error, and the judgment will be ment was definite and binding, to

reversed and the action dismissed. wit, that Everett should be ultimately responsible if there was fail

NOTE. ure on the part of the Moores to pay, and on the part of the estate of

The decision in the reported case John Annin to make good the lia

(SYKES V. EVERETT, ante, 751) that bility. He agreed to bear the ex

parol evidence is admissible to vary penses of suing them, and has done

or explain the contract implied from so. It is now found as a fact that the indorsement of a bill or note is in the estate of John Annin has not accord with the rule followed in a been wound up, and of course has few jurisdictions; the great weight of not been exhausted. It is not even authority holds such evidence inadmisfound as a fact that it is insolvent, sible as shown in the note, post, 764.

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Evidence — varying indorsement on note.

1. Parol evidence is not admissible to show that one who indorsed and transferred notes even after maturity was not to be held liable thereon in case they were not paid by the maker.

[See note on this question beginning on page 764.] Bills and notes effect of indorse- uine, and will be paid according to its ment.

purport upon due presentment, de2. The indorsement of a bill or note mand, and notice. is a fresh and substantive contract, [See 3 R. C. L. 1148.] embodying all the terms of the instru- - time of making

effect. ment in itself.

4. The contract of indorsement is [See 3 R. C. L. 1150.]

the same between indorser and in- engagement of indorser.

dorsee, whether it is made before or 3. One indorsing a promissory note after maturity. engages that the instrument is gen- [See 3 R. C. L. 1151.]

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(100 Miss. 739, 57 So. 4.) Trial – reasonable time for present- Note - second transfer - original ining note.

dorsement effect. 5. In case of an indorsement after maturity, the question what is a rea

7. The payee of a promissory note sonable time for presentment of the

who, after indorsing and transfernote is for the court where the facts ring it as collateral security, receives are few and simple, but where they it back and assigns it to a stranger are complicated or doubtful the question must be left to the jury.

with the original indorsement upon it, [See 3 R. C. L. 1194, 1195.]

assumes toward him the same obligaEvidence parol to vary writing. tion that he would have assumed by 6. Parol evidence is never admis

indorsing it at the time of the transsible to contradict or vary the terms of a valid written instrument.

fer. (See 10 R. C. L. 1016.]

[See 3 C. R. L. 1130, 1131.]

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APPEAL by plaintiff from a judgment of the Circuit Court for Lauderdale County (Buckley, J.) in defendant's favor in an action brought to recover the balance alleged to be due on certain promissory notes. Reversed.

The facts are stated in the opinion of the court.
Mr. Wyatt Easterling, for appellant: property, and at a still later date,

In the case of the blank indorse- being indebted to E. B. Hawkins, ment for the purpose of deposit, of a executed a third deed in trust, concheck which is subsequently repu

veying the same property. The indiated and returned, if the blank in

debtedness to Shields was evidenced dorsement is negligently left upon the check and it is transferred to a bona

by eight promissory notes, all of fide holder, the latter may recover

which were dated January 3, 1906. from the indorser, who, under the cir

These notes were made payable to cumstances, is estopped to set up

the order of J. T. Shields, and were fraud.

due at different dates; the first one Turnbull v. Bowyer, 40 N. Y. 456, being due on April 15, 1906, and the 100 Am. Dec. 523, affirming 2 Robt.

last one on December 15th of the 411; Alleman v. Wheeler, 101 Ind. 141;

same year. In January, 1907. Burgess v. Northern Bank, 4 Bush,

Shields borrowed some money from 600; Cabot Bank v. Morton, 4 Gray,

the Citizens' Bank, and in order to 156; Mosher v. Carpenter, 13 Hun, 602; Herrick v. Whitney, 15 Johns. 240;

secure the payment of this loan he Gurney v. Womersley, 4 El. & Bl. 133,

indorsed, by writing his name across 119 Eng. Reprint, 51, 24 L. J. Q. B. N. the back, the Johnson notes, and deS. 46, 1 Jur. N. S. 328; Jones v. Ryde, livered them to the bank. Some 5 Taunt. 488, 128 Eng. Reprint, 779, 1 time after that, Shields paid his Marsh. 157, 15 Revised Rep. 561.

note to the bank, and the Johnson Messrs. McBeath & Miller for appel

notes were surrendered to him. In lee.

August, 1909, Shields proposed to McLean, J., delivered the opinion dispose of these notes to Hawkins. of the court:

The matter was consummated, and W. B. Johnson and wife were in- Hawkins became the owner of the debted to one Bluett Lee, and in notes. Shields delivered the notes, order to secure payment of this in- with a written indorsement thereon. debtedness, on December 24, 1904, At the time of the purchase of these executed a certain deed in trust up- notes it was suggested by Hawkins on certain real estate. Subsequent that it would be necessary for the ly to this, Johnson and wife became transfer of the notes to be marked indebted to J. T. Shields, and, in on the record, and that this transorder to secure the payment of this fer would have to be acknowledged, indebtedness, also executed a cer- and that it would cost something to tain deed in trust upon the same have this done; but after advising

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