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contract of indorsement, but is to show what the contract was in fact. Texas Baptist University v. Patton (1912)
Tex. Civ. App. —, 145 S. W. 1063.
An analogous question of some interest arose in the case of Abraham v. Mitchell (1886) 112 Pa. 230, 56 Am. Rep. 312, 3 Atl. 830. In this case a sale of property was made, and a note given for the purchase price to one other than the owner, and indorsed by the payee to the owner for the purpose of transferring the title to the note, merely subsequently, the indorser was compelled to pay the note, and brought an action against the real owner to whom it had thus been transferred, to recover the amount thus paid. In holding that there could be a recovery, the court states that the defendant was the real owner of the note before its indorsement and had a right to demand its transfer; that he was present when it was given, and agreed to take it, and passively assented to the insertion of the plaintiff's name as payee; that the plaintiff might have added the words, "without recourse," to his indorsement, or made a special agreement with the defendant for his protection, but the law implies an agreement by the defendant to reimburse the plaintiff in case he should pay the note to an innocent holder because of his indorsement.
e. Indorsement to evidence payment. It has been held that the payee of a note who has indorsed the same may show that the indorsement was made upon the payment of the note and as evidence of such payment. Spencer v. Sloan (1886) 108 Ind. 183, 58 Am. Rep. 35, 9 N. E. 150; Cole v. Smith (1877) 29 La. Ann. 551, 29 Am. Rep. 343; Davis v. Morgan (1870) 64 N. C. 570; Morris v. Faurot (1871) 21 Ohio St. 155, 8 Am. Rep. 45. The admission of such testimony does not vary or contradict the terms of a writing, for the question in such a case is "not as to the terms of the contract, or the nature or extent of the indorser's liability, but whether there was any contract at all out of which any liability could arise." Morris v. Faurot (Ohio) supra.
VI. Negotiable Instruments Law. Several provisions of the Negotiable Instruments Law have been considered with reference to the admissibility of parol evidence to vary the contract of an indorser. The Negotiable Instruments Act provides that "a person placing his signature upon an instrument otherwise than as maker, drawer, or acceptor is deemed to be an indorser unless he clearly indicates by appropriate words his intention to be bound in some other capacity." This provision is involved more frequently in cases of irregular indorsers, and is not, therefore, construed frequently in cases within the scope of this note. It has been viewed, however, as preventing the introduction of parol evidence to vary or explain the contract implied from the payee's indorsement. Kopf v. Yordy (1916) 200 Ill. App. 409; Porter v. Moles (1911) 151 Iowa, 279, 131 N. W. 23 (apparently, although not clearly, the payee's indorsement); First Nat. Bank v. Korn (1915) Mo. App. -, 179 S. W. 721; Eaves v. Keeton (1917) 196 Mo. App. 424, 193 S. W. 629.
See also People's Bank v. Baker (1917) Mo. App. 193 S. W. 632. Nor can an indorsement by a subsequent holder be varied or explained by parol evidence. Lyons Lumber Co. v. Stewart (1912) 147 Ky. 653, 145 S. W. 376.
But a contrary view has been taken as to the admissibility of parol evidence under this provision of the statute, the evidence being held admissible. Mercantile Bank v. Busby (1908) 120 Tenn. 652, 113 S. W. 390.
The provision that as between the immediate parties to the instrument delivery may be shown to have been conditional, or for a special purpose only, and not for the purpose of transferring property in the instrument, has been considered, and evidence that the indorsee agreed to accept the note. in suit, and to look alone to the maker for its payment, and not to hold the indorsers liable thereon, is held not to show a conditional delivery within the meaning of this provision of the Negotiable Instruments Act. SCHINE
v. JOHNSON (reported herewith) ante, 744.
See Morris-Miller Co. v. Von Pressentin (1911) 63 Wash. 74, 114 Pac. 912, supra, V. b.
And see National Newark Bkg. Co. v. Sweeney (1915) 88 N. J. L. 140, 96 Atl. 86, and Goldman v. Goldberger (1913) 126 C. C. A. 35, 208 Fed. 877, supra, III. b, for interpretation of provision that, as between indorsers, evidence is admissible to show an agreement that indorsers should be liable in a different order than what the signatures prima facie import.
In Smith v. Squires (1901) 13 Manitoba L. R. 360, the court referred to § 55, subsec. 2, of the Bills of Exchange Act of 1890, providing that the indorser of a bill, by indorsing it, "engages that on due presentment it shall be accepted and paid according to its tenor, and that if it is dishonored he will compensate the holder provid
ed that the requisite proceedings on dishonor are duly taken." By § 88 this provision is made applicable to promissory notes, and the court states that by indorsing the note the defendant entered into the engagement or contract with the plaintiff that an indorsement thus imports, and the contract is as much a written one as if the statutory engagement had been written on the back of the note and signed by the defendant. Accordingly, evidence of a contemporaneous parol agreement is inadmissible to vary this contract. This case was followed in Emerson v. Erwin (1903) 10 B. C. 101.
Other provisions have also been considered and held to make the parol evidence inadmissible.
See Guaranty Invest. Co. v. Gamble (1918) 102 Kan. 791, 171 Pac. 1152, supra, II. a, 2.
See Leahmer v. McCullough (1917) 99 Kan. 451, 162 Pac. 297, supra, IV. d. The supreme court of Iowa in Porter v. Moles (1911) 151 Iowa, 279, 131 N. W. 23, in holding parol evidence inadmissible to vary the contract arising upon the indorsement of a note, refers to the provision of the Negotiable Instruments Law relating to the liability of a general indorser, and providing that "every indorser who
indorses without qualification, warrants to all subsequent holders in due course: (1) That matters and things mentioned in subdivisions 1, 2, and 3, of the next preceding section; and (2) that the instrument is at the time of his indorsement valid and subsisting, and, in addition, he engages that on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it." Reference is also made to § 3060-a 17, of the Iowa statute relating to the construction of the contract where the instrument is ambiguous. Subsection 6 of this section, which seems to be the only one relating to indorsements, provides that, "where a signature is so placed upon the instrument that it is not clear in what capacity the person making the same intends to sign, he is to be deemed an indorser."
VII. Identification indorsements.
An indorsement cannot be shown to have been for the purpose of identification only. Geneser V. Wissner (1886) 69 Iowa, 119, 28 N. W. 471. As, for example, an indorsement merely to identify the payee of a bill of exchange to a bank. Thompson v. McKee (1888) 5 Dak. 172, 37 N. W. 367; Stack v. Beach (1881) 74 Ind. 571, 39 Am. Rep. 113.
In Thompson v. McKee (1888) 5 Dak. 172, 37 N. W. 367, the indorser was assured by the cashier of the paying bank that his name was only desired for the purpose of showing who identified the person to whom payment was made, and that he should not be held liable on the draft if he indorsed it.
VIII. Ambiguous indorsements.
Parol evidence has been admitted in certain cases on the theory that the contract of the indorsee was ambiguous. Thus, where a note which the indorsee agreed to accept in payment of the purchase price of certain property was indorsed without recourse by the payee, and thereafter, wher
presented to the indorsee, who refused to accept the qualified indorsement, was indorsed again by the payee, it has been held that these facts may be shown by parol when properly pleaded, since the two signatures render the indorsement ambiguous. Goodrich v. Stanton (1899) 71 Conn. 418, 42 Atl. 74.
But see Johnson v. Glover (1887) 121 III. 283, 12 N. E. 257, and Hately v. Pike (1896) 162 Ill. 241, 53 Am. St. Rep. 304, 44 N. E. 441, supra, II. a, 1.
Where the payee, in indorsing the note, has used words which are ambiguous, parol evidence is competent to explain the meaning. Thus, in Porter v. Kemball (1868) 53 Barb. (N. Y.) 467, a payee, who had agreed to waive demand and notice in indorsing the note, used the following words: "I waive demand of protest." This was held to be ambiguous, and parol evidence admissible to explain.
See Ewan v. Brooks-Waterfield Co. (1897) 55 Ohio St. 596, 35 L.R.A. 786, 60 Am. St. Rep. 719, 45 N. E. 1094, supra.
And see generally, IV. a.
In Union Bank v. Hyde (1821) 6 Wheat. (U. S.) 572, 5 L. ed. 333, a written undertaking by the indorser of a promissory note to the effect that
"I do request that hereafter any notes that may fall due in the Union Bank in which I am, or may be, indorser, shall not be protested, as I will consider myself bound in the same manner as if the said notes have been or should be legally protested," was held to be ambiguous as to whether it amounted to a waiver of demand and notice; and parol proof was admitted to show that it was the understanding of the parties that the demand and notice required by law to charge the indorser should be dispensed with. See also Rose's Notes to this case.
A waiver of protest by the payee upon indorsing a non-negotiable instrument is not a waiver of any right whatever, and cannot be held to include a waiver of diligence which, under the statute, is necessary in order to impose any liability upon the indorser. Burke v. Ward (1895) - Tex. Civ. App. —, 32 S. W. 1047. It is stated that if there were any ambiguity about the words, "protest waived," it might be admissible to introduce testimony to indicate the meaning attached to them by the parties, but their significance is well understood, and no explanation would be permissi ble that would show that they meant "all diligence is waived." W. A. E.
HARRY B. GARRISON et al., Appts.,
WILLIAM NEWTON et al., Respts.
Washington Supreme Court (Dept. No. 2) - May 16, 1917.
Vendor and purchaser lay.
1. The consumption of two and a half months in perfecting title after the time fixed for performance of a contract to sell real estate is not unreasonable, if the vendee acquiesced in efforts to perfect the title after the time fixed, and there is no showing of injury by the delay except inability to rent the property because of defects in title.
[See note on this question beginning on page 815.]
Pleading amendment of answer abuse of discretion.
2. There is no abuse of discretion in permitting amendment of the answer in an action to rescind a contract to sell real estate because of failure to
perfect title in time, so as to show that the vendor had been busily engaged in perfecting the title, after the time for performance, with full knowledge and consent of the vendee.
[See 21 R. C. L. 572 et seq.]
APPEAL by plaintiffs from a judgment of the Superior Court for King County (Mackintosh, J.) in favor of defendants in an action brought to rescind a contract to sell real estate for delay in perfecting title. Affirmed. The facts are stated in the opinion of the court.
Mr. William L. Waters for appellants.
Messrs. John H. Perry and Daniel Landon for respondents.
Fullerton, J., delivered the opinion of the court:
On November 29, 1912, William Newton and Katherine S. Newton, his wife, as vendors, entered into an executory contract with Harry B. Garrison and Katherine S. Garrison, his wife, as purchasers, for the sale of "the following described lands and premises, situated in Wasco county, state of Oregon, to wit: The east 25 acres of the northeast quarter of the northeast quarter of section 21 in township 1 north, range 13 east." The terms and conditions agreed upon were as follows:
"The consideration therefor is the sum of $2,000 of which $500 has been paid in cash, the receipt whereof is hereby acknowledged, $500 shall be paid on or before one year after the date hereof, $500 shall be paid on or before two years after the date hereof, and $500 shall be paid on or before three years after the date hereof, said deferred payments to bear interest at the rate of 7 per cent per annum, payable annually, principal and interest to be paid at the bank of French & Company, in Dalles City, Oregon.
"In addition to the conveyance of said property from the first parties to the second parties, the first parties further agree to sell and convey, and do hereby sell and convey,
unto said second parties for said consideration above mentioned, a right of way for a road from the northeast corner of said premises across property belonging to the first parties, and described as the southwest quarter of the southwest quarter of section 15, township 1 north, range 13 east, which said right of way shall be along the west line of said land last described, and shall be 16 feet in width, and the first parties shall put the same in passable condition for traffic without expense to the second parties, provided, always, that in case the right of way along the west line of said land should not be practical or satisfactory to the second parties, then said right of way shall be located across said premises along a practical and satisfactory route, to be determined by said parties. Otherwise the third man to be selected.
"The first parties hereby covenant and agree to and with the second parties that, upon payment of the sums of money herein before mentioned, that they will execute and deliver to said second parties, their heirs or assigns, or anyone designated by them, a good and sufficient warranty deed for said premises above mentioned, and a deed for a right of way for a road as above provided, which said deed shall warrant the said premises free and clear from all encumbrances whatsoever, and the first parties agree
to furnish to said second parties, without additional compensation, an abstract of title for said premises, showing the same to be the property of the first party free and clear from encumbrances thereon.
"The second parties, for themselves, their heirs and assigns, agree to and with the first parties to pay the sums of money above mentioned at the times and places herein before stated."
The plaintiffs promptly met all payments falling due until final payment of $500, with interest, falling due November 29, 1915, which sum they deposited in escrow on that date in the banking house of French & Company, and made demand for their deed and abstract of title. A deed from plaintiffs to defendants, and an abstract of title, title, were transmitted by plaintiffs to the bank. Examination of the deed showed that it had been drawn upon a form used in the state of Washington, and was inadequate under the Oregon laws. An examination of the abstract disclosed that there was outstanding against the property a mortgage for $1,000, that the land had been sold for the delinquent taxes of 1912, and, of the subsequent taxes, none except those for the year 1913 had been paid. The vendors were notified of the defects in the title, and demand was made that the title be cleared and a quitclaim deed executed for the right of way for a road provided for by the contract. At the same time, a proper form of deed for the state of Oregon and a quitclaim deed for the right of way were prepared and forwarded to the defendants for execution. The deeds were executed by defendants, and returned to the bank, but defendants insisted the mortgage was only a technical matter and they would have it removed just as soon as they were in a position to do so.
Finally, plaintiffs, on January 18, 1916, about fifty days after they had deposited their final payment in escrow, notified defendants that, in view of their failure to perform,
the plaintiffs had determined to rescind the contract, and this action for rescission was instituted on February 10, 1916. The court found that plaintiffs were not entitled to a rescission, and gave judgment against them for the final payment due under the contract. The plaintiffs appeal.
Appellants assign as error the action of the court in permitting respondents to amend their answer on the trial by setting up an allegation that respondents had, from November 29, 1915, to February 16, 1916, with the full knowledge and consent of appellants, been busily engaged in perfecting title to the land in controversy, and that they had been delayed by reason of the dilatoriness of the attorney who represented both the mortgagee and the appellants; and, by way of cross complaint, asked judgment against appellants of the sum of $535. The amendment was objected to on the ground of surprise, and that it involved a new issue after the issues had been fully settled. The court offered to grant a continuance, on terms to abide the final outcome. The appellants, in view of the ruling as to terms, preferred to go to trial. We think there was
no prejudicial er- amendment of ror committed. The answer-abuse amendment was germane to the issues in the case, and its allowance does not show any abuse of the discretion reposed in the trial judges in such matters. Moreover, the plaintiffs proceeded with the trial without taking advantage of a continuance offered them by the court.
The only other error assigned is the granting of a nonsuit against appellants. This involves a consideration of the evidence, which is made up in large part of the correspondence passing between the parties and their attorneys, and necessitates a frequent recurrence to dates. The evidence shows that, at the time of entering into the contract in 1912, respondents were the owners of some 68 acres of land in