Bank of Conway v. Stary

Johnson, J. This is an appeal from a judgment entered by the district court of Walsh County, against the defendant, Dan Sutherland. The other defendant, B. H. Stary, interposed no defense, and judgment was entered against him by default. Sutherland appeals. The suit is upon a promissory note, the complaint being in the usual form. It is alleged that the defendant Sutherland wrote his name on the back of the note, before delivery thereof to the payee, for the purpose of securing the loan. The defendant Sutherland answered, specifically admitting the corporate character of the plaintiff and the execution of the note by his codefendant Stary; otherwise, the answer denied generally the allegations of the complaint. At the trial, the paragraph containing the general denial was stricken out. The result is that the allegation of the complaint, as to the endorsement by appellant, stands admitted. The defendant alleged, by way of defense, that he received no consideration for endorsing the note, that it was endorsed for the accommodation of the maker, that, at the time he endorsed the note, the maker Stary was wholly solvent and was doing a profitable business and was fully able to pay the note; that thereafter, and while Stary was solvent, able to pay the note, engaged in a profitable business, and while the plaintiff had funds and collateral in its possession and opportunity to collect said note from the maker, the defendant demanded that plaintiff proceed against the maker and served notice that, unless such proceedings were taken, appellant would hold himself discharged; that the plaintiff did not proceed against the maker, but instead, and for a valuable eon *402 sideration/without appellant’s consent, extended the time of payment. The answer further alleges that several times thei’eafter, and after the note was past due and payment thereof had been extended, and while the maker was solvent and was transacting business with the plaintiff and fully able to pay the note, and while the plaintiff had opportunity to collect the note from the maker, the appellant demanded that plaintiff take proceedings against the maker Stary, or this appellant would hold chimself discharged. Then follow allegations that the plaintiff and respondent neglected to take proceedings against the maker; that the maker became and was, at the time of the trial, wholly insolvent; that collateral held by the plaintiff had become worthless and deposits withdrawn;' and that the appellant herein had been prejudiced by the acts and omissions of the plaintiff as alleged in the answer to the full amount due on the note. Some testimony and formal proofs were offered, tending to support the allegations of the answer. These were rejected by the court and error is predicated on such ruling. The plaintiff proved the execution of the note by the defendant Stary and the endorsement thereof in blank by the defendant Sutherland, introduced the note in evidence and rested. The note contained the following: “The makers and endorsers each guarantee the payment of this note and waive demand, protest and notice of nonpayment, and consent to any extension of time of payment or renewal thereof without notice.” The defendant took the witness stand and some questions were asked with reference to the solvency of the defendant Stary, but the witness was not permitted to answer, the theory of the trial court being that the facts affirmatively alleged did not constitute a defense to plaintiff’s cause of action. In order to have a correct understanding of the situation, it is necessary to refer more specifically to the proceedings had in the trial court. The defendant, Sutherland, testified in his own behalf, in substance, as follows: That he endorsed the note in suit for the accommodation of the maker and received no consideration therefor, either from the payee or the maker of the note; that after the note matured, to wit: after the 15th day of November, 1917, the plaintiff bank, thru either an officer or employee, asked the defendant to pay the note or renew it, but that defendant at that time told the bank that he would not pay it or renew *403 it; that the maker was doing “lots of business” and “that if they did not get it from Stary (the maker) that I would not consider myself under obligation to them.” It is to be noticed that the date of this conversation is not given, but it took place after the maturity of the note. Obviously, if this demand upon the defendant to pay the note was made, (as the inference must be from the testimony) before any binding extension had been given to the maker and the maker had defaulted in payment, the obligation of the endorser to pay the note had become absolute and such liability, it has been held, is not that of a surety. See Comp. Laws 1913, § 6969; Carnegie Trust Co. v. Kistler, 89 Misc. 404, 152 N. Y. Supp. 242. The defendant testified that in the fall of 1920 the bank again requested him to renew the note, and that he refused. He now contends that he was entitled to the rights of a surety as defined in chapter 85, Civil Code, Comp. Laws 1913, and more specifically §§ 6681, 6682 and 6683 thereof, and was exonerated by reason of the refusal or failure of the plaintiff to proceed against the principal upon demand. When the witnesses had testified as above set forth, and offers of proof had been made and rejected, a colloquy took place between the court and counsel for both parties, at the conclusion of which counsel for the defendant struck from his answer the general denial and counsel for plaintiff moved for judgment on the pleadings. The trial judge, in granting the motion, said that he took into consideration the evidence already in the record, as well as the defensive matters alleged in the answer. This statement of the court seems to have been acquiesced in by both sides and, in fact, counsel for appellant, in his statement of the ultimate facts, sets out the demand made upon the defendant Sutherland for the payment or renewal of the note. This was testified to by Mr. Sutherland. The case, therefore, comes before this court upon the pleading's and the evidence before the trial court when the motion for judgment on the pleadings was granted. Taking the most favorable view of the.case from the standpoint of the defendant and appellant, the record shows that, after the note was due, at the time when plaintiff made its demand upon the defendant for payment, the latter countered with a demand that the plaintiff proceed against the principal debtor and then told plaintiff that if such proceedings were not taken, defendant would hold himself discharged. *404 The fundamental question, therefore, is whether an accommodation endorser, who endorses, before delivery, a promissory note containing the waivers and consent to extensions of time, incorporated in the note in suit, may relieve himself from liability thereon by notifying the creditor-payee to proceed against the principal debtor under- the provisions of § 6683, Comp. Lawsj 1913. Section 6683 appears to be principally relied on by the appellant. That section reads as follows: “A surety may require his creditors to proceed against the principal or to pursue any other remedy in his power, which the surety cannot himself pursue and which would lighten his burden; and if in such case the creditor neglects to do so, the surety is exonerated to the extent to which he is therebj1' prejudiced.” It is not necessary, in the view we take of this case, to discuss at great length the interesting question of the boundaries of the right given the surety by § 6683, supra. That question is not free from difficulty. The Oklahoma statutes defining the rights of sureties, including § 6683, supra, are taken from this state without change. In that state, the supreme court was held, under facts very similar to, in fact, scarcely distinguishable from the facts in the case at bar, that the surety cannot, by demand, compel the creditor to sue the principal maker before the former may require the surety to pay the note. The statutes cited in these cases, as to the remedies of the surety, are identical with ours, and § 4964 of the Oklahoma Statutes of 1910, is substantially identical —perhaps not quite so broad — as § 7407, Comp. Laws 1913, making it optional with the plaintiff to include in one action all persons severally liable on an instrument. Palmer v. Noe, 48 Okla. 450, 150 Pac. 462; National Bank v. Lowrey, 57 Okla. 304, 157 Pac. 103; Gregg v. Oklahoma State Bank, 72 Okla. 193, 179 Pac. 613. According to the Oklahoma rule, as applied in the cases cited, the contention of the appellant could probably not be sustained. An accommodation endorser, who endorses a promissory note before delivery, under §§ 6914, 6948 and 6949, Comp. Laws 1913 (§§ 29, 63 and 64 of the Uniform Negotiable Instruments Act), is not a surety within the provisions of chapter 85 of the Civil Code (Comp. Laws 1913, §§ 6675 to 6689) so as to have the right, under § 6683 thereof, to require the creditor “to proceed against the principal or to pursue *405 any other remedy in his power which the surety cannot himself pursue and which will lighten his burden/' with resulting exoneration from liability if the creditor fails, refuses or neglects to sue the principal, or enforce payment by the principal in appropriate legal proceedings. Whether, and, if he is, under what circumstances and to what extent, an accommodation endorser or maker of a promissory note may be entitled to any of the rights and remedies of sureties under chapter 85, supra, is not decided because that question is not properly involved in. this proceeding. In the absence of a statute to the contrary similar to § 4882, Rev. Codes 1899, the rule seems to have been well nigh universal, before the Negotiable Instruments Law, that an accommodation endorser did not stand in the relation of a surety to the maker so as to be within the provisions of statutes giving the surety the right to enforce remedies against the principal debtor or to require the creditor to proceed against the principal debtor for the protection of the surety. Ross v. Jones, 22 Wall. 576, 22 L. ed. 730; Gordon v. Southern Bank, 19 Ind. 192; Converse v. Cook, 25 Hun, 44; Gibson v. Parlin, 13 Neb. 292, 13 N. W. 405; Clark v. Barrett, 19 Mo. 39; Miller v. Mellier, 59 Mo. 388. But this was not the rule in North Dakota prior to the adoption of the Uniform Negotiable Instruments Act. See Revised Codes 1899, § 4882. It is, of course, elementary that, in the absence of a statute, a genci’al endorser is xxot a surety, nor is he exxtitled to the rights that belong to the surety relation. Section 6914, Comp. Laws 1913, beixxg § 29 of the Uniform Negotiable Instruments Law, provides that an accommodation endorser is liable to a holder for value ixotwithstanding sxxch holder at the time of taking the instrument knew him to be only an accommodation party. The plaintiff in the case at bar is a holder for value under the Negotiable Instruments Law, and, in the abseixee of defenses, Sutherland would be liable as such endorser to the bank. Sections 6948 and 6949, being §§ 63 and 64 of the Negotiable Instruments Law, fix the status of the aceommodatioxx endorser and his liability as sxxch to the payee and all subseqxxent parties. Without extexxding the discussion, we are unable to see anything in these sections or in any other part of the Negotiable Ixxstrxxments Act that can be construed as an abrogation of *406 flie general rule theretofore existing, in the absence of a statute to the contrary, with respect to the relation of the accommodation endorser to the principal maker of the note. It was not that of a surety, so as to bring him within the provisions of statutes similar to § 6683. The Negotiable Instruments Law does not expressly give the accommodation endorser rights as a surety in this respect which he did not formerly have. By repealing § 4882 Ncv. Codes 1899, the inference is legitimate that the legislature intended to take from the accommodation endorser the rights of a surety as defined in § 6683, Comp. Laws 1913. Whether the act enlarges or restricts the grounds upon which a surety may be discharged is not here involved. See National Bank v. Lowrey, 57 Okla. 304, 157 Pac. 103; Graham v. Shephard, 136 Tenn. 418, 189 S. W. 867, Ann. Cas. 1918E, 804, where conflicting views upon this question are expressed. We find the rule of § 6683 foreshadowed and broadly applied in Pain v. Packard, 13 Johns. 174, 7 Am. Dec. 369, and King v. Baldwin, 17 Johns. 384, 8 Am. Dec. 415. It is not necessaiy to discuss these-cases. It is sufficient to say that they have been criticized in subsequent decisions of the highest courts of New York and of other states as unsound and as stating a rule which was an anomaly in the common law ; see Warner v. Beardsley, 8 Wend. 199, 200; Bingham v. Mears, 4 N. D. 437, 27 L.R.A. 257, 61 N. W. 808; Huey v. Pinney, 5 Minn. 310, Gil. 247. Section 1372 of the Field Code codifies, though with limitations, the rule of these decisions in language identical with § 6683,. Comp. Laws 1913, except that our legislature omitted the provisions in the Field Code requiring the surety to- offer to indemnify the principal against loss, generally a prerequisite to obtaining this relief in. courts of equity. Huey v. Pinney, supra, p. 253 [Gil.]. In the note to this section of the Field Code, it is said: “This seems on the whole to be the more reasonable mile, though the authorities do not fully sustain it.” Our statute was adopted in 1877 as § 1681 of the Civil Code of the Territory of Dakota. In New York, whence the rule of § 6683 is derived, the supreme court held, in Converse v. Cook, 25 Hun, 44 (1881), that an accommodation endorser was not within the rule of Pain v. Packard or King v. Baldwin, supra, and was not relieved from liability, as such accommodation endorser, because the creditor, upon demand, had refused or *407 neglected to proceed against the principal debtor. In the case of Trimble v. Thorne, 16 Johns. 152, 8 Am. Dec. 302, the same justice who wrote the opinion in King v. Baldwin held that a regular endorser was not within the rule and had no right to compel the creditor to proceed against the principal debtor before enforcing the endorser’s obligation under the instrument. This last case was decided in 1819. It would seem, therefore, that the New York courts, where this rule originated, have not been disposed to extend it or to apply it to any relation other than that of suretyship in the common law or technical sense. The Uniform Negotiable Instruments Act was adopted in this state in 1899. Chapter 88 of the Civil Code of the Revised Codes of 1899 contained the prior law of negotiable instruments. ' Section 4882 (Field Code, § 1260) thereof expressly gave the accommodation endorser all the rights of a surety as defined in the chapter on Surety-ship and provided that such endorser be exonerated in like manner. When the Uniform Negotiable Instruments Law was adopted this section was repealed. Other and different provisions took the place of this statute. It is now contended that the accommodation endorser, notwithstanding this repeal and the provisions of the Negotiable Instruments Law, particularly §§ 63 and 64 of that act, is entitled to all of the rights, privileges, and immunities of a surety at common law and under the statutes. It is too clear for argument, if this doctrine be sound, that the result will be to import into the Negotiable Instruments Act the law of forty-eight different jurisdictions defining the rights and liabilities of sureties, adding elements of uncertainty which, to a substantial extent, negative the desirable purpose of uniformity in the law of commercial paper. That may not be a conclusive reason why the doctrine should be rejected, but in view of the object sought to be attained and the desirability that the courts cast no obstructions in the way, the contention is entitled to serious consideration. We do not propose to enter into a lengthy discussion as to the nature of the history of the development of the law merchant, on the one hand, and the law of suretyship on the other. The term “surety” is not known to the law merchant, but is a term of common-law origin. It is insisted that the term with all its incidents at common law must now be bodily carried over into the law of negotiable instruments and that the rights of the surety or the accommodation endorser, whose position *408 or contract is of course, in some particulars, similar to that of the common law surety, shall be measured according to the rules of the common law. It seems to the writer that the advocates of this doctrine overlook important historical facts. The term surety was unknown to the law merchant; the relation or status itself has no real analogy therein. The statute, § 196, provides that the rules qf the law merchant, not of the common law, nor of local statutes governing the rights of sureties, shall govern in all matters not covered by the act. The law merchant is a system of law that does not rest exclusively on the institutions and local customs of any particular country, but consists of certain principles of equity and usages of trade which general convenience and a common sense of justice have established to regulate the dealings of merchants and mariners in all the commercial countries of the civilized world. 3 Kent, Com. 2; Brooklyn City & N. R. Co. v. National Bank, 102 U. S. 14, 31, 26 L. ed. 61, 68. Of this system we are required to take judicial notice. Comp. Laws 1913, §§,,7938 — 7952. “This lex mercatoria or common law of merchants is of more universal authority than the common law of England.” 1 Randolph, Com. Paper, 1. The common-law courts, when they had ousted the jurisdiction of admiralty, as will be hereafter adverted to, decided “the causes of merchants by the general rules which obtain in all commercial countries; and that often, even in matters relating to domestic trade, as, for instance, with regard to the drawing, the acceptance, and the transfer of inland bills of exchange.” In other words, the transactions of commerce were regulated by a law of their own and that was the law merchant “which ajl nations agree in and take notice of.” 1 Bl. Com. 273. It should be noted that the lex mercatoria was originally a separate body of law and, like equity and admiralty law, was administered in separate or special courts. See Jenks, History Eng. Law, pp. 40, 128. It was somewhat analogous to the Roman system known as jus gentium. The lex mercatoria was not, like the common law, the custom of a place or territory; it was the recognized custom of merchants and traders who had business relations in all the countries of Europe, including England. The merchants class, and disputes among its members arising out of commercial transactions, were not subject to the common Jaw. This practice grew out of the necessities of commerce and of trade. Merchants traveled from fair to fair and from place to place, *409 but in all places tbe same rules of law were administered and enforced in commercial litigation. Later, tbe admiralty court widened its jurisdiction to embrace mercantile causes. During the sixteenth century this court declared the principles of the law merchant. Later, the common law judges began to encroach upon the field of admiralty jurisdiction over commercial transactions and, as a result of numerous causes unnecessary to discuss, the jurisdiction of admiralty was gradually reduced and the jurisdiction of the common law courts increased over this class of cases. As administered by the King’s Courts, the rules of the law merchant nevertheless remained a body of law which were applied to particular classes of transactions rather than to a particular class of men. The law merchant thus gradually became a part of the legal system of England. See 2 Street, Foundations of Legal Liability, p. 331 ff. It is true that the process was necessarily marked by mutual adaptation and substantial modification of both systems, that is, the law merchant and the common law. It is nevertheless inaccurate to say that the law merchant lost its identity entirely and became wholly assimilated with the common law when its administration was assumed by the King’s Courts. Though its principles were adopted into the common law by Lord Mansfield, the law merchant still remained a body of rules applicable to a certain class of transactions, and international in character. See Jenks, History Eng. Law, pp. 239, 303. It seems to the writer to be at least a questionable use of terms to speak of the common law as the law of negotiable instruments when the law merchant is intended. The law merchant, in so far as its fundamental principles are concerned, remained essentially a separate system of law. It is no more accurate, as a generalization, to say that where the law merchant is silent it is subject to the rules of the common law than it would be to say that where the common law is silent it is subject to the principles and rules of the law merchant. The law merchant is, in fact, “an independent parallel system of law, like equity or admiralty.” Bigelow, Bills, Notes & Checks, p. 5. The King’s Courts administered not local custom, nor even the custom of the realm, but rules applied in commercial causes in all countries. It should also be noted that interference by the courts in behalf of the surety as against the creditor for the purpose of accelerating the *410 movements of the latter, or of compelling him to take action for the protection of the surety’s interests, is of equitable origin. Later, the rules of equity were recognized and given effect at law. Their origin and development, however, were entirely distinct and separate from the rules of the law merchant. The rule that a court of equity would under some circumstances aid the surety in order to protect his interests by compelling action or nonaction by the creditor, is of comparatively recent origin. In any event, it has no connection, whatever, with the origin, development, or application of the rules of the law merchant. Our legislature has distinctly recognized the common law as applicable in certain cases in the absence of statute. See § 7936, subsec. 41; § 11, 179; and §§ 4329-4331; Comp. Laws 1913. See also Pratt v. Pratt, 29 N. D. 531, 536, 151 N. W. 294. The Negotiable Instruments Law, however’, expressly adopts the Law Merchant, not the rules of the common law, as to matters not covered therein, and this court is required to take judicial notice thereof. Comp. Laws 1913, §§ 7938-7952. This is a distinct legislative recognition of the historical fact that the law merchant has a history and had a development distinct and essentially different from that of the common law; and of the further fact that although ultimately the administration of the rules of the law merchant was assumed by the King's Courts, its fundamental principles remained substantially intact. It seems to the writer of this opinion that it was the intention of the framers of the Negotiable Instruments Law to define the status of the accommodation endorser without reference to the rights of the surety at common law, by giving him the right to indicate upon the instrument, in appropriate words, if he desired to be bound in the capacity of and entitled to the rights and privileges of a surety at common law or under the statutes of the jurisdiction governing the contract between the parties. It is next insisted that alleged extensions of time operated to exonerate the endorser from liability. It is a sufficient and complete answer ■ to this argument to point out that the note contained an express consent to “any extension of time.” When the endorser consented to '“any extension of time,” he consented in law “that any one of an indefinite number of extensions” might be made. Winnebago County State Bank *411 v. Hustel, 119 Iowa, 115, 93 N. W. 70; Gregg v. Oklahoma State Bank, 72 Okla. 193, 179 Pac. 613. See also Bonart v. Rabito, 141 La. 970, 76 So. 166. Sutherland is in no position to object because the creditor -did that which he expressly and without restriction authorized him to do. One who is an accommodation endorser of a note, and liable as such, in accordance with §§ 6914, 6948 and 6949, Comp. Laws 1913, being § § 29, 63 and 64 of the Uniform Negotiable Instruments Law, which ■contains in the body thereof the following stipulation: “the makers and endorsers each guarantee the payment of this note and waive demand, protest and notice of nonpayment, and consent to any extension of time of payment or renewal thereof without notice/' is bound by this waiver, and, if a surety within the provisions of § 6683, Comp. Laws 1913, permitting a surety to accelerate the movements of the creditor by notice and upon demand, he cannot afterwards, by giving notice, require the creditor to proceed against the principal debtor. The appellant, Sutherland, when he endorsed the note, became bound by the stipulation in the body of the instrument heretofore quoted. All of the waivers therein contained are binding upon him to the same effect as if he had signed the instrument as principal maker. Comp. Laws 1913, § 6995; Archenhold Co. v. Smith, — Tex. Civ. App. —, 218 S. W. 808; Scott v. Smith, 35 Idaho, 388, 206 Pac. 812; Phillips v. Hippo, 93 Iowa, 35, 57 Am. St. Rep. 254, 61 N. W. 216. Appellant, in legal effect, says to the holder of the note that any extensions of time may be made, without notice to him, which, in the judgment and discretion of the holder or creditor,” may be expedient or necessary under the circumstances. This language is broad enough to include a waiver of the statutory right of the surety to accelerate the movements of the creditor by notice, as provided in § 6683, Comp. Laws 1913. Manifestly, the express agreement that the time of payment may be extended an indefinite number of times without notice is entirely inconsistent with the contention that the endorser, who has expressly agreed that such extensions may be made, may nevertheless, by a demand after the note is due, destroy the effect of such agreement, and, in an important and substantial particular, modify the contract without the assent of the other party to it and compel the creditor to institute proceedings upon the note. Owensboro Sav. Bank & T. Co. v. *412 Haynes, 143 Ky. 534, 136 S. W. 1004; Archenhold v. Smith, — Tex. Civ. App. —, 218 S. W. 808; Armour Fertilizer Works v. Bond, 139 Ga. 246, 77 S. E. 22. One other matter remains to be considered. Appellant alleges in his answer as follows: “That thereafter and after the maturity of said note, and while the same was due and payable, and while said B. H. Stary was wholly solvent and doing, a large and profitable business, and was transacting, business with the plaintiff, and while he was fully able to pay said note,, and the plaintiff from time to time had funds and collateral of and ample opportunity to collect said note from the said B. H. Stary, this defendant demanded of the plaintiff that he proceed against the said B. H. Stary, etc.” These allegations must be accepted as true. We shall first discuss the question as to the duty of the creditor to realize on the collateral. Must the creditor take steps to realize on the collateral security in his possession before enforcing the obligation of the accommodation endorser or the surety? This question seems to have been answered in the negative in this state, at least as far as the surety is concerned. In Bingham v. Mears, 4 N. D. 437, 27 L.R.A. 257, 61 N. W. 808, the court says: “On the same principle the surety cannot insist that the creditor must first essay to collect his claim out of the collaterals the principal debtor has given him except in the case mentioned in § 4310. This statute is inapplicable in this action.” Section 4310, referred to, in § 6688, Comp. Laws 1913, and has no application to the facts in the case at bar. See Brandt, Suretyship & Guaranty, § 260. The rule is reiterated by this court in William Deering & Co. v. Russell, 5 N. D. 319, 326, 65 N. W. 691. Furthermore, and this fact is controlling on this appeal, whether appellant be endorser or surety, the testimony in the record on this subject is to the effect that the bank did not take collateral because “it was not necessary.” This testimony was not contradicted and appellant did not offer to prove the contrary. We hold, therefore, that no facts appear in the record or in the offers of proof which gave rise to a duty on the part of the creditor to realize on collateral before proceeding against *413 the appellant, whether we assume appellant’s status to be that of a technical surety or regard him as an accommodation endorser. Construing the portion of appellant’s answer above quoted as an allegation that the respondent had in its possession, as a deposit to the credit of the principal debtor, an amount sufficient to pay the note in suit or a portion thereof, we are constrained to hold that the court did not err in granting the motion for judgment upon the answer and the evidence. This allegation is not supplemented or made more specific by an offer of proof. This court has held, on at least two different occasions, that the relation between a bank and a depositor “is that of debtor and creditor merely;” that the bank is not a custodian of a deposit, but a debtor to the depositor in the amount thereof. Shuman v. Citizens’ State Bank, 27 N. D. 590, 605, L.R.A. 1915A, 728, 147 N. W. 388; Citizens’ State Bank v. Iverson, 30 N. D. 497, 512, 153 N. W. 339. This court also held that § 6868, Comp. Laws 1913, giving the bank a lien upon all property in its hands, had no application to a general deposit. Shuman v. Citizens State Bank, supra. (This section was repealed by chap. 176, Session Laws 1919.) The right of a bank, therefore, to apply a deposit upon an indebtedness owing by the depositor to the bank is not in the nature of a lien but “is rather a right of set off or application of payments.” 7 C. J. 655. There is grave doubt whether, in any case, the duty exists to apply the deposit on the note. First International Bank v. Beiseker, 43 N. D. 446, 175 N. W. 637. It is not necessary to decide that question now. The undisputed testimony shows that such deposits as the principal had in the bank were special deposits — checks had been drawn and approved against the deposit — and could not be applied on the note. The allegations of the answer are somewhat indefinite; and the appellant did not offer proof to contradict this testimony. It must be taken as an established fact in the case that such deposits could not, on any theory, be applied on the note. If the appellant be, in effect, seeking to prove that he was liable in some capacity other than that of an endorser, he must also fail. Under § 6948 (§ 63 of the Negotiable Instruments Act) the intent to be bound in some capacity other than defined in §§ 6948 and 6949, (§§ 63 and 64 of the Negotiable Instruments Act) must be indicated in the endorsement and cannot be shown by parol proof. The statute fixes the *414 status of the accommodation endorser. First Nat. Bank v. Bickel, 143 Ny. 754, 137 S. W. 790; Lyons Lumber Co. v. Stewart, 147 Ky. 653, 145 S. W. 376; Overland Auto Co. v. Winters, — Mo. App. —, 180 S. W. 561; Lightner v. Roach, 126 Md. 474, 95 Atl. 62; Mechanic v. Elgie Iron Works, 98 Misc. 620, 163 N. Y. Supp. 97; Baumeister v. Kuntz, 53 Fla. 340, 42 So. 886; Porter v. Moles, 151 Iowa, 279, 131 N. W. 23; Neosho Mill. Co. v. Farmers Co.-op. Warehouse Stock Co. 130 La. 949, 58 So. 825; Ensign v. Fogg, 177 Mich. 317, 143 N. W. 82; Meyers Co. v. Battle, 170 N. C. 168, 86 S. E. 1034; Rockfield v. First Nat. Bank, 77 Ohio St. 311, 327, 14 L.R.A.(N.S.) 842, 83 N. E. 392; Thompson v. Curry, 79 W. Va. 771, 91 S. E. 801; Murray v. Third Nat. Bank, 148 C. C. A. 247, 234 Fed. 485. A contrary rule, namely, that §§ 63 and 64 merely create a presumption and that the real contract may be shown by parol or other evidence seems to have been applied in Mercantile Bank v. Busby, 120 Tenn. 652, 113 S. W. 390, and Kohn v. Consolidated Butter & Egg Co. 30 Misc. 725, 63 N. Y. Supp. 265. Prof. Brannan, in his comprehensive work, Negotiable Instruments Law, Annotated, 3d ed. 1921, p. 242, thinks that these decisions are “erroneous and to be regretted.” Judgment is affirmed with costs. Nuessle, J., concurs in the result.