Mayes Mercantile Co. v. Handley

Townsend, J. (after stating the facts). There is but one question before this court for determination, viz: [360] whether the words. “The Mayes Merc. Co. Transferred to W. H. Handley,” written upon the back of said note by the defendant the Mayes Mercantile Co. (plaintiff in error here) at the time of the delivery of said note to Handley, was a commercial indorsement, and fixed.the liability of the defendant as an indorser, as contended by appellee, or was simply an assignment of said note, and that defendant was not liable as an indorser, as contended by appellant. The contention of plaintiff in error is that it did not intend to indorse said note and bind itself as an indorser, and guaranty the payment of the note, but simply to assign and convey whatever interest it might have in said note. This was negotiable paper, and negotiable paper is properly transferred by indorsement and delivery, and when indorsed in the usual manner the one transferring the note is liable as an indorser, unless he uses some words limiting his liability, such as “without recourse,” or words of similar import. See Maine Trust & Banking Co. vs Butler (Minn.) 48 N. W. 333, 12 L. R. A. 370, where the question is almost identically the same as in the case at bar. The indorsement in the note there was as follows: “For value received, I hereby assign and transfer the within note, together with all interest in and all rights under the mortgage securing the same to L. D. Cooke.” The court there used this language: “The appellant, in this case, with much care, indicated his purpose to sell and transfer the note, but he failed to limit and qualify his indorsement by words which would clearly indicate such an intent, if in fact it' existed. It was incumbent l upon him to do so, if he intended or expected to escape the liability of the ordinary indorser. The phrase 'without recourse/ or its equivalent, which must be used on such occasions, is a very simple one, and in every day use. The appellant did not insert in his contract of indorsement this phrase, or words equivalent thereto. To relieve one who puts his name on the back of a negotiable promissory note from liability [361] as an indorser he must insert in the contract itself words clearly expressing such an intention.” To the same effect is Davidson vs Powell (N. C.) 19 S. E. 601. See, also, Markey vs Corey, 108 Mich. 184, 66 N. W. 493, 36 L. R. A. 117, 62 Am. St. Rep. 698 and Sears vs .Lantz, 47 Iowa, 658. In those cases the word, “assign” is used, and the courts there held that the payee was not relieved of liability as an indorser. The statute (section 482, Mansf. Dig. (Ind. Ter. Ann. St. 1899, § 464)), also .says: “All indorsers or assignors of any instrument in writing assignable b) law, for the payment of money .alone, on receiving due notice of the non-paj'rnent or protest of any such indorsed or assigned instrument in writing, shall be equally liable with the original maker, obligor or payee of such instrument, and may be sued for the same at the same time with the maker, obligor or payee thereof, or may be sued separately.” The judgment of the court below is therefore affirmed. Clayton and Lawrence, JJ., concur.