Bank of Albion v. Smith

By the Court, Johnson, J. The only question in the case is, whether the legal effect of the indorsement of a promissory note, in blank, can be varied, or changed, by a cotemporaneous parol agreement. An indorsement in blank imports, in law, a precise and definite undertaking on the part of the indorser to pay the note, upon condition that payment shall be demanded of'the maker, and notice of non-payment given to such indorser, in the manner prescribed by law. It is, in legal effect, a promise in writing. Our courts in this state have uniformly held that the legal import of a written undertaking was a part of the contract, and could no more be varied, or contradicted, by parol, than it could, had such legal import been clearly and fully expressed in the instrument. I know of no exception to this rule, in this state. The rule has been applied to promissory notes, indorsements, bills of lading, leases, deeds, and almost every description of written instruments. I shall cite only a few of the numerous cases to be found in our reports. Thompson v. Ketcham, (8 John. 189.) Creery v. Holly, (14 Wend. 26.) Seabury v. Hungerford, (2 Hill, 80.) Prosser v. Luqueer, (4 id. 420.) Pattison v. Hull, (9 Cowen, 747.) Payne v. Ladue, (1 Hill, 116.) Swart v. Service, (21 Wend. 36.) The principle is that all previous and cotemporaneous negotiations and'undertakings are merged in the writing and its legal import. The undertaking of an indorser may be either limited, or enlarged, at the time it is entered into, by express terms, at the pleasure of the indorser. But if no such terms are expressed, in the indorsement, the law fixes the character of the undertaking," and it cannot be varied by parol. What the plaintiff 492 insisted upon, at the trial, and what the jury found, was, in substance and effect, that at the time the defendant turned out the note, and indorsed it, it was agreed by parol that the plaintiff need not make any demand of the maker, when the note became due, and that the defendant would be bound to pay without such demand. In other words, that a demand of the maker, was no part of the condition of the promise to pay. It did not present the case of a waiver of a condition, after it had become obligatory. The effect of the evidence was to show that no such condition ever attached, or formed any part of the undertaking. If an indorsement can be varied by a cotemporaneous parol agreement, to this extent its entire character may be changed, and no one can ever know how, or to what extent, an indorser in blank is bound. The question of waiver of demand did not arise in the case, whatever it may have been called upon the trial. [Cayuga General Term, June 7, 1858. Welles, Smith and Johnson, Justices.) The case of Brent’s Ex’rs v. The Bank of the Metropolis, (1 Peters, 89,) relied upon by the plaintiff’s counsel, so far as it holds that the legal import of an indorsement may be contradicted or varied by parol, is certainly not law in this state, and is in conflict with a well settled rule of evidence. In that case, however, the agreement, as to the place of the demand, was with the maker, and not with the indorser, sought to. be charged. Ho place of payment was mentioned in the note, but demand was made at the place where the maker agreed that demand and payment should be made. In such a case, perhaps, it might well be held that as to the indorser the demand was duly made, and the condition complied with. The indorser was held to be bound by the agreement of the maker and the established and known usage of the bank. Ho such questions arise in this case. Here was no demand of the maker, and the only question is, whether the liability of the indorser has been fixed without it. It is clear, I think, that it has not. The defendant was entitled to a nonsuit. A new trial must therefore be granted, with costs to abide the event.