Lester v. Paine

By the Court, Miller, J. The justice before whom this cause was tried has found that the defendant Paine did not indorse the check to give the maker thereof credit with the plaintiff, and did not intend or agree to become in any- manner liable to the plaintiff upon the check, or otherwise than as second indorser thereof. I do not discover that his finding is not warranted by the evidence in the case. The testimony is entirely barren of any thing to show a knowledge by the defendant Paine of the facts in reference to the purpose for which the check was given. This is the great difficulty in upholding the plaintiff's case; and it can only be done upon the theory that the check, being payable to the plaintiff, must be presumed to have been made for the jilaintiff's benefit, with the knowledge of the defendant. I do not think that any such hypothesis is sustainable. The earlier decisions of the higher courts in this state hold an entirely different «doctrine. The case of Herrick v. Carman, (10 John. 224; 12 id. 159,) which was similar to the case at bar, the note being payable to the order of the payee, who was the assignee of the plaintiff, was decided upon the ground that it did not appear that the defendant had sufficient knowledge of the consideration to make him liable otherwise than as second indorser. Mr. Justice Spencer expresses the opinion that if the plaintiff had supplied this proof the action might have been sustained. (12 John. 160, 161.) In Nelson v. Dubois, 13 John. 175,) the opinion of the court in Herrick v. Carman was adopted and applied. In Campbell v. Butler, (14 John. 349,) where the note was payable to the order of the plaintiff and it appeared that it was made to give the maker credit, with the knowledge of the indorser, it was decided that the rule laid down in Herrick v. Carman and Nelson v. Dubois applied. [619] In Truman v. Wheeler, 17 John. 318,) where the note was payable to the plaintiff or order, and it did not appear that the defendant knew for what purpose the note was designed, or that there was any communication between him and the holder of the note, it was decided that the defendant was only liable as second indorser. I do not understand that this doctrine has been disturbed by any of the later cases. (See Hall v. Newcomb, 3 Hill, 233; 7 id. 416; Waterbury v. Sinclair, 16 How. Pr. 340; opinion of Emott, J. 341.) The last reported case where the question has arisen is Moore v. Cross, (19 N. Y. Rep. 227.) It should be noticed that the marginal note of that case is rather broad, and not sustained fully by the opinion. The action was brought to recover the amount of a promissory note made by one McG-ervey, payable to the order of the plaintiff, and indorsed by the defendant. The facts are similar to those in the case at bar, with the exception that it appeared that the defendant indorsed the note for the purpose of paying for coal sold and delivered by the plaintiff to the maker-on the credit of the indorsement, and that the note was delivered thus indorsed, for the coal sold and delivered, with the privity of the defendant. The case sustains the doctrine enunciated in the earlier decisions, and Johnson, J. indorses the principle established in Herrich v. Carman and Gilman v. Wheeler, and says : “In neither of them was it made to appear that the second indorser put his name on the paper to give the maker credit with the payee.” It appeared distinctly in this case that the indorser was privy to the contract, and that his name was put upon the paper for the purpose of giving the maker credit with the payee. When the case now considered was presented to the court, on a previous occasion, it was held by Mr. Justice Peckham in his opinion, that it was not enough that Lester and Wilson agreed that Wilson should procure Paine as surety, but knowledge should be brought home to Paine, whether he indorsed before or after Lester. [620] [Albany General Term, December 1, 1862. Hogeboom, Peckham and Miller, Justices.] It is quite obvious from the cases cited, that knowledge cannot be inferred from the fact that the indorser signed before the payee. Under such circumstances the legal intendment is that the indorser only intended to become liable as a • second indorser ancTsubsequent to the payee; and that he indorsed the paper ’ with the understanding that the payee was to be the first indorser. Aside from the paper itself there must be extrinsic evidence that the indorsement was given with the intent of the indorser to give the maker of the note credit with the payee; so that the payee would have a right to indorse his name without recourse. There was no such evidence on the trial, and I am of the opinion that the decision of the justice was correct, and the judgment entered thereon should be affirmed.