Wyckoff v. Wilson

McAdam, C. J. When Wilson indorsed the note, he had the right to assume from its form that Wyckoff & Co., the payees, (plaintiffs,) were to become first indorsers, and he (Wilson) the second indorser. He also had the right to suppose, and act upon the belief, that, if Middlebrook did not pay the note, and he (Wilson) was obliged to pay it, he would have a remedy over, not only against Middlebrook, the maker, but Wyckoff Bros., the payees (plaintiffs) and first indorsers. The form of the obligation is not conclusive, however, and the parties thereto are entitled to show their true relations to it. Upon this just principle, the payee, as first indorser of a negotiable instrument, may recover from the second on proof that the latter indorsed 629 to accommodate the maker for the benefit of the payee. Story, Prom. Notes, § 151; Morris v. Walker, 15 Q. B. 589; Smith v. Marsack, 6 C. B. 486; Cady v. Shepard, 12 Wis. 639. The purpose of such proof is to negative the legal presumption arising from the form of the instrument, that the truth may prevail and justice be done. To overcome the legal presumption, however, it is necessary to show that the defendant knew when he indorsed the note that it was to be used by the maker to obtain credit with the plaintiffs, (the payees,) and that although, apparently, the second indorser, he intended to become, and was in truth, the first, and, as such, liable thereon to the payees (plaintiffs) in case Middlebrook, the maker, failed to pay at maturity. Little v. Tyng, 1 City Ct. R. 309; MacTeague v. James, 2 City Ct. R. 52; Moore v. Cross, 19 N. Y. 227; Bacon v. Burnham, 37 N. Y. 614; Phelps v. Vischer, 50 N. Y. 69; Coulter v. Richmond, 59 N. Y. 478; Jaffray v. Brown, 74 N. Y. 393. In this view, the questions put to Middlebrook were proper, and should not have been excluded by the trial judge. The answers might have shown that the defendant did not know he was expected to become the first indorser on the note, and did not intend to assume that responsibility, but acted on the form of the obligation, which authorized him to assume that he was to become what the form implied, to-wit, the second indorser, with a remedy over against the plaintiffs as payees in case he was obliged to pay the note, in default of payment by those primarily liable. For this error the judgment must be reversed, and a new trial ordered, with costs to the appellant to abide the event.