Leech v. Hill

The opinion of the Court was delivered by Sergeant, J. —When bills of exchange and promissory notes are drawn according to the established usage amongst merchants, they have certain properties by law annexed to them, which are well defined, and are presumed to be known to all that become parties to these instruments. If a note be indorsed by the payee, to whose order it is.drawn, such indorsement is an undertaking by him to pay the amount at the time appointed, if the maker do not, provided the holder tabes cave to make a demand on the maker, and to give due notice to the indorser on default of payment. But where a note is drawn and indorsed out of the usual form, it is an anomalous instrument: and I know no other rule by which it is to be construed than according to the contract and understanding of the parties exhibited in the evidence. What would be the effect of a blank indorsement of a note drawn to the order of another person, unaccompanied by evidence, it is unnecessary to examine. In the case before us, the evidence is clear, that the indorsement was intended by all concerned [450] to be a security to Hill, for a loan of money to Sample, and that the note was drawn in its present shape by Sample, who acted as the agent of all parties. It being impossible, on account of the informality of the instrument, to treat it as a negotiable note, it can be considered in no other light than as an agreement of the defendant to become the surely or guarantor of the note, and as authorizing the plaintiff to write over his signature an engagement to that effect. In so doing he expressed no more than was tacitly implied by the contract and understanding of the parties. The cases cited by the plaintiff’s counsel show that it has been so viewed by the courts of Massachusetts and New York, and it seems impossible to give any other construction to the transaction. If the defendant stood in the light of a guarantor, then, according to the opinion of this court in Gibbs v. Cannon, 9 Serg. & Rawle 198, the plaintiff was not subject to all the duties of a holder of a note towards an indorser; but if the maker was known by the defendant before and at the time when the note was payable to be insolvent, notice of non payment was not requisite. Whether the guarantee was contained in the same or a different instrument, can make no difference in its legal effect. We are therefore of opinion that there was no error in the charge of the court below. Judgment affirmed.