Kern v. Von Phul, Waters & Co.

By the Court ElANDrau, J. The main question presented by this case is whether an indorser of an ordinary negotiable promissory note, can plead and prove that he had a parol understanding at the time he puthis name on the note, by which he was not to be'liable on his contract, or in other words that he was an indorser without recourse. At first thought such a proposition would seem to be in direct hostility to the well known and most familiar of all rules of law, that parol evidence is not admissible to contradict or vary the terms of a written instrument; but when an examination of the authorities is made, a great many decisions can be found which tend strongly to innovate upon the above rule, all claiming to observe and adhere to it, yet finding some special circumstances in the particular case upon which to base a distinction, and thus evade its rigorous operation. There is a natural desire which is founded on legal principles, to impose some character of liability upon a party who signs his name to a contract. This just inclination of the judicial mind, in its efforts to prevent an entire failure of liability, has led to serious encroachments upon the verity and integrity of written instruments, more particularly in regard to promissory notes and bills of exchange than any other species of contracts. A great deal of this confusion and misapplication of principle has arisen from that class of cases where a note is [430] drawn payable to the order of one party, and is endorsed by another previous to its delivery to tbe payee, and the latter seeks to make the former responsible to him. Since the case of Jossellyn vs. Ames, 3 Mass. R., 274, the question of admitting parol evidence to show the relation of parties to each other, and to fix their relative liabilities upon such paper, has received the adjudication of almost all the courts of this country, and the weight of authority is decidedly in favor of the competency of such evidence. Whether this is a departure from principle to meet the exigencies of a special case, it is needless now for this Court to determine. When we succeeded the Supreme Court of the Territory of Minnesota, we found three decisions of that Court upon the records adopting the general current of decision. (1 Minn. R., 369, 380, 383.) We followed the precedent in several cases, and think it should now be regarded as the settled law of the State. 2 Minn. R., 139, 147. The attempts that have been made to apply the rule recognized by these cases to others bearing analogy, have gradually and insidiously undermined the rules of evidence and introduced uncertainty and insecurity into a system which should rest upon principle alone. It is not our purpose to extend a rule which we deem questionable. In the course of our investigations we have been frequently called upon to examine questions kindred to the one at bar, and have in every instance, where we were untrammelled by the precedents of our own Courts, adhered with strictness to the immutability of written instruments when assailed by parol evidence. Levering & Morton vs. Washington, 3 Minn. R., 233; Walters vs. Armstrong, 5 Minn. R., 448; Borup vs. Nininger, 5 Minn. R., 523; Peckham & Spencer vs. M. D. Gilmam, & Co., decided at this term. In the case at bar the Defendant Kerns wrote his name on the back of the note without restriction or qualification. That alone imports a contract just as well known in the law as if it was all written out over the signature. Story on Prom. Notes, sec. 135. He now seeks to pi’ove by parol that the essence of the contract, which prima facie his name creates, [431] was extracted by a parol reservation at tbe time tbe indorsement was made; or in other words that bis contract was to impose no liability or obligation upon bim. "We do not think it can be done. Tbe contract of indorsement does not fall witbin tbe class of contracts, that being partly reduced to writing, and partly resting in parol, may be established as an entire obligation or agreement: These contracts are generally characterized by some incompleteness in tbe written part, indicative of other stipulations being necessary to its perfection, or some kindred feature that takes them out of tbe ordinary rule. An indorsement lacks no element of perfection. It creates a contract, tbe obligations and liabilities of which' are as well settled as any known to commerce. It therefore is not subject to be varied or defeated by a cotemporaneous verbal agreement. Tbe counsel for tbe Defendants seems to have fallen into an error of fact about tbe allegation of notice of dishonor having been served on tbe indorsers, being in tbe complaint. "We find a full allegation to that effect in folio 20 of tbe paper books. Tbe note was protested on the third day of April, 1858. At that time tbe service might be made by mail even upon a party resident witbin tbe town where tbe notice was mailed. Old R. S., chap. 4, art. 6, sec. 5, as amended by sec. 4 of the Laws of 1856, p. 5, 6; 3 Minn. R., 323. Tbe notaries were by section six of tbe same act required to, beep a record of tbe notices so served, and such record was made evidence. On tbe 26th of July, 1858, tbe law above referred to was repealed, (Comp. Stats., 135, sec. 101,) and a new law enacted which allows tbe “ instrument of protest accompanying any bill of exchange or promissory note which has been protested,” &c., to be evidence of tbe facts stated in it. Oomp. Stats., p. 134, sec. 96. This section refers as well to past as future protests. Tbe trial of this action came on in April, 1862. Tbe notarial certificate was therefore evidence under the law of 1858, which was in force. If a notice was properly folded and addressed, it would be sufficient whether under cover of what is popularly called an “ envelope ” or not, nor is it essential to tbe validity of a protest that tbe notary should keep a record of tbe same. It [432] might have been difficult or impossible to prove it under the law of 1856, if no record was made, but the law of 1858 furnished another mode. We see no error in the record, and the judgment of the Court below must be affirmed.