Consterdine v. Moore

Sedgwick, J. This action was begun in the district court of Dawson county to foreclose a real estate mortgage. There was a decree foreclosing the mortgage, and the defendant has appealed. The note and mortgage were executed by the defendant Thomas E. Moore and wife to the Globe Investment Company. The defendant Bank of Miller afterwards bought the mortgaged property subject to the mortgage, and now defends in this case. Soon after the note and mortgage were executed and delivered the payee, the Globe Investment Company, sold the papers to parties who afterwards, and before the note became due, sold and assigned them to the plaintiff. Afterwards the defendant bank paid the mortgage note in full to the original payee, the Globe [293] Investment Company, but payment has not been made to this plaintiff. The indorsement on the note was: “Pay to the. order of-without recourse. Globe Investment Company, J. Lowell Moore, Treasurer.” The first contention is that the plaintiff is not entitled to protection as an innocent bona-fide indorsee under this indorsement. This contention can not be sustained. A blank indorsement, until it is filled up and made special, is equivalent to a bill of exchange payable to' bearer. Everett v. Tidball, 34 Nebr., 803, 806; 2 Randolph, Commercial Paper [2d ed.], 705, and cases cited. The holder may, at his option, complete the indorsement by inserting the name of the indorsee; and this he can do either before or after he begins suit thereon. Evans v Gee, 11 Pet. [U. S.], 80, 9 Law. Ed., 639; Maxwell v. Vansant, 46 Ill., 58; 1 Randolph, Commercial Paper, 181. The holder, in filling the indorsement, may write any words over the name of the indorser which do not enlarge his liability as indorser. To fill the blank with the name of the indorsee would restrict the present indorsement, and is not necessary to the negotiability of the note. The case of Gaylord v. Nebraska Savings & Exchange Bank,* 54 Nebr., 104, is cited as holding a different doctrine. In that case a stranger to the paper who had the note in his possession as agent of the payee, wrote on the back of the note, “Pay to the order of,” and sent it to the payee, advising her to sell the note and invest the proceeds, and representing to her that he would sell the note for her and make a more profitable investment of the proceeds. She thereupon wrote her name under the words indorsed on the note, and returned it to the agent, who deposited the same as collateral security for indebtedness of the co-partnership of which he was a member, and did not account to his principal for the proceeds. In an action for conversion, brought against the bank by the payee to recover the value of the note, it was held that instructing [294] the jury to find a verdict for defendant was error. This conclusion might be justified on the ground that in view of the peculiar form of the indorsement, the circumstances surrounding the transaction would furnish sufficient evidence of notice to the bank to require that issue to be submitted to the jury. In the case at bar the proof is clear that the payee sold the note in the regular course of business, indorsed its name thereon, and delivered it to the purchaser. Under such circumstances, there is no reason for holding that the incomplete special indorsement written by the payee over its name would affect the negotiability of the note in the hands of subsequent holders. 2. It is also contended that the evidence establishes that the Globe Investment Company, at the time the defendant bank paid the money, “was agent for the plaintiff to collect and receive the money.” The defendant, having paid the money to one who did not and could not produce the note, he has thereby assumed the burden of showing that the party to whom he paid the money was the OAvner of the paper, or the authorized agent of the owner to receive the money for him. The payee, the Globe Investment Company, sold the paper to John Stuart & Company, Limited, of England, avIio in turn sold it to this plaintiff. There is considerable evidence in the record in regard to the business relations of the Globe Investment Company and John Stuart & Company, Limited, and of the course of business between them, and it is earnestly insisted that the Globe Investment Company Avas the agent of John Stuart & Company in the collection of its loans in general, and particularly in relation to the loan in question; and it is shoAvn that John Stuart & Company, several months before this paper became due, instructed the Globe Investment Company to make collection of the paper; but it is not necessary to determine the legal effect of the relations existing betAA'een these two companies, Avhich was the controlling consideration in Stuart v. Stonebraker, 63 Nebr., 554. The evidence is not contra295 dieted that this plaintiff bought the paper from John Stuart & Company, • Limited, t on the 27th day of March, 1890, which was but a few months after the note was given, and that he held the paper himself until a short time before the note became due. He then took it to John Stuart & Company, Limited, and instructed them to forward it for collection, They forwarded the note to Kidder, Peabody & Company, who presented it for payment to the Globe Investment Company, and payment was refused. The evidence that this plaintiff was an innocent-purchaser of the note, and that he never authorized the Globe Investment Company to make this collection for him, either directly or through John Stuart & Company, Limited, is abundantly sufficient to support the finding of the trial court. 8. The appellant in his brief urges that the note was not negotiable because of agreements contained in the mortgage that the maker should pay insurance premiums and taxes on the mortgaged premises, and that if the -maker failed to pay in accordance with the terms of the paper, the mortgagee or its assigns might declare the whole debt due and payable at once, or might elect to pay the taxes and insurance, and even, in such case, might declare the whole debt due. The note and mortgage, having been executed at the same time, and having been transferred together, they must be construed together, and the provisions of the mortgage relating to the indebtedness itself would have the same effect as though they were incorporated in the note; but the provisions referred to relate only to the security, which is collateral to the indebtedness, and such provisions do not affect the negotiability of the note. There is no agreement to pay the taxes that might be assessed upon the indebtedness itself, nor any other provision which would render the amount of the indebtedness or the time of payment uncertain within the rule adopted by this court. In Stark v. Olsen, 44 Nebr., 646, it was held that neither the provision to pay attorney’s fee, nor that [296] if default be made in tbe payment of any interest coupon, tbe principal sum may at the option of the holder of the note become due and payable without further notice, would affect the negotiability of the note; and the provisions of this note are within the same rule. - ' The following opinion was filed on rehearing on October 7, 1908: 1. Mortgage: Negotiable Note: Security Incident to Debt: Transfer. A real estate mortgage given to secure a negotiable note is a mere incident to the debt, and is transferred by a transfer of the note. We65 v. Hoselton, 4 Nebr., 308. 3.-: -: -: —-: Provision in Mortgage Affecting , Indebtedness: Construction. A note and mortgage executed and delivered together as one transaction will be construed together. Provisions in the mortgage affecting the indebtedness itself will be construed with the note. Grand Island Savings & Loan Ass’n v. Moore, 40 Nebr., 686. 3. -: -: -: -: -: -: Sale and Delivery: Purchaser: Notice. When the note and mortgage and an assignment of the mortgage are sold and delivered together, the purchaser will be charged with notice of the contents of the papers. 4. Non-Negotiable Note: Transfer: Notice: Payment to Original Payee. . The .maker of non-negotiable papers, who has no notice of a transfer thereof, may make payment to the original payee. The decree of the district court is Affirmed. Footnotes [*] 69 Am. St. Hep., 705.