Webster v. Cobb

Skinner, J. This was an action of assumpsit by Cobb against Webster, upon a guaranty of a promissory note, executed by one Fowler to one Stewart, who assigned the same to Cobb. The second count of the declaration alleges the making of the note by Fowler; that Webster, at the same time, and before the delivery thereof to Stewart, in consideration thereof, and that-Stewart would accept the same, did make his promise and guaranty, in writing, on the back thereof, as follows: “ For value received, I do hereby guarantee the payment of the within note when duethe assignment of the note by Stewart to Cobb,, before the same became due, and that neither Fowler nor Webster have paid the same, &c.. Webster pleaded the general issue and special pleas, alleging payment of the note before the assignment to Stewart, and impeaching the good faith of the assignment. The cause was tried by the court, and judgment rendered in favor of Cobb for the amount of the note. On the trial the plaintiff read the note and assignment in evidence, with the signature of the defendant written and in blank on the back thereof. The defendant objected to this evidence, and the plaintiff then wrote over the signature of defendant the guaranty in the declaration set forth. To the reading of this guaranty in evidence the defendant objected, and the court overruled the objection. The only questions necessary for determination are: Had the plaintiff the right to fill up the blank over the signature of the defendant with the guaranty ? Can the plaintiff maintain an action on the guaranty ? And was the note assigned bona fide, so as to cut off the defence of payment to the payee, by the maker, before the assignment ? The proof shows that the signature of defendant was on the back of the note while in the hands of the payee, and that the payee assigned the note to the plaintiff in the same condition as it came to his hands. In the case of Camden v. McCoy 3 Scam. 437, this court held the law to be, that the holder of a negotiable note, indorsed in blank, may fill up the blank with such undertaking as is consistent with the nature of the instrument and the intention of the parties; and that the signature of a third person, in blank, on the back of such note, while in the hands of the payee, is presumptive evidence that it was placed there at the time of the execution of the note as guaranty. The same doctrine is recognized in Cushman v. Dement, 3 Scam. 497; Smith v. Finch, 2 Scam. 321; Carroll v. Weld, 13 Ill. 682; and Klein v. Currier, 14 Ill. 237. Where the note has been in circulation, and the name of a third person appears upon it in blank, it cannot be determined whether the name was placed there for the purposes of transfer and creating the liability of simple indorser,'or for the purpose of absolute guaranty. The note, in the course of negotiation, may have passed from holder to holder, by blank indorsement, and, therefore, no presumption, from the face of the instrument, can be raised, that the blank signature was placed there at the inception of note, as a guaranty. Here, the note was so indorsed at the time of its delivery to the payee, and passed, by assignment, directly from him to the plaintiff. The defendant could not, therefore, have been an intervening indorser. The guaranty is such an one as the law, under the facts, implies, and was, therefore, rightfully written over the signature of the defendant, even at the trial. The guaranty is general, specifying no person to whom the guarantor undertakes to be liable, and is upon the back of a negotiable instrument. In such case, the guaranty runs with the instrument on which it is written, and to which it refers, partakes of its quality of negotiability, and any persons having the legal interest in the principal instrument, takes, in like manner, the incident, and may sue upon the guaranty. This view is consistent with the nature of the transaction, the' evident intention of the parties, and the objects and uses of commercial paper. Heaton v. Hulbert, 3 Scam. 489; Watson v. McLoren, 19 Wend. 557; 26 Wend. 425; Story on Bills, 536; Adams v. Jones, 12 Peters, 207; Walton v. Dodson, 3 Carr. & Payne, 163; Bradley v. Carey, 3 Greenleaf, 233. The defendant proved the payment of the note to the payee, Stewart, before the assignment to the plaintiff, and called Stewart to impeach the assignment. From Stewart’s testimony, it appears that he had a difficulty with Webster, and others connected with the transaction out of which the note arose, and that Stewart, upon the refusal of one of the' parties to pay him a demand, wrote an assignment of the note to the plaintiff, his " brother-in-law, which assignment was also witnessed; that Stewart, being somewhat excited and unwell, sent for the plaintiff, showed him the note and assignment, and asked him if he would take the note in payment of certain property plaintiff was to let Stewart have; that plaintiff replied that he would if it would be any accommodation to Stewart, and he did not want it; and, that the note, without further ceremony, was delivered to plaintiff ; that plaintiff lived on a farm of Stewart’s, and had the use "of it for repairs and fencing; that, before then, plaintiff desiring to leave the farm, Stewart had agreed to purchase plaintiff’s crops on the farm, consisting of some ten acres of corn, twenty acres of oats, and some farming utensils ; that no price for the property nor time of payment was agreed on; that no bill of items was made, or receipt executed, nor could Stewart state the value of the property; that nothing more was said, and that the property was the only consideration for the assignment. We are satisfied that the assignment was merely colorable, and, if so, it is no protection against the defence of payment. No reasonable man would dispose of a note, amounting .to over $1,200, and become personally responsible as assignor in this hasty and unsatisfactory manner, regarding it a real transaction. He did not know the value of the property he was to get for the note, and, in all probability, it did not amount to one-fourth the amount of the note. The making of the assignment, and having the same witnessed, on the occurrence of the difficulty with Webster and others, the sending for the plaintiff, his brother-in-law, the disposition of the note to him without any satisfactory equivalent, upon the spur of the moment, and the accommodating willingness of plaintiff to accept the same without further inquiry, seem to us to mark' a colorable transaction, invented to cut off the defence. The judgment is reversed and the cause remanded. Judgment reversed.