Chicago Trust & Savings Bank v. Nordgren

Mb. Presiding Justice Waterman delivered the opinion of the Court. Up to the time that the note was purchased by appellant it had no validity; until then there had been no consideration given or received for it. Being payable to the order of the maker, and consequently having no validity until indorsed by him, when appellee’s name was placed thereon it was placed there as that of a second indorser or assignor. Whoever after this took the note took it with notice of the contract of indorsement which Hordgren, appellee, had entered into, and that contract can not be varied by oral testimony which might increase his liability. Bogue v. Melick, 25 Ill. 91; Blatchford v. Milliken, 33 Ill. 434; Kayser v. Hall, 85 Ill. 511. It -is quite true that the Supreme Court of this State has in many cases said that where the name of a third party appears upon the back of a promissory note, he is presumptively a guarantor, which presumption may be rebutted by proof that the agreement between the parties was different. Kingsland et al. v. Koeppe et al., 137 Ill. 344, and cases there cited. As to these cases it must be borne in mind that where the maker and payee of a note are the same person, there is, even after indorsement by the maker, but one party to the note, the same person appearing both as maker, payee and indorser; and it is not until more than this is done, that is, not until the note thus made and indorsed has passed out of the hands of the maker, payee and indorser, that it has any validity as a promissory note. When transferred to another person the note then, for the first time, has two parties to it; then becomes a contract; has a maker and a payee, who are not one and the same' person; such payee being the first payee, not the maker, the note has ever had; when he puts Ms name upon the note he is not a third party, but is the second party. Oral evidence was not admissible to show that appellee’s contract was that of a guarantor, because such evidence would be to vary the terms of his written contract. Why, then, it is asked, is oral testimony admissible when the name of a third party appears upon the back of a note to rebut the presumption that he is a guarantor ? Promissory notes and bills of exchange are contracts sui generis. They import consideration and are negotiable. To a promissory note there are two parties, a maker and a 'payee; if the.payee writes his name in blank upon the back of the note, he becomes an indorser and is liable as such to whomsoever the note may come. In the beginning there were two promissory notes, as such, only makers, payees and indorsers; the practice, by third parties, of guaranteeing promissory notes afterward came into vogue; and in some cases such guaranties have been held not to be negotiable. True v. Fuller, 21 Pick. 140; Tinker v. McCauley, 3 Mich. 188; 2 Parsons on Notes and Bills, 134-135; Lamourieux v. Hewitt, 5 Wend. 308. If not negotiable, the consideration of the contract of guaranty could not be inquired into. It is useless to attempt to reconcile the numerous authorities bearing upon the nature of the contract entered into by a third party in placing his name upon the back of a promissory note. For the present cases it suffices that, as appellant admits, the Supreme Court of this State has, in three instances, dedared that where a note is made payable to the maker’s own order and is then indorsed upon the hack by the maker, a second person putting his name on the back immediately following that of the maker, assumes the liability of, and is, a second indorser. The judgment of the Superior Court is affirmed.