Farmers Savings Bank v. Hansmann

Sherwin, J. 2 The controlling question before us is ■whether the defendant may show want of consideration for his indorsement of the note in suit. That the maker of a note may- impeach the consideration is well settled. It is a general rule that an indorsement is a contract, and that, like every other contract, it requires consideration; and it- is held that “between immediate parties the want of consideration invalidates it.” 3 Randolph, Commercial Paper (2d Ed.), section 691. If the defendant’s contention is true, his indorsement was without consideration, and made for the express purpose of transferring a note, which had been drawn payable to his order without his knowledge or consent, to its owner. We have held that parol evidence is competent to show the. real nature of the transaction, where an indorsement in blank has been made. Harrison v. McKim, 18 Iowa, 485; James v. Smith, 30 Iowa, 55. It must be borne in mind that the claim of the defendant distinguishes this case from Bank v. Sigstad, 96 Iowa, 491, and Bank v. Wilka, 102 Iowa, 315, for in both of these cases the indorsers had received value for the paper they indorsed, and hence had received value for their indorsements, and undertook to release themselves by oral proof of a different agreement limiting their liability. The question of want of consideration was not involved in either case. It is held that an indorser in blank may' prove by parol evidence that his indorsement was without consideration. 2 Randolph, Commercial Paper (2d Ed.), section 782; Kirkham v. Boston, 67 Ill. 599; Keeler v. Printing Co., 16 Wash. 526 (48 Pac. Rep. 239); Allin v. Williams, 97 Cal. 403 (32 Pac. Rep. 441); Smith v. Carter, 25 Wis. 283; Avery v. Miller, 86 Ala. 499 (6 South. Rep. 38); Wood v . Matthews, 73 Mo. 477; Hazzard v Duke, 64 Ind. 220. The defend 52 ant herein cannot be in any worse situation than an indorser in blank, and we think he was clearly entitled to show want of consideration for his indorsement. The question as to whether there was in fact consideration therefor was for the jury. There was a sharp conflict in the evidence as to the nature of the transaction, and we cannot interfere with the verdict. Under the issues presented, it was necessary to prove the agreement between the defendant and plaintiff’s, cashier. The judgment is aeeiemed.