Bowie v. Hume

Mi\ Chief Justice Alvey delivered the opinion of the Court: At the trial many exceptions were noted by the plaintiff, some of them not very material to be reviewed on appeal. The plaintiff, the appellant, has, in a general way, assigned a great many errors in the rulings of the court below, but they are so defectively and indefinitely stated that it is difficult to determine what are the particular questions intended to be presented for consideration. The defendant, the appellee, however, has treated the assignment of errors as presenting certain questions, and has made no motion to dismiss or affirm, for the want of proper assignment of errors under the rule. We shall, therefore, consider the salient points of the case, upon the supposed errors as stated in the brief of the defendant, the appellee. 1. The first question proper to be considered is, whether the note sued on was a valid negotiable promissory note, upon which the defendant can be held liable as endorser? It is contended by the defendant that the memorandum appearing at the foot of the note was a material alteration of the body of the note, and destroyed its negotiability, and being a material alteration, it exonerated the defendant from all liability thereon. The court, by its fourteenth instruction granted at the instance of the defendant, directed the jury “ that if they should find that at the time the defendant placed his name on the back of the note as endorser and returned the note to Thomas L. Hume, the note upon its face was a perfect instrument, and that subsequently, and without the knowledge and consent of the defendant, the said note was, before its maturity, altered by Thomas L„ Hume by adding thereto the memorandum, ‘with the privilege of paying all or any portion any time before maturity— Hall & Hume,’ the said alteration was a material alteration, and the plaintiff is not entitled to recover unless the jury further find that the said memorandum was on the paper at — 310 — the time when .the defendant signed the memorandum of waiver of February 4th, 1879.” This instruction was not only calculated to confuse the jury, but was erroneous in several particulars. The note had matured on the very day that the waiver of protest and notice was signed by the defendant, and if the memorandum had been written at the foot of the note before that time, then, according to the instruction of the court, the signing of the waiver would estop the defendant from denying the fact of the existence of the memorandum at the foot of the note at that time. There is no substantial or reliable evidence that the memorandum was appended after the maturity of the note, nor would there be any reason or legal effect in such memorandum, if annexed to the note after its maturity. The effect of the memorandum was only intended to secure a privilege, while the note was running to maturity, not after maturity; and it therefore carries intrinsic evidence that it was appended to the note before maturity. The only evidence upon the subject, if it can be called evidence, is that given by the defendant himself. In answer to the question, “ When you signed the waiver on the back of that note, do you remember whether you examined the face of it?—Answer. I do not think I made any close examination of it. Q. Are you able to say whether that privilege was on the face of the note then ?—A. I do not remember. I am satisfied I did not see it.” This evidence is wholly insufficient to establish the fact of the time when the memorandum was written, and, indeed, it is quite insufficient to rebut the legal presumption that the memorandum was appended contemporaneously with the execution of the note, and as a constituent part thereof. 1 Dan. Neg. Inst., Secs. 152, 153, 154, 155, and the cases there referred to. And if we treat the memorandum, signed by the makers of the note, as having been made contemporaneously with the note (it being written at the foot of the note, with no other reference to date than that at the top of the — 311 — note), then, upon principle, and according to authority, such memorandum would constitute a part of the note, and, with that memorandum incorporated as part of the note, the note would be properly described in the special counts of the amended declaration. If the memorandum be regarded as part of the note, then the note thereby was made payable on or before the time mentioned for maturity, at the option of the makers; and it is now well settled that the employment of such terms in a promissory note will not affect its negotiability. In the case of Mattison v. Marks, 31 Mich. 421, the note in question in that case was payable on or before a certain day, and Mr. Justice Cooley, in delivering the opinion of the court, said: “ The legal rights of the holder are clear and certain; the note is due at a time fixed, and it is not due before. True, the maker may pay sooner if he shall choose, but this option, if exercised, would be a payment in advance of the legal liability to pay, and nothing more. Notes like this are common in commercial transactions, and we are not aware that their negotiable quality is ever questioned in business dealings. It ought not to be questioned for the sake of any distinction that does not rest upon sound reason.” The same principle is fully stated and maintained by the Supreme Court of Illinois, in the case of Dorsey v. Wolff, 142 Ill. 589, upon review of many cases. But this question is definitely settled by the Supreme Court of the United States, in the case of Chicago Railway Co. v. Merchants’ Bank, 136 U. S. 268. In that case, it was held, that the negotiability of the instrument was not affected by the fact that it might, at the option of the holder, and by reason of the default of the maker, become due at a date earlier than that fixed. In the opinion of the court it is said: “Upon like grounds it has been held that the negotiability of the note is not affected by its being made payable on or before a named date, or in instalments of a particular — 312 — amount. In Ackley School District v. Hall, 113 U. S. 135, 140, it was held that municipal bonds, issued under a statute providing that they should be payable at the pleasure of the district at any time before due, were negotiable; for, the court said: ‘By their terms, they were payable at a time which must certainly .arrive; the holder could not exact payment before the day fixed in the bonds; the debtor incurred no legal liability for non-payment until that day passed.’ ” The court then refers to and quotes with approval the passage in Judge Cooley’s opinion, which we have already quoted, in Mattison v. Marks, 31 Mich. 421, and several other cases, among them the case of Carlon v. Kenealy, 12 M. & W. 139. And in the case of Ricker v. Sprague Mfg. Co. 14 R. I. 402, also referred to by the Supreme Court, it was held that a reservation in a note of the right to pay it before maturity in instalments of not less than five per cent, of the principal at any time the semi-annual interest became payable, did not impair its negotiability; the court observing that a note is negotiable if one certain time of payment is fixed, although the option of another time of payment be given. But suppose the memorandum appended to the note here in question was appended by the makers, or one of them, at a time subsequent to the making of the note, and after the note had been endorsed by the defendant, it does not follow, as matter of course, that the defendant was thereby released of liability on his endorsement of the note. It is not shown by the slightest proof that the memorandum was appended to the note after the note was delivered to Bowie, the bona fide holder for value; nor is it pretended that there was any mutilation, or spoliation, or change whatever, in the terms of the note as it was originally made and signed. The memorandum, while inscribed on the same piece of paper at the foot of the note, is entirely separate and distinct from the note as originally made; and if this memorandum — 313 — was appended after the note was made, and after it had been endorsed by the defendant, it was done without authority, and the memorandum should be treated as wholly immaterial and as not forming any part of the note, as against the defendant, the endorser. It is certainly true that either party to the note may show by parol evidence the true state of the case, and may, therefore, show when, the person by whom, and the circumstances under which the memorandum was made; and if it be shown that the memorandum was appended at a time and under such circumstances as to make it clear that it was not, by any fair legal intendment or construction, made a part of the note, the negotiability of the note was not thereby impaired, nor was the liability of the endorser in any manner affected. Odiorne v. Sargent, 6 N. H. 410. The memorandum in such case is simply collateral, and therefore immaterial and inoperative as against the defendant, the endorser. Smith’s Merc. Law (Ed. 1850), 329, 330, and cases cited. There are many cases in the reports where memoranda written at the foot, as in this case, or on the back of promissory notes or other negotiable instruments, have been held to be immaterial or as not affecting the negotiability of such instruments, as against the subsequent endorsers. As an instance of the application of this principle we have the case of Stone v. Metcalfe, 4 Camp. 217, where it was held that a memorandum or stipulation endorsed on a promissory note by the payee, was not to be taken as part of that instrument, without evidence that it was written at the time when the note was made. In that case the memorandum made upon the note was by the payee, in which he directed, in case of his death, that his executor should permit and suffer the sum secured by the note to remain on the security of the note, so long as it might be convenient to the maker, without suit at law or in equity, 11 until three years after my death, provided he continues to pay the interest thereof regularly — 314 — as the same becomes due.” The defense turned upon the effect of this memorandum endorsed on the note. • But Lord Ellenborough held, “ that if the memorandum was subsequently written when the note had been perfected and delivered in its absolute state, it could not be considered as a part of that instrument, although it chanced to be inscribed upon the same piece of paper.” And so where a drawer, who held a bill endorsed in blank by the payees, wrote under his signature: “Left with Mr. B. (the plaintiff) as collateral,” it was held to be no part of the instrument, and was immaterial. Bachellor v. Priest, 12 Pick. 399. And where the last endorsee of an accommodation bill made a memorandum at the foot directing its proceeds to be credited to the drawer, it was held no part of the bill, and its obliteration of no consequence. Hubbard v. Williamson, 5 Ired. 397. Therefore, if the memorandum be treated as not constituting a part of the note, and as being immaterial to the liability of the defendant as endorser, it follows that there was error in' instructing the jury that there could be no recovery on any of the counts in the original declaration in the cause. 2. Then, as to the question respecting the genuineness or forgery of the signature of A. H. Pickrell, on the note, and the effect thereof. The note, as we have seen, was made payable to A. H. Pickrell and Prank Hume, the defendant, and the latter is sued as endorser. These payees of the note were not partners, but they were, joint payees, and they became joint accommodation endorsers, and though the endorsement upon the note is not in form joint, yet we must suppose that the endorsement was intended to transfer a joint title; and though the names of the payees appear on the note separately and successively, still, upon the assumption that the signatures are genuine, the parties are to be treated-as joint endorsers. And, being joint endorsers, in order to fix their liability, notice of the dishonor of the paper at maturity was — 315 — required to be given to each of them, and notice to one only would be without effect as to him. Willis v. Green, 5 Hill, 232; Bank of United States v. Bierne, 1 Grat. 234; Shepard v. Hawley, 1 Conn. 368; People’s Bank v. Keech, 26 Md. 521; 2 Dan. Neg. Inst., Sec. 999. The notice of dishonor to each endorser was required in order to preserve the right of contribution as between them. Demand, protest and notice, however, may be waived, but to make such waiver effectual it must have been by all the endorsers interested in the question of contribution inter sesse. In this case, such waiver was supposed to have been effected; but one of the principal questions in the case has arisen upon the facts attending the procurement of that supposed waiver as to one of the named endorsers. In regard to the signature of the defendant to the waiver written upon the note there is no question or dispute, but in regard to the genuineness of the signature of A. H. Pickrell, the other payee named in the note, and whose name appears on the note as first endorser, there is much controversy, and a considerable conflict in the evidence. The right of the plaintiff in the note is not based, as would seem to be supposed, on the terms of the waiver endorsed on the note at its maturity, as an independent contract or undertaking, but upon the endorsement of the note by the payees, and the matter of the waiver is important only as means of making the original endorsement effectual. If, before the delivery of the note to Bowie, the holder for value, the defendant placed his name upon the note as endorser, and at the time of such endorsement by the defendant the name of Pickrell appeared upon the note as first endorser, and Bowie, becoming holder, took the note upon the faith of the genuineness of the endorsements of both Pickrell and the defendant, then the defendant would be estopped to deny the genuineness of the signature of Pickrell as against the bona fide holder of the note. And whether Pickrell's signature in the endorsement be genuine or not — 316 — (and there is no presumption that it was forged), if the waiver written on the back of the note at maturity was signed by Pickrell in his own proper hand, or by the hand of another authorized by him, all question as to the genuineness of the signature in the endorsement would be removed, leaving no question as to the defendant’s liability on his endorsement. The signature to the waiver would be a full adoption of the signature to the endorsement. These questions were all fully and fairly submitted to the jury by the instructions that were given by the court. We need not repeat the terms of the several instructions granted in respect to these questions; but in granting the fourth prayer of the plaintiff, and the eighth prayer of the plaintiff, as modified by the court, and in the volunteer instruction given by the court, designated as instruction 10, we think the subject was quite fully and fairly covered. And, in respect to the other prayers of the plaintiff, Nos. 1, 2, 3, 5, 6 and 7, we think there was no error committed in refusing to grant them. Nor do we find error by the court in granting the fifteenth prayer offered by the defendant, as that prayer was modified by the court before granting it as an instruction. 3. With respect to the question of estoppel presented by the ninth prayer of the plaintiff, which was granted with certain slight modifications as to its structure, in reference to the facts of the case, we do not perceive that, in the modifications made by the court, there was any such substantial change made as furnished ground for an exception by the plaintiff. The principle of the prayer as presented, founded upon the facts enumerated, was substantially preserved in the instruction as given, and the plaintiff, therefore, had no cause for exception. 4. With respect to the question of the competency of the defendant to testify as to the transaction that was had with Baker, the agent of Bowie, the holder of the note, in regard to the circumstances under which the waiver was written — 317 — by the agent and signed by the defendant, and the understanding for obtaining the signature of Pickrell to the waiver, we think the ruling of the court was proper. It is true, Bowie, the original holder of the note, had died since the former trial of the cause in 1888, and the present plaintiff, as administrator, had been substituted in his place as plaintiff on the record. At the time of the transaction with Baker, the agent, Bowie, the principal, was alive. But he was not present, and the transaction was exclusively as between Baker, the agent, and the defendant. Baker was introduced as a witness by the plaintiff to give his version of the transaction, and it would seem to be but fair and reasonable that the defendant should be allowed to give his version also; and the only question is, whether the terms of the statute are so imperative in prescribing the disqualification of parties to a cause to testify, under the circumstances of this case, as to exclude the defendant. The statute (Sec. 858, R. S. U. S.) provides that “In the courts of the United States no witness shall be excluded in any action on account of color, or in any civil action, because he is a party or interested in the issue tried: Provided, that in actions by or against executors, administrators, or guardians, in which judgment may be rendered for or" against them, neither party shall be allowed to testify against the other, as to any transaction with, or statement by, the testator, intestate, or ward, unless called to testify thereto by the opposite party, or required to testify thereto by the court.” As will be observed, the exclusion of parties as witnesses in the cases provided for is not absolute and unqualified; but the court may, in its discretion, in any case where justice would appear to require it, direct that the party otherwise excluded should be examined. The great and leading principle of this and similar statutory provisions, is to preserve entire mutuality as between the parties, that each shall-be competent, and required if necessary, to state his version of the transaction under in — 318 — vestigation. It is important, therefore, to look to the parties in fact and who are actively engaged in the transaction, in order to get the real facts as they transpired, and as they may be remembered by all parties concerned. If the transaction involved has been conducted by an agent, and that agent be a competent witness to support his version of what occurred, there can be no good reason for excluding the other party to the transaction; and there does not appear to be anything in the terms of the statute to require such construction. We think the statute should receive a liberal ■construction in order to maintain the principle of mutuality, and that seems'to be the construction adopted by other courts where similar statutes prevail. We think the court committed no error in allowing the ■defendant to testify. Pratt v. Elkins, 80 N. Y. 198 ; First Nat. Bank v. Payne, 111 Mo. 291, 293-4; Harris v. Bank, 22 Fla. 501; 3 Jones, Ev., Sec. 794, note 10. '5. We come lastly to the question as to the admissibility of the testimony given by the defendant on the former trial and reported stenographically, and when Bowie, the then plaintiff, was present and was also examined as a witness for himself. The right of cross-examination in respect to both parties was fully exercised; and the present plaintiff at the last trial produced and read in evidence the testimony given on the former trial by the then plaintiff Bowie, as the testimony of a deceased witness. The testimony of the defendant then given is objected to upon the ground that the party giving the evidence on the former trial is still living. But we do not think the objection a sound one. If the defendant, like his original adversary, had been dead at the last trial, there could have been no question of the admissibility of his testimony given on the former trial. But though still in life, there has supervened a cause of disqualification to his right to testify as a living witness without any fault or agency of his own. As matter of principle, in what respect does the case differ from that of a disquali — 319 — fying interest acquired by a witness after he has testified in a cause, and subsequently, on a new trial, his testimony is found to be essential to the party for whom he originally testified? In such case it has been repeatedly held by courts •of chancery that the deposition or testimony of such witness, given on a former hearing, is admissible; and it is difficult to perceive any reason for refusing to apply the same principle in actions at law. Professor Greenleaf, in his work on Evidence, Yol. 1, Sec. 168, states his conclusion upon the subject thus: “If, in cases of disqualifying interest, the witness has previously given a deposition in the cause, the deposition may be read in chancery, as if he were since deceased, or insane, or otherwise incapacitated. It may also be read in the trial at law of an issue out of chancery. In other trials at law, no express authority has been found for reading the deposition; and it has been said, that the course of practice is otherwise; but no reason is given, and the analogies of the law are altogether in favor of admitting the evidence. And as it is hardly possible to conceive a reason for the admission of prior testimony given in one form, which does not apply to the same testimony given in any other form, it would seem clearly to result, that where the witness is subsequently rendered incompetent by interest, lawfully acquired, in good faith, evidence may be given of what he formerly testified orally, in the same manner as if he were dead; and the same principle will lead us farther to conclude, that, in all cases where the party has, without his own fault or concurrence, irrecoverably lost the power of producing the witness again, whether from physical or legal causes, he may offer the secondary evidence of what he testified in the former trial. If the lips of the witness are sealed, it can make no difference in principle, whether it be by the finger of death, or the finger of the law.” We entirely agree with the learned author, in the principle and reason, stated by him, in the passage just quoted from his very authoritative work; and we are clearly of — 320 — opinion that the testimony of the defendant given on the former trial, when the then plaintiff was living and was examined as a witness, was properly admitted by the court, and therefore the exception taken to its admission ought not to be sustained. But for the errors that occurred in granting the thirteenth and fourteenth prayers of the defendant, offered for instruction to the jury, we find it necessary to reverse the judgment appealed from, and remand the cause for a new trial; and it is so ordered. Judgment reversed and cause remanded.