Kline v. Bank of Tescott

[96] The opinion of the court was delivered by Horton, C. J.: On August 15, 1888, the discount committee of the Bank of Tescott accepted the note of the Kanopolis Creamery Company to the Western Creamery Building and Supply Company, of June 1, 1888, for $950, “as collateral.” F. F. Scidmore, F. L. Scidmore and M. B. Buell were partners, under the firm name of the Western Creamery Building and Supply Company. This company was also a stockholder in the Kanopolis Creamery Company, a corporation duly organized and existing under the laws of this state. F. L. Scidmore was a director of the Bank of Tescott. F. F. Scidmore was the cashier of the bank, and the discount committee of the bank consisted of F. F. Scidmore, T. E. Scidmore, and T. B. Seers. F. F. Scidmore was the person who secured the note sued on, and knew all the facts and circumstances under which it was executed and delivered, and was present with the discount committee of the bank when that committee acted upon and accepted the same. Under the rule in Mann v. National Bank, 30 Kas. 412, we must treat the note as if this action were between the original parties only, as if no assignment or transfer had been made. The trial court held that the note upon its face was the note of the Kanopolis Creamery Company, and that Waite and Wooley executed it in their official capacity only, but that the parties who signed upon the back were liable personally as guarantors. If extrinsic evidence were not admissible, the ruling of the trial court would be correct. Under the authorities, if the parties who signed the note on the back, and who composed the board of directors of the Kanopolis Creamery Company, had signed the note upon its face, they could show they made it only in their official capacity as directors of the corporation. “Where individuals subscribe their proper names to a promissory note, prima faoie they are personally liable, though they add a description of the character in which the note is [97] given; but such presumption of liability may be rebutted, as between the original parties, by proof that the note was in fact given by the makers as agents, with the payee’s knowledge.” (Byles, Bills, 27, n. 1; Haile v. Peirce, 2 Md. 327; McWhirt v. McKee, 6 Kas. 412; Talley v. Burtis, 45 id. 147.) In this case, it is claimed that if extrinsic evidence had been received, it would have shown the directors of the Kanopolis Creamery Company—the corporation—signed their names at the instance of F. E. Scidmore, one of the members of the Western Creamery Building and Supply Company, on the back of the note as officers of the corporation, and for the corporation only. It is claimed that F. F. Scidmore assured these directors that the only way to make a corporation note was for the officers and directors of the corporation to sign their names and affix their official positions thereto, and that the note was thus signed under his direction to bind the corporation, but not the officers individually.. If the parties who wrote their names upon the back of the note as directors had signed their names upon the face thereof, they could have shown by extrinsic evidence that they were acting for the corporation only, and we perceive no reason why, as between the original parties or any subsequent holder of the note accepting the same as collateral, with full notice of all the facts and circumstances connected with the execution and delivery thereof, the same rule will not apply when such signatures are upon the back of the instrument before delivery. In Fullerton v. Hill, 48 Kas. 558, (29 Pac. Rep. 583,) it was ruled that “A stranger to a promissory note, who writes his name across the back thereof before it is delivered to the payee, incurs prima facie the liability of the guarantor. But parol proof may be received to show the exact liability of such indorser, by showing the agreement and understanding of the parties at the time of such indorsement.” (Baker v. Chambels, 4 G. Greene, 428; Whitney v. Inhabitants of Stow, 111 Mass. 368; National Bank v. Boardman, 48 N.W. Rep. [98] 1116; Metcalf v. Williams, 104 U. S. 93; Good v. Martin, 95 id. 90.) “ Considerable diversity of decision, it must be admitted, is found in the reported cases where the record presents the case of a blank indorsement by a third party, made before the instrument is indorsed by the payee, and before it is delivered .to take effect, the question being whether the party is to be deemed an original promisor, guarantor, or indorser. Irreconcilable conflict exists in that regard; but there is one principle upon the subject almost universally admitted by them all, and that is, that the interpretation of the contract ought in every case to be such as will carry into effect the intention of the parties, and in most cases it is admitted that proofs of the facts and circumstances which took place at the time of the transaction are admissible to aid in the interpretation of the language employed.” (Denton v. Peters, Law Rep., 5 Q. B., 475; Good v. Martin, supra.) We think that the parties who signed as directors had the right, at the trial, to give in evidence to the jury that the note in question was not their note as guarantors, but that it was the note of the Kanopolis Creamery Company only. The judgment of the district court will be reversed, and the cause remanded for further proceedings in accordance with the views herein expressed. All the Justices concurring.