Kohrs v. Smith

HONORABLE W. R. C. STEWART, Judge of the Ninth Judicial District, sitting in place of the Chief Justice, disqualified, delivered the opinion of the court. Section 5866 of the Civil Code, which is a part of the [1] Negotiable Instrument Act of the laws of the state of Montana, provides: “No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided. But one who signs in a trade or assumed name will be liable to the same extent as if he had signed in his own name.” This section of our Negotiable Instrument Act is uniform with, and contained in, the laws of thirty-eight states of the Union, and is the result of an effort directed by the American Bar Association to bring about uniformity of the laws on this subject, a history of which effort may be found in Part III of Ogden on Negotiable Instruments. The same general rule is stated in 2 Clark & Skyles on the Law of Agency, section 575, as follows: [472] “It is also a well-settled rule that only such persons are liable on a negotiable instrument as are named or described therein; or, in other words, a negotiable instrument is binding on the person only by whom it is signed. If an agent is authorized to make, draw, accept, or indorse a negotiable bill or note, in order that it may be binding on the principal, he must either sign the principal’s name, or must make it appear in some way from the face of the instrument that it was executed for him; and if instead of doing so he, innocently or intentionally, makes it appear that he himself is the party to the instrument, it will be binding on him alone. When, therefore, an agent makes, indorses or accepts a negotiable instrument in his own name, he is personally liable thereon, although he may have acted in good faith and may have disclosed the fact of his agency or the name of his principal; and parol evidence is inadmissible for the purpose of charging another or relieving the agent from liability on such instrument. ” The same rule is stated in 1 Daniel on Negotiable Instruments, section 303, which reads as follows: “No party can be charged as principal upon a negotiable instrument unless his name is thereon disclosed. The reason of this rule is that each party who takes a negotiable instrument makes his contracts with the parties who appear on its face to be bound for its payment; it is ‘a courier without luggage,’ whose countenance is its passport; and in suits upon negotiable instruments, no evidence is admissible to charge any person as a principal party thereto, unless his name in some way is disclosed upon the instrument itself; although upon other written contracts, not negotiable, it is often competent to show that, although signed in the name of the agent only, they were executed in the business of the principal, and with the intent that he should be bound.” To the same effect is the case of New York Life Ins. Co. v. Martindale, 75 Kan. 142, 121 Am. St. Rep. 362, 12 Ann. Cas. 677, 21 L. R. A., n. s., 1045, 88 Pac. 559; 1 Am. & Eng. Ency. of Law, 2d ed., p. 1141. Since the adoption of our Negotiable Instrument Act the supreme court of Washington, in Seattle Shoe Co. v. Packard, [473] 43 Wash. 527, 86 Pac. 845, has construed the Act as follows: “But, outside of the authorities which have been cited in this case, our own statutes settle the status of the parties to a transaction of this hind. Chapter 149, found on page 340 et seq. of the Laws of 1899, a chapter relating to negotiable instruments, undertakes to establish the law of this state in relation thereto. Section 18 (page 345) provides: ‘No person is liable on the instrument whose signature does not appear thereon except as therein otherwise expressly provided.’ It will be observed that this is an action upon the draft, and it will be further observed that the signature of the respondents does not appear upon said draft, and no liability of the respondents can therefore attach unless the liability is otherwise expressly provided in the Act, and no such express provision can be found.” It will be noted that there is nothing about the notes in [2] question here to indicate a liability on the part of any other person than defendant Smith, who signed the same. Therefore the judgment, so far as it fixes the liability against the defendant Boardman, is erroneous under the statute, and should be revised so as to bind the defendant Smith alone. The judgment is therefore reversed, and the trial court is directed to enter judgment for the plaintiffs for the amount of the notes against the defendant Clyde C. Smith alone, and for the sale of the pledged stock. 'Reversed, with directions. Mr. ‘Justice Smith and Mr. Justice Holloway concur. Rehearing denied June 4, 1912.