Norfolk National Bank v. First National Bank

Rose, J. This is an action on an unpaid note in the following form: , Note — See 40 Harvard Law Review, 494. [561] “$4274.72. Bristow, Nebraska, April 21, 1922. “July 22, 1922, after date, for value received, I promise to pay to the order of C. T. Samuelson, forty-two hundred seventy-four and 72/100 dollars. “Payable at the First National Bank, Bristow, Nebraska. With interest at the rate of ten per cent, per annum from maturity until paid; payable semi-annually. “The indorsers, sureties, guarantors, and assignors, severally waive presentment for payment, protest and notice of protest for non-payment of this note, and consent that the time of payment may be extended without notice. “(Signed) Bert Loomis. “0. O. Lynch, Nebr., R. 1: “No. 15622. Due July 22, 1922. 2.26.” The indorsements on the back of the note are as follows: “Payment Guaranteed. “Protest, demand and notice of non-payment waived. “C. T. Samuelson. “Payment guaranteed. Protest, demand, notice of nonpayment waived. “Woods Credit Company, “By F. W. Woods, Pt. . “F. W. Woods. ■ “.86 cents I. R. S. duly canceled.” The Norfolk National Bank is plaintiff and pleads that it purchased the note in due course of business for full value before maturity. The action is one at law to recover from the First National Bank of Bristow, the only defendant, as indorser, the unpaid principal and interest. It is alleged in the petition that in these transactions the business, pursuant to custom, was conducted on the part of defendant in the adopted name of “C. T. Samuelson” — the name appearing on the face of the note as that of payee and on the back of the nóte as that of indorser. “C. T. Samuelson” was the name of the vice-president and managing officer of defendant. The facts on which the action is based, including the charge that defendant is payee and indorser, are pleaded formally in detail. The note and the [562] indorsements thereon are parts of the petition. Defendant denied liability as an indorser. A jury was waived and the district court upon a trial of the issues dismissed the action. Plaintiff appealed. Is a national bank whose name nowhere appears on a negotiable promissory note, except to designate the place of payment, liable as indorser in an action at law on the note to recover the unpaid principal and interest? Plaintiff insists that, defendant, the First National Bank of Bristow, in fact lent to Loomis the money for which he gave the note In controversy, that defendant was the real payee and the first indorser, that in these transactions defendant conducted, pursuant to custom, the business in the adopted name of C. T. Samuelson, and that the liability on the actual- indorsement is the same as if the name of the First National Bank of Bristow, defendant, had appeared in the note as payee and in the indorsement as indorser. The position outlined does not seem to be tenable. Under such a custom personal transactions of C. T. Samuelson in accepting and transferring a note would be identical with that of defendant — the bank of which he was the managing officer. Identity of parties is an important factor in banking affairs. Without attempting to reform the note, plaintiff demanded the enforcement of an obligation not expressed or .implied in the writing itself. This required oral proof at variance with what is clearly expressed on the face and back of the note on which the action was based. It also required oral proof of a custom showing that the written contract of the parties in unambiguous terms is not what it purports to be. A negotiable instrument with indorsements thereon, if any, has a, definite import In • commerce, carrying generally on its face and back its obligations and the names of the obligors. In the channels of trade it is not intended to be a bearer of fictitious names or undisclosed obligations. Furthermore a national bank is a creature of federal law with a corporate name to be used in conducting the business of banking. It seems clear, therefore, without a reformation of the note, in absence of fraud [563] or mistake, that parol evidence was inadmissible for the purpose of showing that the writings did not disclose on their face their true import, or that custom created an unexpressed obligation, or that C. T. Samuelson was an adopted name of defendant. The controlling principle is that one whose name nowhere appears on a negotiable promissory note is not generally chargeable as indorser. There are exceptions to the rule, but none of them applies to the facts of the present case. It follows that the action was properly dismissed-. Affirmed. Thompson and Eberly, JJ., dissent.