Muntz v. Schmidt

Mb. Justice Niehaus delivered the opinion of the court. This suit was brought by the appellant, Henry Muntz, in the Circuit Court of Kane county, against ¡the appellee, Henry Schmidt, to recover the amount due on a promissory note for $7,000, made by the Elgin National Brewing Company, payable to the order of the appellant, and indorsed before its delivery to the appellant, by the appellee and Frank A. G-oecke. The case was tried by the court without the intervention of a jury, and the finding and judgment of the court was in favor of the appellee, whereupon an appeal was prayed and perfected. The proof shows that on or about April 12, 1911, the appellant loaned the Elgin National Brewing Company, of which the appellee was then president, $7,000 upon the promissory note in question, which was dated April 12, 1911, by which the brewing company promised to pay to the order of the appellant the sum of $7,000 twelve months after the date, with 6 per cent interest per annum. Frank A. Groecke and the appellee indorsed the note by placing their signatures on the back thereof without indicating by appropriate words or otherwise their intention to be bound in any other capacity than that of indorsers. The note thus made and indorsed was accepted by the appellant for the $7,000, which he loaned to the brewing company. On the trial the appellant offered to prove by parol evidence that the undertaking of the appellee in indorsing the note in question was that of a guarantor. The parol offered was objected to, but the court allowed the proof offered to be made, subject to the objection. The proof offered and admitted amounts to this: That Mr. Groecke, who was vice president and manager of the brewing’ company, had several conversations with’ the appellant concerning a loan of $7,000 which Mr. Groecke wanted the appellant to malee to the brewing company; that the appellant finally made up his mind to help the parties out, and on one occasion before the note in question was made went to the office of the brewing company concerning the matter of this loan, and Groecke and Schmidt were both there, and that he then told them that he would loan the money, but would have to have Mr. Schmidt as guarantor, and that Schmidt agreed to it. This was all that occurred upon the occasion in question; afterwards, on April 12,1911, Groecke came to appellant’s office in reference to the loan and presented him the note in question with the signatures on the back, and he accepted the note and gave him a check for $7,000. The note was not paid by the brewing company when it became due, nor at any time after that; no notice of its dishonor was given to the appellee as required by the statute to hold the appellee, and make him liable as indorser. No suit was commenced against the appellee until 3 years after the maturity of the note. If the appellee by placing his signature on the back of the note in question assumed the obligation of indorser, the appellant had no right of recovery against him because he failed to give the statutory notice of the dishonor of the note; but if the obligation of the appellee was that of guarantor, such notice was not required. We are of opinion that the obligation assumed by the appellee under the facts proven was that of indorser. Sections 63 and 64 of the Negotiable Instruments Act (J. & A. ¶¶ 7702, 7703) define the liability incurred by a party who places his signature upon a promissory note otherwise than as maker, and expressly provide that he shall be deemed an indorser unless he clearly indicates by appropriate words an intention to be bound in some other capacity. In this case the appellee at the time he placed his signature upon the back of the instrument did not indicate any intention to be bound in any other capacity than that of indorser; and therefore under the statute his liability was that of an indorser, and the appellant accepted the note under these conditions. The fact that the appellant told the appellee upon a previous occasion that he would not loan the money unless the appellee guaranteed the note cannot be regarded as of controlling importance, in view of the fact that he did actually loan the money and accept the note without requiring the appellee to become guarantor. We are of opinion that the parol evidence offered was not competent and did not change the liability incurred by the appellee, in placing his signature on the note under the statute. Where the law attaches a certain liability to the act of a party, in placing his signature to a note, such liability cannot be changed by parol evidence; and parol evidence is inadmissible to change the terms of a contract which the law has fixed. Hately v. Pike, 162 Ill. 241; Kopf v. Yordy, 200 Ill. App. 409; First Nat. Bank of Arcola v. Heeb, 188 Ill. App. 194; 8 Corpus Juris, p. 74, secs. 121, 122. The findings of the court therefore that the appellee was an indorser, and as indorser was not liable, were correct; and a judgment was properly rendered for the appellee. The judgment is affirmed. Judgment affirmed.