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commodation, notwithstanding their apparent liability to him on the face of the paper. The fact of the accommodation making and indorsing might be proved to defeat the action, and it would establish that the agreement of the parties, contrary to the legal inference from the face of the paper, did not impose a liability on the maker and indorser to pay the party suing."

There has always been conflict among the courts of the several states both in asserting the principles upon which irregular indorsers upon commercial paper are to be held and in the conclusion arrived at in particular cases litigated. The number of cases is so great, and the possibility of even a partial reconciliation of them so remote, that we will confine our citation of authorities wholly to those in this state. It was well settled in this state for many years prior to the enactment of the Negotiable Instruments Law that a person who puts his name on the back of a bill or note before its delivery is presumably a second indorser and not liable to the payee, but the presumption could be rebutted by parol evidence to show that the intention of the indorser was to become surety for some prior party to the instrument. * *

The Negotiable Instruments Law was first enacted in this state in 1897. * * *Section 64 provides: [Court quotes section 64.] By this section of said law the presumption as established by the courts in this state was changed, and an irregular indorser is now presumed to be liable in accordance with the express language of the statute. Questions relating to the sufficiency of the pleadings are settled by the statute. A complaint upon a note or bill, without alleging a collateral agreement between the parties whose names are on the instrument, seeking to recover against a person except as provided by the statute, would clearly be demurrable.

The note of the Lenape Coal Company was payable to the plaintiff. a third person, and the defendant, according to the provisions of said section, is liable to the plaintiff, the payee therein. No serious contention has been made to the contrary. The serious question for consideration arises from the fact that the bills were payable to the maker and drawer thereof, respectively, and the defendant, as an indorser thereon before delivery, is not under the statute prima facie liable thereon to the plaintiff. Should parol evidence have been allowed to show the intent of the parties? We have not discovered any exception to the rule as established by the courts of this state allowing parol evidence as between the parties whose names appear on the bill or note to determine their liability as between themselves. It is frequently stated that where a note is payable to a person other than the maker, and is indorsed by a third person before delivery, the intention of the indorser is ambiguous and uncertain on the face of the paper, and such uncertainty justifies the receipt of parol evidence to determine the true intention of the parties. We do not see that any greater certainty exists upon the face of a bill as to the true intention of the parties, where it is drawn to bearer or to the order of the maker, and it is indorsed by a third person after acceptance by the acceptor and before delivery to the payee and maker. There is a certain rule of presumption determined by common law or by statute, but the alleged reason for the rule in either case is not very apparent. The long-established rule to allow parol evidence that the intention of the parties may prevail seems to have met with somewhat general approval, with

out discussing specifically the principles upon which such evidence is admitted.

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In Good v. Martin, 95 U. S. 90, 24 L. Ed. 341, the court say: "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 proof of facts and circumstances which took place at the time of the transaction are admissible to aid in the interpretation of the language employed. *

* * ""

It must constantly be borne in mind that the acceptance of a bill makes the acceptor the principal debtor. A bill, when accepted, becomes similar to a promissory note; the acceptor being the promisor, and the drawer standing in the relation of an indorser. * *There

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is nothing in the negotiable instruments law to indicate an intention on the part of the Legislature to change the rule as established in this state relating to the receipt of parol evidence to determine the primary. liability as between the persons whose names appear upon the instru ment or as between those secondarily liable thereon. * Parol evidence is necessary to determine whether a party to an instrument. including an indorser thereon, is an accommodation party, and also to determine which other party to the instrument he had accommodated. The plaintiff was the holder of the note for value, and the evidence showed that the defendant was an accommodation indorser for the benefit of the acceptor. The last subdivision of section 64, as we have quoted, makes parol evidence necessary to establish whether the indorser signed the instrument for the accommodation of the payee. It is true that this section does not expressly state that, if the indorser signed for the accommodation of the acceptor, he is liable to all parties subsequent to the acceptor; but the fact that such a provision is not included in section 64 does not prevent the admission of parol evidence to determine generally the questions relating to an accommodation party as provided by section 29.

The Negotiable Instruments Law by section 196 provides: "In any case not provided for in this act the rules of the law merchant shall govern." By section 68 of the Negotiable Instruments Law it is provided: "As respects one another, indorsers are liable prima facie in the order in which they indorse; but evidence is admissible to show that as between or among themselves they have agreed otherwise." As we have seen, upon the acceptance of the bill the acceptor becomes the principal debtor and the one primarily liable to pay the amount of the bill, and all other parties to the instrument, including the maker and indorser, are secondarily liable. We are of the opinion that the maker of the bill is in legal effect and within the intention of this section an indorser, and that as between the plaintiff and the defendant parol evidence is authorized to determine the liability as between them.

The articles of the Negotiable Instruments Law relating to the presentation of bills and notes for payment and notice of dishonor * * * further show an intention by the Legislature to leave the order of lia

bility among those whose names are on the instrument subject to determination by any competent evidence.

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There is no reason that we can conceive why the Legislature should intend to change the rule in regard to the admission of parol evidence as it had existed in this state for many years. All of the quotations that we have made from the negotiable instruments law show that it has enlarged rather than restricted the rules allowing parol evidence to show the true liability and relation of the parties whose names appear upon the bill or note in all actions between themselves. It is certainly very material to the drawer of a bill whether an indorser signs it at his request or at the request and for the benefit of the acceptor. We do not think it was the intention of the Legislature by the enactment of section 64 of the Negotiable Instruments Law to establish a rule as to the liability of an irregular indorser conclusive on the parties to the instrument as between themselves in an action where the facts showing a different intention are fully alleged. All of the decisions of our courts since the enactment of the negotiable instruments law tend to sustain the views herein expressed.

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In Kohn v. Consolidated Butter & Egg Co., 30 Misc. Rep. 725, 63 N. Y. Supp. 265, McAdam, J., said: "That this is the proper interpretation of the act is obvious. The true intention of indorsers as between themselves can always be shown by oral evidence. * * * To go further, and decide that the statute intended to create an incontestable liability against irregular indorsers, would be to impute to the legislative wisdom a design repugnant to every notion of judicial procedure, especially in a provision enacted in the interest of law reform."

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(Supreme Court of Michigan, 1918. 201 Mich. 655, 167 N. W. 842.) Action by Arnold B. Cooper, doing business as A. & W. Cooper, against Michael Sonk and others. To review judgment for plaintiff, defendants bring error.

KUHN, J. This action was brought in the justice's court for the city of Detroit to recover from the defendants, as indorsers, the balance claimed to be due on a certain promissory note, of which the following is a copy:

$600.00

Detroit, Michigan, February 1, 1915. "Six months after date we promise to pay to the order of A. and W. Cooper six hundred dollars at the Wayne County & Home Savings Bank, Detroit, Michigan, for value received, with interest at six per cent. per annum.

"[Signed]

St. Michael's Archangel Polish National Catholic Church
"M. Sonk.
"Victor Gorniak.
"A. Citorski.”

On the back of the note appear the names of the said M. Sonk, Victor Gorniak, and A. Citorski and also of the twelve other defend

The note was not paid at maturity and was duly protested. Judgment for $500 was rendered in favor of plaintiff by the justice

of the peace, and on appeal the circuit judge directed a verdict in plaintiff's favor for the same amount.

The note was given in renewal of a prior note which had been accepted by the plaintiff in lieu of filing a lien against the church property for materials furnished in the erection of said church. Mr. Gage Cooper, plaintiff's manager, testified that when the settlement by note was proposed, the representatives of the church agreed to have the note indorsed by some men of financial responsibility; that he looked up the proposed indorsers, found they were all right, and took the note with their indorsement. It is the claim of the defendants that the note was the note of the church corporation solely; that the names appearing on the face and back of the note were the names of the committee of the church and were signed by those persons as committeemen and not in their individual character; and that the plaintiff knew and understood this fact at the time the note was taken. Upon the trial the defendants attempted to introduce testimony to show these facts, but the court, upon objection by plaintiff's counsel, refused to admit it, on the ground that the unqualified signatures on the note could not be explained or varied by parol evidence. Whether or not the court erred in refusing to admit this testimony is the question raised by the appellants' assignments of error.

[Court here quotes sections 63 and 64 of the Negotiable Instruments Law.]

Mr. Bunker, in his work on Negotiable Instruments, in which he has annotated this act, in a footnote to the last section above set forth, in reviewing the decisions applicable thereto, says: "The statute seems to fix absolutely the status of the irregular indorser and thus excludes. parol testimony to vary his liability. The only question of fact would seem to be, Did the person 'not otherwise a party to the instrument,' place his signature thereon 'before delivery' ?"

From the instrument here in question it appears that the indorsements on the back of the note were unqualified, and in accordance with the decisions of this court we are of the opinion that parol evidence is not admissible to vary the terms of this negotiable instrument. As was recently said by Mr. Justice Steere in the case of Holland City State Bank v. Meeuwsen, 192 Mich. 326, 158 N. W. 1032: "Under the undisputed facts in this case, defendants' testimony along those lines, as the trial court ultimately held, was wholly incompetent, and but an attempt to reduce this written instrument from an absolute, unqualified undertaking according to its written terms to a conditional, defeasible agreement, by proof of a contemporaneous, oral contract. The court properly rejected such evidence. * * * ""

The court ruled properly in rejecting the testimony in controversy. The judgment is affirmed.

SHEA v. VAHEY et al.

(Supreme Judicial Court of Massachusetts, 1913. 215 Mass. 80, 102 N. E. 119.) Action by John P. Shea against James H. Vahey and others. Judgment for defendants, and plaintiff excepts.

RUGG, C. J. There was evidence from which it might have been found that the plaintiff was simply the agent of one of the indorsers. B. & P.Bus.LAW-57

of the note in taking up the note after maturity and in bringing this action.

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The defendant was the first of the four indorsers upon the note. The true relation as between themselves of parties liable on a note may be shown by oral evidence in actions between them to determine their respective obligations. It is only in the absence of proof to the contrary that the law fixes the legal effect of their liability on the instrument in accordance with the order of the signature. When an outside agreement is proved the rights of the parties as to each other are fixed in accordance with its terms regardless of the order in which the signatures appear on the note. There was ample evidence to support a finding that the indorsers, of whom there were three at the outset, agreed before signing the original note that they should share equally whatever they might be required to pay on it, and that later when the wife of one of the three signed a renewal of the original note making four indorsers it was agreed that the proportion of liability of the defendant should remain the same. The jury as shown by the verdict believed that this agreement was made. The plaintiff technically was not entitled to recover on the note. The action should have been by the indorser who has paid for contribution upon the oral agreement. * * The rulings were sufficiently favorable to the plaintiff. Exceptions overruled.

SECTION 5.-RIGHTS OF THE HOLDER AGAINST THE RESTRICTIVE INDORSER

No section of the act deals expressly with the liability of a restrictive indorser to subsequent holders. Section 66, in terms, applies to "every indorser who indorses without qualification." A restrictive indorser is not a qualified indorser, therefore it would seem that the liability of the restrictive indorser is to be ascertained from this section unless the relations existing between the restrictive indorser and subsequent holders are of such a nature as to prevent, by implication, the application of this section. It will be recalled that section 36, in defining what shall constitute a restrictive indorsement provides that "an indorsement is restrictive, which either (1) prohibits the further negotiation of the instrument; (2) constitutes the indorsee the agent of the indorser; or (3) vests the title in trust for or to the use of some third person." Section 37 deals with the rights of an indorsee under a restrictive indorsement, which are: (1) "To receive payment; (2) to bring any action thereon that the indorser could bring; (3) to transfer his rights as such indorsee, where the form of the indorsement authorizes him to do so." It appears, therefore, that section 37 does not impose any liability on the instrument upon the restrictive indorser to subsequent indorsees. Taking these two sections together it appears that every restrictive indorsement will either (1) pass the title to the restrictive indorsee in trust for the restrictive indorser or in trust for a third party. Where the restrictive indorsee holds the title in trust for the restrictive indorser

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