Hamburger v. Miller

Alvey, J., delivered the opinion of the Court. The note sued on in this case was made by the Building Association on the 22nd of May, 1872, payable to Conrad Meise, or order, twelve months after date. It is in the ordinary form of a promissory note, and was signed by the President, Secretary, Treasurer, and two directors of the Company. It appears to have had the impress of the corporate seal affixed at the foot of the note, but there is no reference made to the seal in any part of the instrument itself, and there is nothing appearing to indicate the purpose of affixing the seal.

The note was indorsed in blank by the payee, and also by the defendant, Hamburger; and not being paid at maturity, it was protested tor nonpayment. The note, notwithstanding the mark of the seal affixed, must be taken as a negotiable promissory note, and that, too, without regard to extrinsic facts. It was manifestly ³²⁴ issued as a promissory note and was intended to be discounted for the benefit of the payee. Without negotiable quality it would not have subserved the purpose for which it was made.

Upon successful negotiation of the note the payee was made to depend for the money for which he gave the Building Association a mortgage on his house. The question of the liability of the defendant on his indorsement was raised by prayers offered in the Court below, and by the ruling thereon, the plaintiff obtained a verdict and judgment for the amount of the note. The defence relied on by the defendant is, that he indorsed the note for a special purpose, and that such indorsement was made by him without consideration, to the knowledge of the plaintiff. And for the purpose of showing under what circumstances the indorsement was made, and the note placed in the hands of the plaintiff to be discounted, and in what manner the note was used by the plaintiff to raise the money thereon, and the way in which it again came to the possession of the plaintiff, both parties were examined as witnesses ; and, with a material discrepancy in their testimony as to the purpose for which the indorsement was placed on the note, the facts about which they both agree appear to be these: After the note was made by the Association, and indorsed by the payee, it was left with the defendant, as the treasurer of the corporation, with the understanding that it should be discounted, and after deducting certain charges due the Association, the balance of tbe proceeds to be paid over to Meise, the payee of the note.

The plaintiff had been in the habit of procuring notes of a similar character to be discounted at the instance of the defendant, for a certain commission ; • and in this instance he was applied to by the defendant to get the note discounted, and for that purpose the note was placed in his hands, without any other indorsement than that of the payee. Finding some difficulty in procuring discount of ³²⁵ the note, the plaintiff returned to the defendant and informed him that it was necessary that he, the defendant, should put his name on the note, in order, as the defendant testifies, to his receiving the money, the product of the discount, and for that purpose alone ; though the plaintiff swears that the indorsement was made to give additional security to the note. Whereupon the note was indorsed by the defendant, and again placed in the hands of the plaintiff to be negotiated. The plaintiff then passed the note to a Mrs. Aberle, without any indorsement of his own, and, the note being for $500, received from her $480, which he paid over to the defendant, less a commission of one per cent.

It appears that the money obtained from Mrs. Aberle was not obtained by regular discount and upon the credit of the note; but the plaintiff pledged his own individual responsibility for the money, and the note was passed as collateral security only. As we have already stated, the money not being paid at the maturity of the note, the note was duly protested for nonpayment, and notice given the indorsers. After this, instead of bringing suit against the parties to the note, suit was brought by Mrs. Aberle against the plaintiff on his separate undertaking for the re-payment of the money, and judgment being recovered for the amount, he paid it, when the note was returned to him by Mrs. Aberle, through her attorney. And the sole question is, whether the plaintiff is such holder of the note as entitles him to recover on the indorsement of the defendant ?

In an action by the holder of negotiable paper against the immediate indorser, the title of no innocent third person intervening, it is always competent to the defendant to show, by parol evidence, either the want or failure of consideration as between himself and the plaintiff, or that the indorsement was