Jenkins v. First Nat'l Bk. of Balto.

⁸⁶ Urner, J., delivered the opinion, of the Court. The appellant was an endorser before delivery of three promissory notes of the Jenkins Provision Company fotr $5,000 each payable to “ourselves” and endorsed in blank by the company for' discount by the National Bank of Baltimore. In a suit by the bank against the appellant as endorser of the notes, after default in payment at their maturity, the defense sought to be interposed, by proffers of parol proof which the trial Court rejected, was that the appellant, who was president of the Jenkins Provision Company, became an endorser individually upon certain notes of the company, of which those sued on are renewals, and furnished a collateral guaranty thereof by his wife, under an agreement with the bank that before accepting the notes or any renewals thereof, it would procure also the individual endorsement thereon of J. Herbert Cromwell, who was interested in the borrowing company and served as its treasurer, but that while the first two notes discounted after the agreement were endorsed by both J. Herbert Cromwell and the appellant, the bank failed to obtain the endorsement of Mr. Cromwell on subsequent renewal notes, thereby’ violating the condition upon which the appellant endorsed the notes and agreed to their delivery, and that he did not know of the failure of the bank to have Mr. Cromwell endorse the later renewals until after the company’ was placed in the hands of receivers, the renewal notes having in every instance been taken by Mr. Cromwell himself to the bank. This theory of conditional delivery was likewise set forth in a special plea, to which a demurrer was filed and sustained, and by a prayer which was necessarily refused in view of the exclusion of the evidence by which it might have been supported.

Judgment was recovered by the bank, on the verdict of a jury, for the amount of the three notes and interest after a payment of $1,854.40 out of the- assets of the company’ had been credited. The Negotiable Instrument Act provides that as between the immediate parties, or against one not holding in due ⁸⁷ course, the delivery of a negotiable instrument may be shown to have been conditional. Code, Art. 13, sec. 35. Long prior to that enactment it had been held by this- Court to be “competent for a defendant to show by parol that a promissory note, on which he is sued as endorser, was delivered as an escrow, or that it was delivered to the plaintiff’ to he held upon a condition to be performed before the interest of the holder could attach.” Ricketts v. Pendleton, 14 Md. 329 ; Hamburger v. Miller, 48 Md. 326 .

In 8 Corpus Juris, 206, it is said: “Instruments delivered on condition are, as between the immediate parties, invalid until the happening of the event on which the inception of the instrument is made to depend. Thus where a note is delivered under an agreement- that it is not to become binding until signed by another person, the failure to- obtain such additional signature precludes a recovery as between the original parties or transferees who have notice of the agreements.” 'Numerous cases applying this principle are cited in a note to the statement just quoted. In 3 Ruling Case Law, p. 862, the decisions are said to be “harmonioiis on the proposition that except as against a holder in due course, parol evidence is admissible to show that a negotiable instrument was delivered subject- to a condition, and that by reason of the failure* to perform or comply with the condition the instrument never became a completed contract in prmsenti.” The proposal in this case was to prove in effect that the defendant endorsed the notes upon the express condition, which the hank agreed to but failed to perform, that another designated endorser should he procured by