Murphy v. Stubblefield

Thomas, J., delivered the opinion of the Court. This is the second appeal in this case, the first appeal having been decided in 133 Md. 23 , and the suit is by the holder or endorsee of the two promissory notes referred to in Ho. 13 Appeals of this term * against the guarantors of said notes. ¹⁵⁹ This case and Ho. 13 Appeals were argued together in this Court; the records contain practically the same pleadings and the same evidence; the prayers and exceptions thereto are the same; the first exception to the evidence is the same as the first exception in Ho. 13, and the brief of the appellant in Ho. 13 was refiled in this case. The second exception is to the ruling of the Court below permitting the witness Bobinson to answer the following-question on cross-examination: “You then went to Mr. Stubblefield to sell this note, I presume ?” In answer to the question the witness replied: “Whether you call it selling it or discounting it, I don’t know, but I went there to get the money.” Even if the question could be regarded as objectionable on cross-examination, the ruling of the Court could not amount to reversible error, as the same evidence was admitted without objection. The evidence objected to in the third exception was clearly admissible to rebut the testimony of Mr. Bobinson that he told the plaintiff that Mr. Bracey had an interest in the notes.

Smith EL Bracey testified that the notes were made by Fred A. Dolph “and endorsed by the people whose names are on the back of the notes”; that he paid for them and that they belonged to him, and that he gave them to Mr. Bobinson “to get discounted,” and told him if he could get them discounted he could take out the $700.00 he owed Bobinson. Mr. Bobinson testified that Mr. Stubblefield explained to him that he could not discount or loan money on notes and that he could only buy them, and that when Mr. Bracey gave him the notes “I had the pointblank authority to make the best deal I could.” It is said in 20 Cyc., 1434, speaking of the transfer of notes with a guaranty endorsed thereon: “The courts do not agree as to whether such transferee, being innocent, takes the guaranty free from the equities of the guarantor,” and that the better rule is that he takes subject to defenses which “existed between the original parties.” In 14 Amer. & Eng. Ency. of Law, 1158, the author says: “According to a num ¹⁶⁰ her of decisions, a guaranty indorsed on a note which is general and unrestricted in its terms passes with the title to the note, and in the hands of a bona fide holder is not subject to any defenses which may be set up> as between the original parties. It is said in such case the guaranty runs with the instrument on which it is written and partakes of its quality of negotiability; that any person having the legal interest in the principal instrunient takes in a like manner the incident, and the guaranty may be sued upon.” After referring to cases holding that such a guaranty cannot be transferred to a third person, it is further said: “There yet remains to be considered a third class of decisions which seems to stand on middle ground between the two classes already cited.

Briefly stated, the rule laid down by these decisions is that the transferee of a note on which a guaranty is indorsed may sue