First National Bank v. Clifton

Defendant has appealed from a judgment against him in an action brought by the plaintiff to recover damages for breach of a contract by which defendant promised to indorse the note of the Bethel Vineyard Company in consideration of a renewal of a loan by the plaintiff bank to said company.

The trial court has found that on the twenty-fourth day of November, 1922, Bethel Vineyard Company was indebted to plaintiff in the sum of one thousand dollars upon two promissory notes'; that at the time Bethel Vineyard Company was a vendee under a contract to purchase from de-> fendant certain real property in the county of Fresno; that said Bethel Vineyard Company upon said day applied to plaintiff for an extension of said loan for one year; that plaintiff was unwilling to grant such extension of said loan in the form in which said loan then stood and upon the security plaintiff then had, but said Vineyard Company represented to plaintiff that if it would grant such extension of said loan, said company would give to plaintiff a new note for said loan and that one K. Horita and the defendant U.

“Mr. Horita was in today and I agreed to renew the loan with that understanding, while we must say that we are reluctant about renewing it, as $700 has now matured the second fall.”

A few days later, the foregoing letter was returned to plaintiff by defendant with the following statement, signed by defendant, written on the back of said letter: “I will indorse the note with a crop order for the 40% of the crop of 1923 with Mr. Horita.”

It was further found that upon receipt of this communication from defendant, plaintiff extended said loan for one year and made out a new note therefor and said Horita indorsed the new note which is set forth in the findings; that in extending the loan plaintiff relied upon defendant’s agreement to indorse the note and the extension was made within a reasonable time after defendant’s said promise to indorse the note and before any notice of the withdrawal of defendant’s agreement had been received by plaintiff, and that within a reasonable time thereafter plaintiff presented a new note to defendant and requested defendant to indorse said note; that defendant failed and refused to indorse

[1] Appellant admits that there is ample authority fixing liability for damages upon one who breaches his promise to indorse a negotiable instrument, if his promise be supported by a sufficient consideration. In the instant case, defendant promised to indorse the note as a consideration for the extension of the loan. He wrote, agreeing to do so “with Mr. Horita.” Acting upon this offer, the bank renewed the loan, canceling the old notes and accepting a new note of the company upon which appears the signature of K. Horita. This note was presented to defendant for his signature. According to his own testimony, he refused either to “endorse or guarantee or sign it in any way.” Later," when defendant called at the bank and was asked by one of its officers to indorse the note, he refused again and the court has found that defendant refused to indorse said note in any manner and form. These facts are so simple that there scarcely seems to be a basis for argument about many of the matters discussed in the brief for appellant. [2] It is strenuously contended that since plaintiff asked defendant to indorse the note and he replied that he would indorse “with Mr. Horita” that he did not accept plaintiff’s offer. Conceding this, it is nevertheless true that after defendant agreed to indorse “with Horita,” the bank accepted this offer by acting upon it within a reasonable time and before its withdrawal, according to the findings. [3] It is next contended that Horita did not indorse the note; that his signature was * appended to the note as a guarantor. Horita’s signature appears on the note after the following statement: “For value received, I hereby guarantee payment of the within note at maturity, or at any time hereafter, with interest at the rate of eight per cent per annum until paid, waiving demand, notice of non-payment and protest.” Defendant’s complaint seems to be that Horita assumed

If it be contended that the contract could not be varied in any particular even to the advantage of the defendant, we are faced with a situation where no prejudice resulted to defendant by treating Horita’s guaranty as a general indorsement upon the note, because the court has found that both the maker of the note and ITorita are insolvent and that the note cannot be collected from either of them. Therefore, defendant has not been prejudiced by reason of the fact that Horita was not, strictly speaking, an indorser. Defendant had as much right against Horita as a guarantor as he would have had against him as a prior indorser, and neither right had any value when he was insolvent. In other words, since Horita was insolvent, whether he was a prior indorser or a guarantor, defendant would have been called upon to pay the note had he fulfilled his contract and indorsed the same. The judgment awards to plaintiff, as damages for breaching this contract, the amount of the note and interest which plaintiff has been unable to collect either from the maker or the guarantor.

There are no other matters requiring discussion and the judgment is affirmed.

Nourse, J., and Sturtevant, J., concurred.

A petition by appellant to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on August 6, 1926.

All the Justices present concurred.