Washington Sav. Bank v. Ferguson

The question here is purely one of law. These are the undisputed facts: The defendant is the last indorser of two promissory notes which were discounted by the plaintiff. These notes were made by the Arkell Publishing Company to its own order, and were indorsed by it, and also by W. J. Arkell and James Arkell. The defendant’s indorsement then followed. When these notes were discounted the defendant was the vice president of the plaintiff bank, and he was present at a meeting of its executive committee at which a resolution was passed in these words:

“The meeting having been called to consider two notes, of $5,000 each, made by the Arkell Publishing Company of New York, offered for discount by Mr. George O. Ferguson, on motion of George W. Cissel the committee decided unanimously to grant the loan.”

Thereupon the notes were discounted, and their proceeds, less the usual interest for the unmatured period, credited to the defendant’s account. The defendant drew against these proceeds two checks,— one for $3,800 and one for $5,145. The former was drawn to the plaintiff’s order, and was given to it in payment of its draft on New York for a like amount, payable to the defendant’s order. This draft the defendant indorsed in blank, and gave it' to the Arkell Company. The other check was drawn in the same way, and was given to the plaintiff in part payment of a debt due to it by the defendant. What was left of the proceeds of the two notes was also utilized by the de

The question.is, do the facts thus alleged constitute a defense? A number of questions tending to prove these facts were put to the defendant upon the trial, and were ruled out. If the facts thus averred and sought to be established constituted a defense, these rulings were erroneous. They were made before the defendant testified to the resolution of the plaintiff’s executive committee, the discount of the notes for him, and the crediting of their proceeds to him. It may be that, even if the rulings in question were erroneous, this subsequent testimony annihilated the entire defense. But there might be a possible question on that head, in view of the defendant's insistence that the plaintiff was throughout aware of Ms agency, and that the resolution, discount, indorsement, and crediting of proceeds were all understood to be merely forms resorted to for convenience. We need not consider the question thus suggested, as we have no doubt that the defense pleaded was inherently bad, and consequently that the rulings excepted to were entirely correct. The defendant’s accommodation indorsement was a written contract, to which the law has given a definite character. By that indorsement the defendant engaged that, if the note was not paid at maturity, he would, upon proper notice of dishonor, indemnify the holder. He now pleads that this written engagement was not the real engagement, that he was not to be liable according to the tenor of his indorsement, and that he was only to be liable for any balance which might remain unpaid upon the note after the application of the collaterals and the exhaustion of legal remedies against the maker. Thus, he distinctly seeks to vary or qualify his written obligation. Parol evidence tending in this direction is as clearly inadmissible in the case of a con

‘The contract entered into by the defendant was a contract in writing by his signature to the bill as drawer, which imports a liability on the defendant to pay the amount on default, and notice to the defendant of such default. That which the plea attempts to set up is that the defendant, at the time he signed the bill as drawer, entered into a contract under which the payment was to be made at a different time and in a different manner from that which the bill imports,—an agreement, in short, which contradicts the written contract, and oral evidence of which is inadmissible, according to the authority of numerous decisions.”

Brett, J., added these observations:

‘‘I agree that the evidence was not admissible, because it did not impeach the consideration for the bill, or show that it had failed, or set up any agreement to suspend the commencement of the defendant’s liability. * * The fact of security being given, or of the plaintiff’s failure to realize the security, does not alter or impeach the consideration. The paroi agreement does not postpone the liability of the defendant as drawer of the bill, but limits his liability as defined by the bill.”

The defendant, however, seeks to bring his defense within that class of cases where it is held that, as the delivery and consideration of a note are always open to impeachment, the effect of the delivery and the extent of its operation may be limited by the conditions on which the delivery was made. Benton v. Martin, 52 N. Y. 570 . It is undoubtedly true that the annexing of conditions to the delivery of a note is not an oral contradiction of the written obligation. But the learned counsel for the defendant misconceives what was actually decided in Higgins v. Ridgway, 153 N. Y. 130 , 47 N. E. 32 ; Seymour v. Cowing, 4 Abb. Dec. 200; Bookstaver v. Jayne, 60 N. Y. 146 ; and Bank v. Colwell, 57 Hun, 169 , 10 N. Y. Supp. 824 . In each of the cases first and last cited the defendant was not even, in any just sense, an accommodation maker. He signed the paper, not for the accommodation of the persons applying for the discount, not to give them additional credit, but for the mere convenience of the banker who made it. In the Higgins Case the note was made by the defendant Bidgway, payable to his own order, and indorsed by him. It was so made and indorsed at the request of the president of the bank, who assured Bidgway that he thereby took no risk, assumed no obligation, and that he would not be held upon the note. There was an entire want of consideration or benefit, and the bank took the note simply for its own accommodation, and to serve, as Martin, J., said, “some particular purpose” of its own. The note there had no vitality as between the bank and Bidgway. The delivery was purely formal.

The judgment and order appealed from should therefore be affirmed, with costs. All concur.