Wyckoff v. Wilson — 30 N.Y. St. Rep. 384

Majority

p. 384

John N. Wyckoff et al., Resp’ts, v. Lemuel H. Wilson, Impl’d, App’lt.

(City Court of New York,

General Term,

Filed April 2, 1890.)

Headnote

1. Bills and Notes—Endorser.

The payee as first endorser of a note may recover from the second on proof’ that the latter endorsed to accommodate the maker for the benefit of the payee; but it must be shown that defendant knew when he endorsed the note that it was to be used by the maker to obtain credit with the payee, and that he intended to become, in fact, the first endorser, and liable as such.

2. Same—Evidence.

Evidence as to what was said in that regard at the time of endorsement, is competent.

Appeal from judgment in favor of plaintiffs.

The action was on a promissory note in these words:

$200. New York, August 12,1889.

Two montos after date I promise to pay to the order of Wyckoff

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Bros, two hundred dollars at the Sprague National Bank, Brooklyn, value received.

E. R. Middlebbook.

Endorsed: Wyckoff Bros.,

Lemuel II. Wilson.

The action is by the payee against Lemuel H. Wilson who, according to the form of the note, is second endorser. The amended complaint properly rebuts the presumption arising from the form of the obligation, by alleging that the note was endorsed by Wilson to pay for property sold and delivered by the plaintiffs to Middlebrook, the maker, on the credit of such endorsement, and that Wilson endorsed the note for the purpose of securing such credit with the plaintiffs. Middlebrook, the maker, was called by the plaintiffs as a witness at the trial, and upon his cross-examination by the defendant’s counsel the following questions were put and rulings made:

At the time Mr. Wilson endorsed this note, was there anything at all said about his position on that note ?

Objected to; objection sustained; exception taken.

Q. At the time Mr. Wilson endorsed this note, was there any' understanding or agreement as to his position on that note?

Objected to as calling for a conclusion and as leading, and as immaterial, incompetent and improper. Objection sustained upon the above grounds, and further ground that the defendant cannot give parol testimony to change the effect of the note. Exception taken.

Q. Do you remember that anything was said at the time this endorsement was made in regard to the intent for which Mr. Wilson endorsed this note ?

Same objection, ruling and exception.

The court directed a verdict in favor of the plaintiff, and the defendant appeals.

O. B. Wilson, for app’lt; B. Bstes, for resp’ts.

When Wilson endorsed the note, he had the right to assume from its form that Wyckoff & Co., the payees (plaintiffs), were to become first endorsers and he (Wilson) the second endorser. He also had the right to suppose and act upon the belief that if Middlebrook did not pay the note, and he (Wilson) was obliged to pay it, that he would have a remedy over, not only against Middlebrook, the maker, but Wyckoff Bros., the payees (plaintiffs) and first endorsers. The form of the obligation is not conclusive, however, and the parties thereto are entitled to show their true relations to it. Upon this just principle the payee, as first endorser of a negotiable instrument, may recover from the second on proof that the latter endorsed to accommodate the maker for the benefit of the payee. Story on Prom. N., § 151; 15 Q. B., 589; 6 C. B., 486 ; 12 Wis., 639 . The purpose of such proof is to negative the legal presumption arising from the form of the instrument that the truth may pre

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vail and justice be done. To overcome the legal presumption, however, it is necessary to show that the defendant knew when he endorsed the note that it was to be used by the maker to obtain credit with the plaintiffs (the payees), and that although apparently the second endorser, he intended to become and was, in truth, the first, and as such liable thereon to the payees (plaintiffs) in case Middlebrook, the maker, failed to pay at maturity. Little v. Tyng, 1 City Ct. R., 309 ; MacTeague v. James, 2 id., 52 ; Moore v. Cross, 19 N. Y., 227 ; Bacon v. Burnham, 37 id., 614; Phelps v. Vischer, 50 id., 69; Coulter v. Richmond, 59 id., 478; Jaffray v. Brown, 74 id., 393.

In this view the questions put to Middlebrook were proper, and should not have been excluded by the trial judge. The answers might have shown that the defendant did not know he was . expected to become the first endorser on the note, and did not intend to assume that responsibility, but acted on the form of the obligation which authorized him to assume that he was to become what the form implied, to wit: the second endorser, with a remedy over against the plaintiffs as payees in case he was obliged to pay the note in default of payment by those primarily liable. For this error the judgment must be reversed, and a new trial ordered, with costs to the appellant to abide the event. Ehrlich, J., concurs._