Cook County National Bank $132, which the Wyandotte Bank offers to pay.

MR. JUSTICE STRONG [after stating the facts]. The note was not indorsed to the Trust Company, and it was not, therefore, taken in the the usual course of business by that mode of transfer in which negotiable paper is usually transferred. Had it been indorsed by the Cook County Bank, it may be that the Trust Company would hold it unaffected by any equities between the maker and payee. But instead of an indorsement, the president of the Cook County Bank merely guaranteed its payment, and handed it over with this guaranty to the Trust Company. The note was not even assigned. There was written upon

it only the following:

For value received, we hereby guarantee the payment of the within note at maturity, or at any time thereafter, with interest at ten per cent. per annum until paid, and agree to pay all costs and expenses paid or incurred in collecting the same. B. F. ALLEN, Pres't.

In no commercial sense is this an indorsement, and probably it was not intended as such. Allen had agreed that the note should not be negotiated, and for this reason perhaps it was not indorsed. That a guaranty is not a negotiation of a bill or note as understood by the law merchant, is certain. (Snevily v. Ekel, 1 Watts & S. [Pa.], 203; Lamourieux v. Hewitt, 5 Wend. [N. Y.], 307; Miller v. Gaston, 2 Hill [N. Y.], 188). In this case, the guaranty written on the note was filled up. It expressed fully the contract between the Cook County Bank and the Trust Company. Being express, it can raise no application of any other contract. Expressum facit cessare tacitum. The contract cannot, therefore, be converted into an indorsement or an assignment. And if it could be treated as an assignment of the note, it would not cut off the defenses of the maker. Such an effect results only from a transfer according to the law merchant; that is, from an indorsement. An assignee stands in the place of his assignor, and takes simply an assignor's rights; but an indorsement creates a new and collateral contract. (2 Parsons, Notes and Bills, 46 et seq., notes.)

At best, therefore, the defendants below can claim no more or greater rights than those of the Cook County Bank, and the complainants are entitled to a return of the note and of the collaterals on payment of the sum of $132.

Decree affirmed.R

8 Accord: Tuttle v. Bartholomew, 12 Met. (Mass.) 452; Belcher v. Smith, 7 Cush. (Mass.) 482; Canfield v. Vaughan, 8 Mart. (La.) 683.

Contra: Myrick v. Hasey, 27 Me. 9; Heard v. Dubuque Bank, 8 Neb. 10; Helmer v. Bank, 28 Neb. 474; Kellogg v. Douglas Co. Bank, 58 Kan. 43; Dunham v. Peterson, 5 N. Dak. 414, where the question is fully discussed and authorities collected; Elgin City Banking Co. v. Zelch, 57 Minn. 487, infra. — H.

860

ELGIN CITY BANKING CO. v. ZELCH.

57 MINNESOTA, 487. — 1894.

ACTION by indorsee against maker. The question was whether plaintiff was an indorsee, or an assignee and so subject to the defense of fraud or failure of consideration. The court directed a verdict for plaintiff. The facts appear in the opinion.

MITCHELL, J. The defendant executed his negotiable promissory note, payable to the order of one Daniel Dunham, who transferred it to the plaintiff, with the following indorsements: "Pay the Elgin City Banking Co. D. Dunham." "Payment Guaranteed. D. Dun

ham."

Whether these indorsements be construed as constituting a single contract, or two distinct and separate contracts, we are clear that they constitute an "indorsement," in the commercial sense, and that the transferee is an "indorsee," and entitled to protection as such, under the law merchant. The fact that Dunham enlarged his responsibility beyond that of " indorser," by guarantying payment, did not change or affect the character of his indorsement.

Order affirmed."

See note 1, above. "A guaranty of the payment of a note does not necessarily include a contract of indorsement, but when such guaranty is written upon the back of the note in general terms and signed by the payee named therein, the universal custom is to treat such contract of guaranty as a transfer of the title of the payee to the person to whom the guaranty is made." National Bank of Commerce v. Galland, 14 Wash. 502, 505. Such a guaranty constitutes " an indorsement of the note with an enlarged liability." Donnerberg v. Oppenheimer, 15 Wash. 290. "I guarantee attorney's fees up to 10 per cent. if this note has to be collected by law, and its prompt payment." held an indorsement by the payee with an enlarged liability. Pattillo v. Alexander, 96 Ga. 60. For a distinction between the case where the guaranty is executed by the payee and where it is executed by a third person, see Vanzant v. Arnold, 31 Ga. 210; Geiser Mfg. Co. v. Jones, 90 Ga. 307. See title “Guarantor's Liability," post, Art. VI. Div. VII.

DELIVERY. "It has often been decided, that the assignment [transfer] of a note is not complete without a delivery, and that where a promissory note is found in the hands of one who has made an indorsement thereon, which, if accompanied by delivery, would have amounted to an assignment [transfer], the presumption will be that the assignment was never completed, and that he may, even after suit brought, strike out such indorsement." Wulschner v. Sells, 87 Ind. 71, 74. Accord: Spencer v. Carstarphen, 15 Colo. 445.

NON-NEGOTIABLE INSTRUMENT. The indorsement and delivery of a nonnegotiable note does not (independent of statute) authorize the holder to bring an action in his own name, and the holder is subject to all defenses that might have been set up against his transferor. Robinson v. Brown, 4 Blackf. (Ind.) 128; Maule v. Crawford, 14 Hun (N. Y.) 193; post, Art. XVII, Div. I, 3. — H.

HERRING v. WOODHULL.

BREESE, J. The first point made in this case is, that the note was not properly indorsed, the transfer being on the face of the note. Literally, indorsement means a writing, in dorse, upon the back of the bill or note. But it is well established, that though such is its import, it may be on the face of the bill,' and numerous indorsements may be made on a separate paper, called an allonge. (Chit. on Bills, 227; Yarborough v. Bank of England, 16 East, 12; Rex v. Bigg, 1 Strange, 18; Story on Prom. Notes, § 121; Gibson v. Powell, 6 Howard [Miss.] 60.) And any form is sufficient which manifests an intention to transfer the note. (Morris v. Bird, 11 Mass. 436.) 2

The last objection is, that the indorsement on one of the notes was not made on the back of the original note, and therefore amounted only to an equitable transfer. The indorsement was made on a paper attached to the back of the note by a wafer, and it had been before thus attached for the purpose of entering thereon indorsements of payments, the back of the original note having been before covered with indorsements; and several payments had been indorsed on the attached paper,

1 Accord: Young v. Glover, 3 Jur. N. S. 637; Haines v. Dubois, 30 N. J. L. 259; Shain v. Sullivan, 106 Cal. 208. See Neg. Inst. L., § 36, subsec. 6. — H. * See Germania Nat, Bank v, Mariner, 129 Wis, 544, ante, p.

before the note was transferred by indorsement to the plaintiff. This paper thus attached had become a part of the note, and no good reason can be given why an indorsement made thereon should not be held a valid and legal transfer. The objection is, that such an indorsement is not sanctioned by custom; but we think it is supported by the reasons on which the custom was originally founded. Bills of exchange and promissory notes were indorsed on the back of the bills and notes, because it was a convenient mode of making the transfer, and in order that the evidence thereof might accompany the note. Such an indorsement as this will rarely happen, and no authority to support it could reasonably be expected; but there is no authority against it.

If a person write his name on a blank paper, to be used as an indorsement of a note to be written on the other side, and it be filled up as intended, the party would be held liable as indorser of the note, although such indorsements are infrequent, and are not according to the customary form of making a transfer; but they have been held to be within the reason of the custom, and are supported by principle. (Bayley on Bills, 92; Violett v. Patton, 5 Cranch. 142.)3

So in the present case, as there is no authority against the validity of the indorsement, we think we shall violate no principle in holding it to be a legal transfer of the note.

Judgment for the plaintiffs.

&62

2. MUST BE OF ENTIRE INSTRUMENT.

HUGHES v. KIDDELL.

2 BAY (So. CAR.), 324.1801.

THIS was an action against defendant as indorser on a note of hand, in which there was a verdict for defendant. The note of hand in question was given by David Bush, of Camden, to the defendant Kiddell, for 4731. sterling. Kiddell afterwards made the following indorsement, viz: —

"I assign over to Hudson Hughes, the sum of 1,930 dollars and 50 cents, as part of this note of hand.

(Signed.) Benjamin Kiddell." Afterwards he made another indorsement, and assigned over the residue of said note [to Hughes.] (Signed) Benjamin Kiddell.

The court, after hearing the arguments, refused to grant a new trial, on the ground that an indorsement for part of a note or bill is

See Neg. Inst. L., § 33, ante. — H.

Counsel for defendant argued that "if it were allowable for a man to indorse for part, he might indorse one hundred to A, another hundred to B, and so on; and by that means, defendant might become liable to twenty dif

bad. (Lex Mercatoria, 445 Carth. 466.) And if so, then two vitious indorsements can never constitute a good one.

ACTION by holder against makers of a note payable "to the order of William Dilworth, Jr.," and indorsed: "Wm. Dilworth, Jr.-Pay R. McCurdy, Cash." Defense, want of title in holder (Bell). Judg ment for plaintiff.

MR. JUSTICE PAXSON delivered the opinion of the Court.

We think the affidavit of defense filed in this case, while not as specific as it might have been, was nevertheless sufficient to prevent judgment. The copy of the note filed by the plaintiff below goes to sustain the denial of his title contained in the affidavit referred to. It is indorsed "Wm. Dilworth, Jr.; pay R. McCurdy, Cash." This is a special indorsement, and upon its face conveys no title to the plaintiff below.

The further allegation that the note in controversy was procured by false and fraudulent representations, and that the consideration thereof has failed, coupled with the denial of said plaintiff's title, was sufficient to put the latter upon proof that he is a bona fide holder." Judgment reversed and a procedendo awarded."

& 64

2. BLANK INDORSEMENT.

CURTIS v. SPRAGUE.

[Reported herein at p. 144.17

§ 65 EVANS v. GEE, 11 Peters (U. S.) 80.-1837. Bill payable "to the order of Thomas Evans" was indorsed in blank by payee (defend

ferent actions on the same bill. For these reasons, and to guard against this monstrous inconvenience, the law of merchants has established it as a rule, that a bill cannot be endorsed for part. Cunn. on Bills. 57."

To the same effect, see Lindsay v. Price, 23 Tex. 280, bottom of p. 282. 5 See Neg. Inst. L., § 98, post. H.

• See also Lawrence v. Fussell, 77 Pa. St. 460.-H.

- C.

7" I see no difference between a note indorsed in blank and one payable to bearer. They both go by delivery, and possession proves property in both cases." Lord Mansfield in Peacock v. Rhodes, 2 Doug. 633. — H.