KAUFMAN v. STATE SAVINGS BANK. (Supreme Court of Michigan, 1908. 151 Mich. 65, 114 N. W. 863, 18 L. R. A. [N. S.] 630, 123 Am. St. Rep. 259.) Action by Adelaide Kaufman against the State Savings Bank. Judgment for plaintiff, and defendant brings error. Affirmed. MONTGOMERY, J. This action is brought for the wrongful taking possession and conversion of a check and draft, each being made payable to the order of the plaintiff and Bernard S. Kaufman, her husband. The transactions which resulted in the giving of each of these items of commercial paper were in all substantial respects identical. The plaintiff was the owner of some furniture in the Sibley Apartments, so called, in the city of Detroit, which were covered by two policies of insurance, one in the Aachen & Munich Fire Insurance Company, and the other in the American Insurance Company of Boston. For some reason, which does not clearly appear, the policies were made payable to Bernard S. Kaufman notwithstanding the ownership of the goods in the plaintiff. A fire having occurred, Bernard S. Kaufman assigned the policies to plaintiff, and deposited the policies with the respective companies. The agent of the first-named company made a draft on the general manager for the amount of the insurance, payable to the order of Bernard S. Kaufman and Adelaide KaufThe second-named company, through its agent, made a check payable in the same manner to the order of Bernard S. Kaufman and Adelaide Kaufman. These two pieces of paper were indorsed to defendant by Bernard S. Kaufman in his own name, and also in the name of plaintiff. The latter indorsement was wholly without authority, the draft issued by the first company being purchased outright on these indorsements, the check from the second company being received for collection on the like forged indorsement. Defendant on receiving the fund turned it over to Bernard Kaufman. The circuit judge directed a verdict for plaintiff, and defendant brings error. man. It is claimed that no title to the paper ever vested in the plaintiff for the reason that there was no delivery of the same to her. The assignment of the insurance to her was for her benefit and interest, and her assent to the assignment and acceptance of it would be presumed. Thatcher v. St. Andrew's Church, 37 Mich. 264; Bangs v. Browne, 149 Mich. 478, 112 N. W. 1107. The fact that this check and draft were made payable to the two, rendered it, if plaintiff's contention be correct, as secure as it would have been had it been payable to the plaintiff alone, and we see no reason why plaintiff is not in a position to avail herself of the draft and check, if she sees fit, by affirming her husband's receipt of the same, to do so. The meritorious question in the case is whether the defendant, having purchased this draft on the indorsement of one of two joint payees, and having assumed to collect the check on an indorsement which SM. & M.B.& N. (2D ED.)-20 turns out to have been a forged indorsement of plaintiff's name, is in position to assert title as against the true owner, or whether, on the other hand, having received the money upon the check and draft, the defendant is accountable to the true owner for the amount of money received. The defendant relies upon the case of Harding v. Parshall, 56 Ill. 219, and other cases, to establish the rule that a debt to two jointly may be paid to either, and, this being so, it is urged that the owner of commercial paper is entitled to demand and receive payment even in the absence of any indorsement at all, and it is sought to reason from this that the indorsement of Bernard S. Kaufman of plaintiff's name had no other effect than to enable Kaufman himself to receive payment through the instrumentality of the defendant. It is a sufficient answer to this view to say that such was not the transaction. What did happen was that Bernard S. Kaufman, having in possession these two pieces of commercial paper, each of which represented money due to plaintiff individually, sold one piece of paper to the defendant, and put it in the power of defendant to recover from the payor the pay on the other piece on a forged indorsement. This as between plaintiff and Bernard S. Kaufman was a conversion of the property, and unless he was authorized to pass title to the defendant, or vest it with an agency to receive the money on her paper, it was likewise as between the defendant and the plaintiff a conversion of the property. In the same jurisdiction in which Harding v. Parshall was decided it was held by Chief Justice Scofield, in Ryhiner v. Feickert, 92 Ill. 305, 34 Am. Rep. 130, following and citing with approval 1 Daniel, Negotiable Instruments, 684, that, if several persons not partners are payees or indorsees of a bill or note, it must be indorsed by all of them. Either one of the joint payees may authorize the other to indorse for him, and an assignment of his interest in the paper from one to the other carries with it such authority; but there is no presumption of law that one may indorse for the other. The same rule was laid down in Wood v. Wood, 16 N. J. Law, 428, and we have been unable to find any case which makes for the contrary rule. This is not the case of receiving payment from the maker by one of two joint payees. It is an attempt to transfer title in one case and create an agency in the other; and, as we have seen, this cannot be done except by indorsement of all to whose order the instrument is made payable. It will, of course, be understood that this is subject to the rule that under the implied authority of one partner he may indorse for his copartner. But that is not the case here. The judgment will be affirmed. SECTION 2.-FORM OF INDORSEMENT THORP v. MINDEMAN. (Supreme Court of Wisconsin, 1904. 123 Wis. 149, 101 N. W. 417, 68 L. R. A. 146, 107 Am. St. Rep. 1003.) See ante, p. 99, for a report of the case. MANGOLD & GLANDT BANK v. UTTERBACK (Supreme Court of Oklahoma, 1916. 54 Okl. 655, 160 Pac. 713, L. R. A. 1917B, 364.)6 Action by the Mangold & Glandt Bank against W. T. Utterback. Judgment for defendant, and plaintiff brings error. Reversed and remanded, with directions. MATHEWS, C. In October, 1910, the defendant purchased from the Denver-Laramie Realty Company certain shares of stock in said company and executed his note to said company in payment for same. On August 14, 1911, the note was renewed, and afterwards transferred to the plaintiff in error. A copy of the note with indorsements is as follows: "$1,000.00. Denver, Colorado, August 14, 1911. "December 14, 1911, after date, I promise to pay to the order of Denver-Laramie Realty Company one thousand & no/100 Dollars, for value received. Payable at First State Bank of Binger, Okl., with interest at seven per cent., from maturity. "[Signed] W. T. Utterback." Indorsed on back: "The Denver-Laramie Realty Co., "By A. J. Spengel, Treasurer. "Northwestern Land & Iron Co., "By A. J. Spengel, Treasurer." On October 10, 1912, suit was instituted on said note in the county court of Caddo county. The defendant answered by general denial, admitted the execution of the note, and alleged that the note was given for certain shares of stock in the Denver-Laramie Realty Company, but claimed that he was induced to sign the same through certain false S. c. 174 Pac. 542 (1918). and fraudulent representations upon the part of said company. Trial was had to a jury, verdict was returned for defendant, and plaintiff prosecutes this appeal. Its first specification of error is stated as follows: "The court erred in overruling motion of plaintiff for judgment, for the reason that, as plaintiff had alleged it was a purchaser in due course of business, for value, before maturity, and without notice, the defenses set up were not available to defendant." The defendant advances the following argument against the foregoing contention of plaintiff: "While the note is negotiable in form, the indorsement is in no sense a commercial indorsement. It is a guaranty of payment pure and simple; that is, the words, 'Payment guaranteed. Protest waived,' followed by the signatures of the two companies, mean that the companies guarantee the payment of the note and waive the protest thereof. The indorsement, amounting to a guaranty of payment, gives the plaintiff in error no standing as a bona fide holder of the note, but it holds the same subject to all defenses which would be available as against the original payee." If plaintiff's contention is correct that the said indorsement upon the note was a commercial indorsement, there being no allegations in the answer that defendant had notice of the alleged infirmity of the note, then plaintiff was entitled to judgment upon the pleadings. In arriving at a decision on this point we are confronted with a chaotic conflict of opinions thereon, and, as far as our investigation. has led us, we find that the courts of but few, if any, of the states have been consistent in declaring on this proposition, and our own court is in conflict thereon. The case of McNary et al. v. Farmers' Nat. Bank, 33 Okl. 1, 124 Pac. 286, 41 L. R. A. (N. S.) 1009, Ann. Cas. 1914B, 248, sustains plaintiff, and the case of Ireland et al. v. Floyd, 42 Okl. 609, 142 Pac. 401, L. R. A. 1915C, 661, sustains defendant. An instructive note to the case of Hendrix v. Bauhard, Ann. Cas. 1913D, 688, after giving a list of the states, including both Oklahoma and Kansas, which hold that a signed guaranty on the back of a note makes the guarantor liable as an indorser, states that the great weight of authority supports that view. In the case last cited there was written on the back of the note, "For value received we hereby warrant the makers of this note financially good on execution," which was followed by the signatures of the payees, and it was there held, if the note was negotiated before maturity to a bona fide purchaser for value, he would be protected from any defense the maker might have against the payees. The leading case holding to this view is a North Dakota case, Dunham v. Peterson, 5 N. D. 414, 67 N. W. 293, 36 L. R: A. 232, 57 Am. St. Rep. 556, and there the subject is also treated with an extended note which declares that the numerical weight of authorities support the decision in Dunham v. Peterson. The indorsement on the note in the Dunham Case was as follows: "For value received, I hereby guarantee the within note, waiving notice of protest and demand." Beneath this guaranty the payee signed his name. The court held therein that, when the payee of a negotiable promissory note transfers it by indorsing thereon a guaranty of payment, the purchaser is an indorsee within the rule protecting an innocent purchaser of such paper for value before maturity against defenses good between the original parties. The case of Markey v. Corey, 108 Mich. 184, 66 N. W. 493, 36 L. R. A. 117, 62 Am. St. Rep. 698, presents an instance where an assignment was written on the back of the note followed by the signature of the payee of the note, and the court held the payee liable as an indorser. The case of Pattillo v. Alexander, 96 Ga. 60, 22 S. E. 646, 29 L. R. A. 616, is an exhaustive and well-considered one on the point under discussion, and, after reviewing the authorities thereon at great length, concludes that a guaranty written on the back of a negotiable promissory note followed by the signature of the payee ordinarily amount: to a commercial indorsement." * * * We are not unmindful of the fact that the case of Ireland v. Floyd, supra, is supported by a respectable line of authorities headed by the Central Trust Co. v. First National Bank of Wyandotte, 101 U. S. 68, 25 L. Ed. 876. Other authorities to the same effect are found in Ann. Cas. 1913D, 695; 36 L. R. A. p. 232, and 67 N. W. p. 295. But we think the better reasoning and greater weight of authority is with the case of McNary et al. v. Farmers' Nat. Bank, supra. But, even if the case of Ireland v. Floyd, supra, was not opposed by the case of McNary v. Farmers' Nat. Bank, supra, and by the weight of authority from other states, we are inclined to the view that it is in conflict with the Negotiable Instruments Law of this state, adopted in 1909. *. * 8 It will be observed from section 4113 that the tendency of the law, when the status of a party who places his name upon the back of a negotiable instrument is under consideration, is to resolve all doubtful cases towards holding the same to be a commercial indorsement in due course. This rule is founded upon commercial necessity. The unshackeled circulation of negotiable notes is a matter of great importance. The different forms of commercial instruments take the place of money. To require each assignee, before accepting them, to inquire into and investigate every circumstance bearing upon the original execution and to take cognizance of all the equities between the original parties would utterly destroy their commercial value and seriously impede business transactions. A simple indorsement by the payee of his name upon a note serves the double purpose both of transferring the title to the holder and of charging the payee with the obligation to pay it in event the maker upon presentation declines to honor it. But before the liability can be 7 The authorities cited are omitted. 8 The court here quotes Negotiable Instruments Law, §§ 17, 38, 57, 59, 63. |