Where an endorsement upon a promissory note was made not by the
payee, but by persons who did not appear to be otherwise connected
with the note, and the note thus endorsed was handed to the payee
before maturity, a motion to strike out of the declaration a
recital of these facts, and also an allegation that this
endorsement was thus made for the purpose of guaranteeing the note,
was properly overruled.
In Minnesota, where the transaction took place, suitors are
enjoined by law, in framing their declarations, to give a statement
of the facts constituting their cause of action, which statement is
required to be expressed in ordinary and concise language, without
repetition and in such a manner as to enable a person of common
understanding to know what is intended.
The facts above recited were a part of the facts constituting
the cause of action, and therefore properly inserted in the
declaration.
Page 63 U. S. 342
Parol proof of the circumstances under which the endorsement was
made was admissible, and the weight of authority is in harmony with
this principle.
The judgment against these endorsers was properly given upon the
ground that they were original parties to the note.
The declaration was sufficient, under the system of pleading
which prevails in Minnesota.
This was an action brought by Simpson in the District Court of
the Second Judicial District, Ramsey County, in the Territory of
Minnesota, upon a promissory note given under the following
circumstances:
"$3,517.07 1/2 ST. PAUL, June 14, 1855"
"Six months after date, I promise to pay to the order of James
W. Simpson, three thousand five hundred and seventeen dollars and
07 1/2-100, value received."
"[Signed] ALEX. REY"
Simpson was the creditor, and it was intended to give him the
security of Marshall & Co.; but instead of drawing the note in
favor of Marshall & Co., and obtaining their endorsement before
handing it to Simpson, the note was drawn as above, and give to
Simpson with the endorsement of Marshall & Co. upon it. The
whole case turned upon the nature of this note. Under the usual
form of proceeding, Simpson would have had to write his name over
that of Marshall & Co., and thus present the spectacle of the
first endorser suing the second endorser. According to the old
system of pleading, there might have been a difficulty, but the
system of pleading in Minnesota obviated all difficulty by
enjoining upon suitors, in framing their declarations, to give a
statement of the facts constituting their cause of action.
Simpson's counsel therefore filed a complaint against the maker and
endorsers of the note, joining them in one action and complaining
that they would not pay the note. In this complaint Marshall &
Co. were called endorsers, and the question immediately arose
whether they were endorsers or guarantors. Accordingly, the counsel
for the defendants moved to strike out of the complaint all those
parts which spoke of Marshall & Co. as endorsers,
Page 63 U. S. 343
for the purpose of guaranteeing the note, and of becoming
sureties and security to the plaintiff. But the court overruled the
motion. The counsel for the defendants then demurred to the
complaint upon the following grounds, which are inserted because
the reporter does not intend to report the arguments of counsel in
this Court upon this mode of making a promissory note and this mode
of declaring upon it.
The grounds of demurrer were the following,
viz.:
First. The said complaint does not state facts
sufficient to constitute a cause of action against the said
defendants, William R. Marshall and Joseph M. Marshall, or either
of them, in that:
1. The facts stated in the said complaint show that the contract
of the defendants, Marshall, upon the promissory note in said
complaint mentioned, was that only of endorsement, and the
allegations in the said complaint of the purpose for which the said
defendants endorsed the said note, and of the reliance of the
plaintiff upon such endorsement as security to him, are incompetent
either to vary the said contract or to change in any respect the
legal obligations of the defendants, Marshall.
2. It appears, upon the face of the said complaint that the
plaintiff is the payee of the said note, that the same is payable
to the order of the plaintiff, and that the plaintiff has never
endorsed nor negotiated the said note.
3. The facts stated in the said complaint show that the
defendants, Marshall, could only have been made liable upon the
said promissory note in the character of second endorsers, and in
that character only upon the endorsement and the transfer of the
note by the plaintiff. The note having matured without endorsement
or transfer by the plaintiff, no liability can in any event attach
to the defendants, Marshall, upon the same.
Second. There is a defect of parties defendant in said
action, in that:
1. The defendants, Marshall, are not proper parties to an action
by the plaintiff upon the said note because, as appears upon the
face of the complaint, they are but the endorsers of
Page 63 U. S. 344
a promissory note payable to the order of the plaintiff, and as
such endorsers cannot be held by the payee.
2. The facts stated in the said complaint show that the maker of
the said promissory note alone is liable to the plaintiff for the
payment thereof.
This demurrer was overruled, and, after some other proceedings,
the court gave judgment for the plaintiff, when the defendants
carried the case to the supreme court of the territory. The points
made in that court upon both sides are inserted, because they are
substantially those which were made in this Court.
Page 63 U. S. 346
MR. JUSTICE CLIFFORD delivered the opinion of the Court.
According to the transcript, the suit was commenced by James
W.Simpson, the present defendant, on the twenty-first day of
December, 1855, in the District Court of the territory for the
Second Judicial District against the plaintiffs in error, who were
the original defendants. It was an action of assumpsit, and was
brought upon a certain promissory note for the sum of three
thousand five hundred and seventeen dollars and seven and a half
cents, bearing date at St. Paul, in that territory, on the
fourteenth day of June, 1855, and was made payable to the order of
the plaintiff six months after date, for value received. At the
period of the date of the note, as well as at the time the suit was
instituted, two of the defendants,
Page 63 U. S. 347
William R. Marshall and Joseph M. Marshall, were partners, doing
business under the style and firm of Marshall & Company.
As appears by the declaration, the note was made and signed by
the defendant first named in the original suit, at the time and
place it bears date.
And the plaintiff further alleges in the declaration that after
making and signing the note, the same defendant then and there
delivered the note to the other two defendants, and that they then
and there, by their partnership name, endorsed the same by writing
the name of their firm on the back of the note, and then and there
redelivered the same to the first-named defendant, who afterwards,
and before the maturity of the note, delivered it so endorsed to
the plaintiff. He also alleges that the defendants, William R.
Marshall and Joseph M. Marshall, so endorsed the note for the
purpose of guaranteeing the payment of the same and of becoming
sureties and security to him as the payee thereof for the amount
therein specified, and that he, relying upon their endorsement,
took the note and paid the full consideration thereof to the
first-named defendant.
Other matters, such as due presentment, nonpayment, and protest,
are also alleged in the declaration which it is unnecessary to
notice at the present time, as the questions to be determined arise
out of the allegations previously mentioned and described.
Personal service was made on each of the defendants, but the one
first named did not appear, and after certain interlocutory
proceedings conforming to the laws of the territory and the
practice of the court, he was defaulted.
On the thirty-first day of December, 1855, the counsel of the
other two defendants served notice of a motion to strike out all
that part of the declaration which sets forth the purpose for which
it is alleged they endorsed the note and so much of the
declaration, also, as alleges that the plaintiff took the note as
payee, relying upon the endorsement, and paid to the first-named
defendant the full consideration thereof, as before stated. That
motion was subsequently heard before
Page 63 U. S. 348
the court, and on the ninth day of February, 1856, was denied
and wholly overruled. After the motion was overruled, the
defendants, whose firm name is on the back of the note, demurred
specially to the declaration.
None of the causes of demurrer need be stated, as they will be
sufficiently brought to view in considering the several
propositions assumed by the counsel on the one side and the other
in the argument at the bar. Suffice it to say that the demurrer was
overruled, and on the tenth day of July, 1856, judgment was entered
for the plaintiff against all of the defendants for the amount of
the note, with interest and costs.
On the eighteenth day of September, 1856, the defendants sued
out a writ of error and removed the cause into the supreme court of
the territory, where the judgment of the district court was in all
things affirmed, and on the fourth day of February, 1857, a final
judgment was entered for the plaintiff that he recover the amount
of the judgment rendered in the district court, with interest,
costs, and ten percent damages, amounting in the whole to the sum
of four thousand three hundred seventy-one dollars and ninety-seven
cents. Whereupon the defendants sued out a writ of error to this
Court, which was properly docketed at the December term, 1857.
All civil suits in the courts of Minnesota are commenced by
complaint, and suitors are enjoined by law, in framing their
declarations, to give a statement of the facts constituting the
cause of action, which statement is required to be expressed in
ordinary and concise language, without repetition and in such a
manner as to enable a person of common understanding to know what
is intended.
Pursuant to that requirement and the practice of the courts of
the territory at the time the suit was commenced, the plaintiff in
this case set forth the facts already recited as contained in the
complaint or declaration.
Facts thus stated in the declaration, pursuant to the directions
of the law of the territory, and which were material to the
understanding of the rights of the parties to the controversy,
could not properly be suppressed by the court. Irrespective,
Page 63 U. S. 349
therefore, of the question whether or not the motion of the
defendants to strike out that part of the declaration was waived
because not pressed in the supreme court of the territory, no doubt
is entertained by this Court that the motion was properly overruled
by the district court upon the merits.
Proof of the attending circumstances under which the defendants,
William R. Marshall and Joseph M. Marshall, had placed their firm
name upon the back of the note would clearly have been admissible
in a trial upon the general issue, and if so, no reason is
perceived why it was not proper for the plaintiff, under the
peculiar system of pleading which prevailed in the courts of the
territory at the time the suit was commenced, to state those
circumstances in the declaration. Beyond question they were a part
of the facts constituting the cause of action, and if so they were
expressly required to be stated by the law of the territory
prescribing the rules of pleading in civil cases. And having been
alleged in pursuance to such a requirement, and being material to a
proper understanding of the rights of the parties to the suit, it
must be considered, by analogy to the rules of pleading at common
law, that they are admitted by the demurrer.
By the admitted facts, then, it appears the defendants, William
R. Marshall and Joseph M. Marshall, placed their firm name on the
back of the note at its inception and before it had been passed or
offered to the plaintiff. They placed their firm name there at the
request of the other defendant, knowing that the note had not been
endorsed by the payee, and with a view to give credit to the note
for the benefit of the immediate maker, at whose request they
became a party to the same.
Whatever diversities of interpretation may be found in the
authorities where either a blank endorsement or a full endorsement
is made by a third party on the back of a note, payable to the
payee or order or to the payee or bearer, as to whether he is to be
deemed an absolute promisor or maker, or guarantor or endorser,
there is one principle upon the subject almost universally admitted
by them all, and that is that the interpretation of the contract
ought in every case to be
Page 63 U. S. 350
such as will carry into effect the intention of the parties; and
in most instances it is conceded that the intention of the parties
may be made out by parol proof of the facts and circumstances which
took place at the time of the transaction. Story on Prom.Notes,
secs. 58, 59, and 479.
When a promissory note, made payable to a particular person or
order, as in this case, is first endorsed by a third person, such
third person is held to be an original promisor, guarantor, or
endorser, according to the nature of the transaction and the
understanding of the parties at the time the transaction took
place. If he put his name on the back of the note at the time it
was made, as surety for the maker, and for his accommodation, to
give him credit with the payee, or if he participated in the
consideration for which the note was given, he must be considered
as a joint maker of the note. On the other hand, if his endorsement
was subsequent to the making of the note, and he put his name there
at the request of the maker, pursuant to a contract with the payee
for further indulgence or forbearance, he can only be held as a
guarantor. But if the note was intended for discount, and he put
his name on the back of it with the understanding of all the
parties that his endorsement would be inoperative until it was
endorsed by the payee, he would then be liable only as a second
endorser in the commercial sense, and as such would clearly be
entitled to the privileges which belong to such endorsers.
Decided cases are referred to by the counsel of the defendants
which seemingly deny that such parol proof of the attending
circumstances of the transaction is admissible in evidence; but the
weight of authority is greatly the other way, as is abundantly
shown by the cases cited on the other side. Whenever a written
contract is presented for construction, and its terms are ambiguous
or indefinite, it is always allowable to weigh its language in
connection with the surrounding circumstances and the subject
matter, and we see no reason, as question of principle, why any
different rule should be adopted in a case like the present. Such
evidence has always been received in the courts of Massachusetts,
as appears from
Page 63 U. S. 351
numerous decisions, and the same rule prevails in most of the
other states at the present time. 1 Am.Lea.Cas., 4th ed., 322.
Repeated decisions to the same effect have been made in the courts
of New York, and until within a recent period it appears to have
been the settled doctrine in the courts of that state.
Recent decisions, it must be admitted, wear a different aspect,
but they have not had the effect to produce a corresponding change
in other states, and, in our view, deny the admissibility of parol
evidence in cases where it clearly ought to be received.
Hawkes
v. Phillips, 7 Grey 284.
Applying these principles to the present case, it is obvious
that the contract of the two defendants whose firm name is upon the
back of the note was an original undertaking, running clear of all
questions arising out of the statute of frauds.
They placed their names there at the inception of the note, not
as a collateral undertaking, but as joint promisors with the maker,
and are as much affected by the consideration paid by the
plaintiff, and as clearly liable in the character of original
promisors, as they would have been if they had signed their names
under the name of the other defendant upon the inside of the
instrument. Numerous decisions in the state courts might be cited
in support of the proposition as stated, but we think it
unnecessary, as they will be found collated in the elementary works
to which reference has already been made, and in many others which
treat of this subject.
Another objection to the right of recovery in this case deserves
a brief notice. It is insisted by the counsel of the defendants
that the complaint or declaration is not sufficient to maintain
this suit against these defendants as original promisors. That
objection must be considered in connection with the system of
pleading which prevailed in the courts of the territory at the time
the suit was commenced. By that system, suitors were only required
to state the facts which constituted the cause of action. In this
case the plaintiff followed that mode of pleading, and we think he
has set forth enough to constitute a substantial compliance with
the law of the territory and the practice of the court where the
suit was instituted.
Page 63 U. S. 352
He alleges, among other things, that the defendants whose firm
name is on the back of the note placed it there for the purpose of
becoming sureties and security to him as payee for the amount
therein specified. That allegation, to use the language of the
statute of Minnesota, is expressed in ordinary and concise
language, and in such a manner as to be easily understood, and that
is all which is required by the law of the territory prescribing
the rules of pleading in civil cases. Under the system of pleading
which prevailed in the courts of the territory, the objection
cannot be sustained.
The judgment of the supreme court of the territory is
therefore affirmed with costs.
