Richards v. Street ( 1908 )

Mr. Chief Justice Shepard

delivered the opinion of the Court:

1. The first assignment of error relates to the sufficiency of the plaintiff’s affidavit. The contention is that it alleges the indorsement of the note by defendant after, instead of before, the indorsement by Albert M. Cowell and A. M. Cowell & Son; wherefore there is a variance between the note as alleged and the one referred to. It is argued that the defendant’s liability, as accommodation indorser, is' only to parties subsequent to the payee, as provided in sec. 1368 of the Code. The affidavit does not recite that the indorsement of defendant followed that of the payee. This might he said of the declaration, however; but any mistake therein is corrected by the particulars of demand attached and referred to, which sets out a correct copy of the note with the indorsements showing defendant to be the first indorser. The judgment was entered upon the recitals of the affidavit, which were accurate. Moreover, no question of liability to the subsequent indorsers arises. The action is by the last holder for value against the defendant alone.

2. The next point made is on the allegation of the affidavit of defense to the effect that the name of Albert M. Cowell was not indorsed by him, but is a forgery. The allegation is, substantially, that the name of Albert M. Cowell, as indorser, is believed to be in the handwriting of Sylvester C. Cowell, and, therefore, a forgery. Assuming, without deciding, that this statement is sufficient to put the question of forgery in issue, we are of the opinion that, under the facts shown, this constitutes no defense to the action. Sylvester C. Cowell is a partner. of Albert M. Cowell & Son, who indorsed the note thereafter and negotiated it. By so acting, they must be understood as affirming that the indorsement was by Albert M. Cowell, or by his authority. Hortsman v. Henshaw, 11 How. 177, 183, 13 L. ed. 653, 656. The presumption is that Sylvester C. Cowell, as a member of the partnership, was authorized to indorse the partnership name; and A. M. Cowell is estopped thereby, as well as by the receipt of the proceeds of the indorsement, to deny the genuineness of his signature which the partnership indorsement affirms. Burgess v. Northern Bank, 4 Bush, 600, 604.

3. The next assignment of error is founded on the allegation of the affidavit of defense, to the effect that the appellant ’had previously indorsed a note for the accommodation of Albert M. Cowell, which had been discounted with the Commercial National Bank, and renewed thereat from time to time; and that, for the purpose of again renewing said note in said bank, he wrote the name of Albert M. Cowell in the blank form of note,' indorsed the same, and transmitted it to said Cowell for the sole purpose of filling in the proper amount and delivering the said note to said bank. The allegation constitutes no defense. A note indorsed under such circumstances and delivered to a holder in due course “is valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority given, and within a reasonable time.” Code, sec. 1318. This was the established rule of law before the passage of the negotiable securities act. Goodman v. Simonds, 20 How. 343, 361, 15 L. ed. 934, 939; 1 Dan. Neg. Inst. §§ 144, 843, 844.

4. The last ground of defense alleged in the affidavit of defense is that the Fourteenth Street Bank was not a holder for value because, in discounting the note, it merely gave the firm of A. M. Cowell & Son credit for the same on its books. The affidavit, it will be remembered, alleges that the plaintiff is merely a holder of said note for the benefit of the said bank. It may be true that a bank which merely gives a credit for the amount of the note, to the discounter, and still holds the money unpaid to him or upon his check, is not a holder for value, within the meaning of sec. 1330 of the Code [31 Stat. at L. 1399, chap. 854]; but it is unnecessary to decide that question. To avail himself of such a defense, the defendant, in addition to the fact that the discount was so applied, must also allege that the money, at the time of notice, remained in the bank to the credit of the discounter. If it has been paid to him or his order, the bank necessarily becomes a holder for value. Mann v. Second Nat. Bank, 34 Kan. 746, 755, 10 Pac. 150.

We find no error in the entry of judgment on the motion, and it will therefore be affirmed, with costs. Affirmed.