Schine v. Johnson ( 1918 )

The Negotiable Instruments Act provides that as between the immediate parties to the instrument "the delivery may be shown to have been conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument." General Statutes, § 4186. This was so before the Act.McFarland v. Sikes, 54 Conn. 250, 7 A. 408; Trumbull v. O'Hara, 71 Conn. 172, 177, 41 A. 546. In this case there is no question but what the delivery was for the purpose of transferring the property in the instrument, for the note in suit was given and received in part payment of an outstanding promissory note which was received back by the defendants for cancellation; and the answer alleges that the intent of the transaction was to make the note available to the plaintiff at once as an obligation of the makers. To that extent the delivery was absolute and unconditional.

Was there a conditional delivery of the instrument so far as the contract of indorsement was concerned? We think not. The conditional delivery of a written contract necessarily implies that the delivery may become absolute and the contract obligatory according to its terms, in case the condition precedent is performed or broken as the case may be. Thus inMcFarland v. Sikes, 54 Conn. 250, the condition on which the note was delivered to the plaintiff's attorney was that if the defendant failed to appear upon a certain day the note was to become effective as a note according to its tenor. Here, however, the alleged condition is that the contract of indorsement, though absolute in form, was never to become operative at all; and so it is evident that the defendants are seeking to attach a condition to the contract itself which is not therein expressed, and are not seeking to attach the condition to the delivery of the contract.

Their real defense is that they never contracted as written, and that the indorsements, although absolute in form, were intended by both parties to be indorsements without recourse. Assuming that to be so, it is too well settled for discussion that the contract which the law implies from an unconditional indorsement cannot be varied or contradicted by parol evidence, in defense of an action on the note. Burns Smith LumberCo. v. Doyle, 71 Conn. 742, 43 A. 483.

If it is true, as claimed, that the plaintiff is fraudulently attempting to take advantage of a contract which neither the plaintiff nor the defendants intended to enter into, the proper remedy is to appeal to a court of equity to have the contract reformed by inserting the words "without recourse" in the indorsement.

There is no error.

In this opinion the other judges concurred.