Stoddard v. Penniman , 108 Mass. 366 ( 1871 )

Colt, J.

The defendant is sued as a joint and several promisor, upon a note payable to the plaintiff. His name is upon the back of the note only, but it was placed there before delivery to the payee, in blank; and upon the note, as it appeared at the trial, produced by the plaintiff, the defendant is chargeable as an original promisor, according to the rule that, when a person not a party to a note puts his name upon it before it is delivered as a valid contract, he thereby makes himself an original promisor. Union Bank v. Willis, 8 Met. 504.

The defence here is, that there had been a material alteration in the note, made without the defendant’s consent, and releasing him from all liability upon it. The note was originally drawn with the words “ payable to the order of myself; ” and while in that form the defendant put his name upon the back, solely for the accommodation of Hanson, the maker, who took it away with the express understanding between them that the defendant’s liability was to be that of subsequent indorser. After it was presented by Hanson to the plaintiff for discount, the word “ myself,” at the plaintiff’s suggestion, was erased by Hanson, and the plaintiff’s name inserted its place, and the money then paid upon it to Hanson.

We are of opinion that this was a material alteration in the form of the note. The undertaking of the defendant, as expressed in the original form, was that of an indorser after Hanson, the payee and maker. When the defendant put his name to the paper, it was incomplete as a contract, and could take effect as a note only when negotiated by Hanson’s indorsement; but the words “ payable to myself or order ” import that Hanson was to be the first indorser. It is not unusual for a third person to indorse a note for the benefit of another before the payee puts his name upon it, leaving that to be done when it is negotiated by him. And in Pierce v. Mann, 17 Pick. 244, it was held that in such case a party making the indorsement is liable only as ipdorser. The obligation of the several parties is to be determined by the instrument as it appears when finished. The condition of the note when first delivered as a valid and binding contract is the test of liability. The order of time in which accommodation parties may have signed is immaterial, in the absence of any agreement varying the apparent liability. The defendant’s signature on the back of a note payable to the maker’s order indicated the extent to which he intended to become fiable if the note should be negotiated. It was a limitation upon Hanson’s authority in his use of the note, which he had no right to disregard. Under it, he could not legally make such alteration as would change a qualified liability as indorser, to pay whoever might acquire title to the note, into the absolute liability of an original promisor. And this limitation forbade him alike to change the name of the payee, or put his own name upon the back as last indorser, or make such special or restricted indorsement as would produce that result. Patch v. Washburn, 16 Gray, 82. Brown v. Butler, 99 Mass. 179. Clapp v. Rice, 13 Gray, 403.

The case at bar does not fall within Union Bank v. Willis, 8 Met. 504, and the cases there cited. The rule there laid down has been declared anomalous, and is not to be extended in its application beyond the facts stated. It applies where, from the form of the note, there can be an original promise to pay a party named as payee. It does not apply where the note is payable to the maker’s order, and where from the nature of the transaction there can be no joint and several promise to pay him, but only a promise to pay such person as the maker himself may by his own act make the bearer or indorsee. In the latter case, the more reasonable and natural interpretation of the contract of the parties is that which we here adopt. Bigelow v. Colton, 13 Gray, 309. Ives v. Farmers' Bank, 2 Allen, 236. See also Ellis v. Brown, 6 Barb. 282.

in accordance with the terms of the report, the entry must be

Verdict set aside.