Haddock, Blanchard & Co. v. Haddock , 103 N.Y.S. 584 ( 1907 )

Kellogg, J.:

By section 114 of the negotiable Instruments Law (Laws of 1897, chap. 612) the liability of an irregular indorser is defined. It is there declared: “ Where a person, not otherwise a party to an instrument, places thereon his signature in blank before delivery, he is liable as indorser in accordance with the following rules:

“ 1. If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties.

“ 2. If the instrument is payable to the order of the maker, or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer.

“ 3. If he signs for the accommodation of the payee, he is liable to all parties subsequent to the payee.” ,

Prior to the statute an irregular indorser upon a note was presumptively not liable to the payee.

Section 118 of that law provides: “ As. respects one another, indorsers are liable prima facie in the order in which they indorse; but evidence is admissible to show that as between or among .themselves they have agreed otherwise. Joint payees ór joint indorsees who indorse are deemed to indorse jointly and severally.”

This statute is substantially a re-enactment of the law as established by the cases. (Moore v. Cross, 19 N. Y. 227; Coulter v. Richmond, 59 id. 478; Culliford v. Walser, 158 id. 65 ; Davis v. Bly, 164 id. 527.)

It is an 'exception to tlie rule that the terms or legal effect of a written instrument cannot be changed by parol. This case is squarely within the terms of section 118 and the above authorities. Subdivision 2 of section 114 of that statute does not purport to fix the rights of the various indorsers as between, themselves, but declares that the irregular indorser is liable to all the parties subsequent to the “ drawer,” not subsequent to the “ payee.” The drawer," the payee and the indorser are. different parties' to a bill, but the same person may occupy all those positions upon -it. This section does not refer to persons but to the parties to the bill. This-statute,, as the defendant construes it, destroys a legal right formerly existing under thé rules of the law merchant, -which rules section 7 preserves in any case not provided for by the. statute; it should,' therefore, be strictly construed. If it was the intent to prevent the payee from recovering against the indorser, he and-not the drawer would have been mentioned. In any event the section does not purport to define'-the liability of one indorser to another. That matter is governed entirely by section 118.. The. two sections read well together, one as showing the position of the parties while the paper is With the public as a negotiable instrument; the .other as defining the rights of the indorsers as between themselves where the negotiable character of the instrument is unimportant. The judgment should be affirmed. .

All concurred, except. Smith, P. J., dissenting in opinion ; Sewell, ' J., not sitting;