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(- Okla. —, 174 Pac. 505.) speak the truth, and that the motion Bills and notes - indorsement - sub for new trial was not filed within the

sequent agreement for release from time required by law, which motion to

liability. strike the trial court overruled. The

7. The holder of a note who inmotion for new trial was also over

dorsed it and recovered possession of ruled, and defendant appeals, but the plaintiff does not assign any error.

it may, in transferring it a second Held that, in the absence of error duly

time, agree to relieve himself from the assigned by the plaintiff, the action of

legal effect of the indorsement previthe trial court in overruling the mo- ously made by him. tion to strike cannot be considered by [See 3 R. C. L. 1157, 1158.] this court.

Indorsement — varying by parol. [See 2 R. C. L. 161.]

8. An indorsement of a promissory Contract — subsequent alteration. 6. A written contract may be al

note at the time of its transfer by the tered by a subsequent written con

indorser amounts in law to a contract tract, or by a subsequent executed oral in writing, which cannot be varied by contract.

a prior or collateral oral agreement. [See 6 R. C. L. 914, 915.]

[See 3 R. C. L. 1156.]

ERROR to the County Court for Custer County to review a judgment in favor of plaintiff in an action brought to recover the amount alleged to be due on two promissory notes. Reversed.

The facts are stated in the Commissioner's opinion.

Mr. T. W. Jones, Jr., for plaintiff in 518, 120 Pac. 616; Pattee Plow Co. v. error:

Beard, 27 Okla. 239, 110 Pac, 752, Ann. The decision of the court is not sup- Cas. 1912B, 704. ported by the evidence and is contrary Messrs. Eugene Forbes and A. E. to law.

Darnell, for defendant in error: Lambert v. Smith, 53 Okla. 606, 157

A qualified indorsement cannot be Pac. 909; Dunkin v. Waurika Nat. made orally, nor parol evidence be ofBank, Okla. 162 Pac. 788; Gault

fered of such an indorsement without v. Kane, 44 Okla. 763, 145 Pac. 1128;

violating the elementary principle Cedar Rapids Nat. Bank v. Bashara,

which prohibits the introduction of 39 Okla. 482, 135 Pac. 1051; Metro

parol evidence to alter, vary, or conpolitan Discount Co. v. Davis, - Okla. v

tradict the terms of a valid written in

strument. A.L.R. - 170 Pac. 707; Shaffer

Second Nat. Bank v. Woodruff, 113 v. Govreau, 36 Okla. 267, 128 Pac. 507.

Ill. App. 6; Chapman v. Chapman, 132 Judgment should have been for de

Iowa, 5, 109 N. W. 300; Torbert v. fendant, whether the instrument was

Montague, 38 Colo. 325, 87 Pac. 1145; negotiable or non-negotiable.

Crilly v. Gallice, 78 C. C. A. 525, 148 1 Dan. Neg. Inst. 6th ed. $ 47, p. 59;

Fed. 835; Franklin v. Browning, 54 Rossville State Bank v. Heslet, 84

C. C. A. 258, 117 Fed. 226. Kan. 315, 33 L.R.A.(N.S.) 738,113 Pac. 1052; Union Stock Yards Nat. Stewart, C., filed the following Bank v. Bolan, 14 Idaho, 87, 125 Am. opinion: St. Rep. 146, 93 Pac. 508; Woodbury v. The plaintiff brought action Roberts, 59 Iowa, 348, 44 Am. Rep.

against the defendant on two prom685, 13 N. W. 312; Smith V. Van Blarcom, 45 Mich. 371, 8 N. W. 90;

issory notes made by the defendant Coffin v. Spencer, 39 Fed. 262; Oyler v.

J. Johnson, payable to the order of McMurray, 7 Ind. App. 645, 34 N. E.

the defendant H. H. Clark, and by 1004; Second Nat. Bank v. Wheeler, the payee transferred after maturi75 Mich. 546, 42 N. W. 963; Citizens ty to the plaintiff, alleging, as a Nat. Bank v. Piolett, 126 Pa. 194, 4

cause of action against the payee: L.R.A. 190, 12 Am. St. Rep. 860, 17

“That at the time of the sale and Atl. 603; Matchett v. Anderson Foundry & Mach. Co. 29 Ind. App. 207, 94

transfer of said notes by said H. H. Am. St. Rep. 272, 64 N. E. 229; City

Clark to this plaintiff, the said H. Nat. Bank v. Gunter Bros. 67 Kan. 227,

H. Clark represented to this plain72 Pac. 842; Steele v. Hudson, 30 Okla. tiff that there was absolutely noth

ing wrong with the said notes, and demurrer to plaintiff's evidence; (3) that there were no defects or in- overruling his motion at the close firmities about them, nor any equi- of the testimony for judgment ties existing between the said H. against the plaintiff in favor of the H. Clark and the said defendant J. defendant. Johnson, maker of the notes."

From a careful reading of the It is nowhere alleged that the petition we are at a loss to undernotes were indorsed by H. H. Clark, stand upon what theory the pleader or that any of the representations expected to establish liability on the alleged to have been made by the part of Clark. It is not alleged that said H. H. Clark had failed or were Clark in due course, before maturiin any respect untrue. Each of the ty, indorsed the notes, or that he indefendants was duly served with dorsed the notes at all, it being only summons, and, defendant J. Johnson alleged that he guaranteed that the defaulting, the court, on request of notes were without defects, infirmithe plaintiff, rendered judgment ties or equities existing between the against Johnson for the full amount maker and the payee, an allegation due on said notes. The defendant H. which was wholly unnecessary, in H. Clark filed separate demurrer, that, under $ 4115, R. C. L. 1910, on the ground that the petition did such warranty would be implied not state a cause of action against by a transfer of the notes by him, which demurrer was by the delivery, and need not have been court overruled, exceptions being expressed, either orally or in writpreserved. Thereafter he filed sepa- ing. Before, however, a cause of rate answer, and, on a hearing be- action would lie against Clark on fore the court without a jury, judg- account of a breach of warranty, ment was rendered in favor of the either express or implied, it would plaintiff and against the defendant be necessary for there to be an alH. H. Clark, for the same sum as the legation in the peti

Pleadingjudgment theretofore rendered tion, showing that special war. against the maker of the notes. The the warranty had judgment against Clark shows on its failed in some material respect to face to have been rendered No- the plaintiff's damage. There are vember 23, 1916, motion for a new no allegations which, either in terms trial having been filed by Clark on or by intendment, meet this necesNovember 25, 1916. The plaintiff sary prerequisite. The action is not filed motion to strike the motion for lodged against Clark as an indorser, a new trial from the files, for the but it is sought to make him liable alleged reason that the same was merely because of the representanot filed within three days after the tions alleged to have been made, and rendition of the judgment. On the without an averment that they are same day the plaintiff also filed what untrue or have failed.

We are, was styled application for order therefore, inclined to hold that the nunc pro tunc to correct the record, court was not in error in overruling and show that the judgment was the demurrer to the petition of rendered on the 15th day of Novem- plaintiff, unless it may be said that ber, 1916, and not on the 25th day the petition was not vulnerable to a of such month. The court overruled general demurrer, for the reason both of the motions of the plaintiff. that copies of the notes were atThe motion for new trial was also tached to and made a part of the overruled, and the defendant H. H. petition, and that the first note Clark duly appeals. The plaintiff shows to have been indorsed without did not appeal, and has assigned no

qualification. Credits on the note at error in this court. The defendant the time of the transfer from Clark Clark urges as error: (1) The to the plaintiff, about which there is overruling of his demurrer to the no dispute either in the pleadings or petition ; (2) the overruling of his in the evidence, show that the entire

ranty of note.

Bills and notes

(- Okla. -, 174 Pac. 505.) principal of the first note, and also Clark's liability on the notes was a portion of the interest, had been agreed upon; that is to say, that paid at the time of such transfer. any warranty that might be implied The second note does not bear the in- from the written indorsement predorsement of Clark, but it might be viously made was limited to defects, contended, with some show of merit, infirmities, and equities existing bethat the petition states a cause of tween him and the maker of the action for the slight balance due on note. The fact that the plaintiff in the first note, and that therefore a his petition pleaded such as the only general demurrer would not lie. The warranty which Clark made, and plaintiff in error, however, calls at- the only liability which he assumed tention to Grimes v. Tait, 21 Okla. in making the transfer, excludes 361, 99 Pac. 810, and to Shaffer v. the plaintiff from any claim that Govreau, 36 Okla. 267, 128 Pac. 507, Clark is liable because of the previas holding that "in an action upon a ous indorsement made by him. It promissory note by an indorsee

was perfectly proper and lawful, against an indorser, the petition in making the conmust allege notice of dishonor by tract with the plain- Indorsementthe maker or such facts as excuse a tiff, for Clark, by sabsequent

agreement for notice of dishonor."

express agreement, release from And in this connection it is sug- to

liability.

relieve himself gested that the petition does not con- from the legal effect of the indorsetain such an allegation. We do not ment previously made by him. If take issue with counsel, nor with the indorsement had been made at the authorities cited, but, on exam- the time of the transfer of the notes ination of the notes, we find that from Clark to the plaintiff, the parol they each contain a waiver of pre

agreement would have become sentment for payment, notice of merged in the legal effect of indorsepayment, protest, and notice of pro- ment, the

same

Indorsementtest. Such waiver incorporated in amounting in law varying

by the note is binding upon the makers

to a contract in and indorsers, and hence constitutes writing which could not be var. sufficient reason to excuse notice of

ied by a prior or collateral padishonor. The peti- rol agreement. But the indorseBills and notes- tion, though defec

ment having been made in the past, waiver of notice,

tive, might, there- the executed parol contract affecting fore, be construed to state a cause of

the same, pleaded by the plaintiff, action as to the balance due on the

was binding and effective. We connote, which shows to have been in

clude that the peti

Pleading dorsed, if it were not for other aver

tion does not state representation, ments in the petition. From the à cause of action petition itself we discover that the against Clark, and that the demur. notes were in the bank at the time

rer thereto should have been susof the transfer; that no indorse

tained. ments were made at such time by

Nor does the evidence introduced Clark, but that he merely ordered show any ground for relief against the bank to deliver such notes to the Clark. There is no evidence of any plaintiff. It is the settled law of this outstanding defects, infirmities, or state that a written contract may equities existing between Clark and be altered by a subsequent written

the maker of the notes, and nothing contractor by a

to show that the validity of the notes Contract-subse- subsequent executed was in any sense impaired. The quent alteration.

oral contract. The plaintiff is not shown to have been petition shows that the contract be damaged by any act or representatween Clark and the plaintiff was tion of Clark. The record shows executed and was oral; that as a that he obtained a judgment against part of such contract the extent of Johnson, the maker of the notes for

parol.

by payee.

absence of

error.

the full amount due thereon. It may not brought about by the careless be that the judgment against John- pleading of his attorney. Clearly, son is not collectable; but, unless according to the plaintiff's own tesClark can be made liable as an in- timony, Clark did not intend, and dorser, the plaintiff is without rem- the plaintiff did not expect him, to edy as against Clark, and there is warrant or guarantee payment of certainly nothing in the pleadings or the notes at the time the trade was in the evidence showing any such made. The defendant Clark was enliability on the part of Clark. The titled to judgment in his favor. evidence shows that the indorse

The plaintiff argues that the court ment made on the first note was should have stricken the motion for made by Clark at a time when he

a new trial from the files, but as the pledged such a note to the bank as collateral for his own obligation; action of the trial court, or made any

plaintiff has not appealed from the that the other note had been merely

cross assignment of placed in the bank for safekeeping;

error, this court

Appealthat, the principal obligation for cannot consider any assignment of which the first note was collateral

objection urged to having been settled with the bank,

the overruling of plaintiff's motion the title and the constructive posses

to strike. The action of the trial sion of each of the notes became

court on such motion has become again vested in Clark. Not having final. indorsed the second note, in no event

This cause is reversed, with direccould he be held liable for the pay

tions to set aside the judgment renment of the same, and for the rea

dered against the defendant H. H. sons set forth in plaintiff's petition

Clark, and to render judgment in his he could not be held liable as an indorser

favor and against the plaintiff, and indorsement. for the balance due

that the judgment against the deon the first note.

fendant J. Johnson be allowed to

stand as rendered. The plaintiff in his testimony makes the following admissions :

Per Curiam: Q. Did he (Clark) or not say any.

Adopted in whole. thing about indorsing the notes at the time he transferred them to you? A. No. Nothing was said about

NOTE. it. Q. Did he (Clark) ever refuse to

The court in the reported case indorse the notes?

(CLARK v. SALLASKA, ante, 746) enA. I never asked him to.

grafts an unusual exception upon the Q. Anything mentioned about he rule excluding evidence to vary or exwould guarantee the payment of plain an indorsement. The decision in this (the notes)?

that case, in effect, is that, upon the A. No, sir.

transfer of a note, the transferer may Q. Nothing said about that ei adopt an indorsement made by him in ther?

the past for another purpose, and limA. No, sir.

it the scope of his liability thereon While the plaintiff is concluded by by what is termed an executed parol his pleading as to the contract made contract. The admissibility of parol between him and Clark, yet it is ap- evidence to vary or explain the conparent from the testimony in the tract implied from an indorsement is case that plaintiff's predicament was discussed in the note, post, 764.

Bills and noteslimited

(167 N. C. 600, 83 8. E. 585.)

R. H. SYKES et al., Trustees, etc., of G. C. Farthing,

V.
R. O. EVERETT, Appt.

North Carolina Supreme Court - November 25, 1914.

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(167 N. C. 600, 83 S. E. 585.) Evidence - parol - to explain indorsement.

1. As between the original parties to an indorsement of a promissory note, parol evidence is admissible to show what the actual contract between them, as evidenced by the indorsement, was.

[See note on this question beginning on page 764.] -failure to object waiver.

upon the principal debt, in the ab2. Failure to object to the introduc- sence of any stipulation to that effect. tion of evidence to show a contract [See 21 R. C. L. 685.] different from that implied from an in- Bills and notes agreement to look to dorsement of negotiable paper waives

collateral effect. the objection.

9. An agreement by an indorsee of a [See 2 R. C. L. 77.]

note not to look to the indorser until Appeal failure to appeal effect. he has exhausted collateral is binding.

3. Prevailing parties who fail to ap- Principal and surety -- obligation of peal from adverse rulings cannot have

surety. them passed upon by the appellate

10. A surety undertakes primarily court.

to pay if the debtor does not. Bills and notes indorsement ef- [See 21 R. C. L. 946.] fect.

Bills and notes - obligation of in4. When a payee or regular indorsee

dorser, of a note writes his name on the back

11. An indorser of a note underof it, the law implies that he intended

takes to pay if the maker does not to assume the well-known liability of

after due notice of the dishonor. an indorser as between himself and

[See 3 R. C. L. 1148.] bona fide holders for value without notice, and he will not be permitted to

- obligation of guarantor. contradict this implication.

12. A guarantor of a note under[See 3 R. C. L. 1153, 1154, 1156.] takes to pay if the maker cannot. Evidence - transferee with notice.

[See 3 R. C. L. 1160.] 5. Parol evidence is admissible to - exhaustion of collateral. explain a blank indorsement of a 13. An indorser of a promissory promissory note, as against the in- note who undertakes to pay when coldorsee's transferees with notice. lateral is exhausted can be held liable [See 3 R. C. L. 1156 et seq.]

only for what cannot be collected out of Assignment — right of assignee.

the collateral. 6. An assignee under a general as

[See 21 R. C. L. 667.) signment acquires the property of his agreement to look to collateral assignee subject to all the equities consideration. against him.

14. An agreement to exhaust the [See 2 R. C. L. 625, 626.]

collateral before looking to the inBills and notes — assignment after dorser, made by the indorsee at the maturity - equities.

time of taking a promissory note by 7. One taking an assignment of a indorsement and as part of the transnote after maturity takes subject to action, is supported by sufficient conall equities between his indorser and sideration. prior parties to the note.

Evidence burden of proof in[See 3 R. C. L. 1045.]

solvency of estate. Pledge - effect of taking collateral 15. An indorsee of a promissory security.

note upon condition that he will ex8. The taking of collateral security haust the collateral before looking to does not suspend the right of action the indorser has the burden of show

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