doctrine of the U. S. Supreme Court; but with the quali fication that if the note were intended for discount, and he put his name on the back of it with the understanding of all the parties that his indorsement would be inoperative until it was indorsed by the payee, he would then be liable only as a second indorser in the commercial sense, and as such would clearly be entitled to the privileges which belong to such indorsers.1 If the note be overdue at the time the third party puts his name upon it, it has been held that he would then be held as guarantor.2

§ 716. When the note is sued upon by the payee it is held that the idea of the party before him being bound as an indorser is excluded. But this doctrine does not seem to us correct. The indorsement, it is true, is an irregular one; but it is quite similar to a bill drawn by the indorser on the maker, and to follow that analogy in all regards seems to us the simplest and most reasonable solution of the question. And there are a number of cases which regard such a party's liability as prima facie that of an indorser. Where a note is payable to the maker's own order, it can have no validity until it is indorsed by him; and in such a case the party signing his name on the note

the note, and he put his name there at the request of the maker, pursuant to a contract with the payee for further indulgence or forbearance, he can only be held as a guarantor.

"III. But if the note was intended for discount, and he put his name on the back of it with the understanding of all the parties that his indorsement would be inoperative until it was indorsed by the payee, he would then be liable only as a second indorser in the commercial sense, and as such would be clearly entitled to the privileges which belong to such indorsers."

1 Rey v. Simpson, 22 Howard, 241.

'Rivers v. Thomas, 1 Lea (Tenn.), 649. But see Rodocanachi v. Buttrick, 125 Mass., 134. where such party was held under the circumstances an original promisor.

9

Quin v. Sterne, 26 Ga., 223; Brinkley v. Boyd, 9 Heisk., 149; Carpenter v. McLaughlin, 12 R. I., 270; Mathewson v. Sprague, 1 R. I., 8; Perkins v. Barstow, 6 R. I., 595; Manuf. Bank v. Follett, 11 R. I., 92.

Price v. Lavender, 38 Ala., 390; Wells v. Jackson, 6 Blackf., 43; Dore v Hurst, 13 Ind., 554; Sill v. Leslie, 16 Ind., 236; Dale v. Moffit, 22 Ind., 114 Roberts v. Masters, 40 Ind., 462; Comparree v. Brockway, 11 Humph., 358; Clonston v. Barbiere, 4 Sneed, 338; Jennings v. Thomas, 13 Smedes & M. 617; Kamm v. Holland, 2 Oregon, 59.

while it is unindorsed by the payee is presumed to contem plate that the payee is to sign before him, and that when the note takes effect he will himself appear as second indorser. All persons taking such a note are apprised of the apparent obligations of the parties, and if they rely on any other, they must ascertain and prove them.1

If any person whose name is upon a negotiable instrument describes himself as surety, guarantor, or indorser, he will thus notify all persons who may come into possession of it, of the character in which he binds himself, and as it is a written contract, no parol evidence will be permitted to qualify or vary it.2

If a note in the maker's hands payable to his own order be indorsed for his accommodation, and he substitute the indorser's name as payee, it is a material alteration.3

SECTION V.

HOW FAR PAROL EVIDENCE IS APPLICABLE TO ASCERTAINED INDORSEMENTS.

717. It is a general principle of law that parol evidence is inadmissible to contradict or vary the terms of a valid written contract, but while it is conceded on all sides to be applicable to all contracts written out in full, it has been considered by some authorities not to extend to those which are raised from implication by operation of lawsuch as indorsements in blank. And this latter view has

1

Kayser v. Hull, 85 Ill., 513; Blatchford v. Milliken, 35 Ill., 434.

2 Tinker v. McCauley, 3 Mich., 188, overruling Higgins v. Watson, I Mich., 428; Whitehouse v. Hanson, 42 N. H., 9.

Stoddard v. Penniman, 108 Mass., 366.

'Greenleaf on Evidence, §§ 277, 281, 282.

5

Ross v. Espy, 66 Penn. St., 487, Agnew, J.: "The contract of indorsement is one implied by law for the blank indorsement, and can be qualified by express proof of a different agreement between the parties, and is not subject to the rule which excludes proof to alter or vary the terms of an express agreement.' Breneman v. Furness, 90 Penn. St., 186; Susquehanna Bank v. Evans, 4 Wash.

been adopted by Byles, in his treatise on Bills, upon the authority of an English case, which does not fully bear out his interpretation of it.1 It is true that there are some ambiguous positions in which parties' names appear on the back of negotiable instruments, which justify the introduction of parol evidence to ascertain whether or not they are indorsers. But when it appears from an inspection of the paper that the party is an indorser, there seems to us no just ground for the distinction taken between the implied contract arising from his mere name thereon written and contracts written out in extenso. The indorsement seldom consists of anything more than the indorser's signature; but if the agreement imported by that signature were written over it in full, the undertaking of the indorser would not be more clearly defined than it is by the signature itself. Its presence and position upon the instrument are as plain a manifestation of the intention of the party as if it were set forth in express words, and parol evidence should not be admitted to vary or contradict it."

718. For, in fact, though there be nothing but the in

C. C., 480; Johnson v. Martinus, 4 Halst., 144 [but see Chaddock v. Van Ness, 35 N. J. L. R., 521, and Johnson v. Ramsey, 42 N. J. L. R., 14 Vroom, where Johnson v. Martinus is criticised and overruled]; Davis v. Morgan, 64 N. C., 381; Mendenhall v. Davis, 72 N. C., 150; Hill v. Shields, 81 N. C., 250 [but as between remote parties, see ante, § 699]; Comm'rs of Iredell v. Wasson, 82 N. C., 308; 2 Parsons N. & B., 519.

1 Pike v. Street, 1 Mood. & Malk., 226 (22 E. C. L. R.) In Byles on Bills (Sharswood's ed.) [*147], 267, it is said: "The contract between indorser and indorsee does not consist exclusively of the writing popularly called an indorsement. The contract consists partly of the written indorsement, partly of the delivery of the bill to the indorsee, and may also consist partly of the mutual understanding and intention with which the delivery was made by the indorser, and received by the indorsee. That intention may be collected from the words of the parties to the contract, either spoken or written, from the usage of the place, or of the trade from the course of dealing between the parties or from their relative situation." Kidson v. Dilworth, 5 Price, 564; Castrique v. Battigieg, 10 Moore, P. C. C., 94. See Bruce v. Wright, 3 Hun, 548 (10 N. Y. S. C. R.), where it is held that an agreement of an indorsee not to sue his indorser is admissible in evidence, and is a good defence, and that the contract between indorser and indorsee consists partly in the written indorsement, partly in the delivery of the paper to the indorsee, and partly of the actual understanding and intention with which delivery was made.

2

* Text approved in Doolittle v. Ferry, 20 Kansas, 230.

dorser's signature, the indorser's contract is as fully expressed as that of the drawer of a bill payable to bearer. He is a new drawer on the drawee, if it be a bill; a drawer on the maker, if it be a note; and the instrument itself, with his name signed as indorser, constitutes his written. contract, from which he can only be absolved by failure of demand or notice, or other delinquency of the holder. The following general view may, therefore, be stated, to wit: that in an action by immediate indorsee against an indorser, no evidence is admissible that would not be admissible in a suit by a party in privity with the drawer against him.1 We have never seen this rule laid down in these words, and the cases exhibit a painful contrariety of opinion. But it goes toward reconciling many which have been deemed at variance, and embodies the true principle, as we conceive, of the subject. Many cases speak of an indorsement in blank as only an implied contract. This misconception often gives rise to error. It is expressed in the body of the instrument, and in the case of a bill the only difference between drawer and indorser, as a general rule, is that the drawer is an originating drawer, signing usually on the face, and the indorser, a transferring drawer, signing on the back.

§ 719. Instances of exclusion of parol evidence between indorser and indorsee.—Accordingly, the indorser can not show by parol evidence against his indorsee that it was agreed that he should not be liable, and that his indorsement was "without recourse" on him. If so intended, it

1

'Approved in Doolittle v. Ferry, 20 Kansas, 230, Brewer, J.

Martin v. Cole, U. S. S. C., October, 1881; Central L. J., Jan'y 20, 1882, p. 46; Virginia L. J., Feb'y, 1882, p. 76, confirming Martin v. Cole, 3 Col., 113, and approving text; Brown v. Spofford, 95 U. S. (5 Otto), 483 (1877); Charles v. Denis, 42 Wis., 56; Eaton v. McMahon, 42 Wis., 487 (disapproving obiter dictum in Merdock v. Aradt, 1 Pin., 70); Doolittle v. Ferry, 20 Kan.; Dale v. Gear, 38 Conn., 15 (1872), S. C., 39 Conn., 89; Law Reg., Jan., 1873, p. 14 (vol. 12, new series, No. 1), explaining and limiting Downer v. Cheesebrough, 36 Conn., 39; Woodward v. Foster, 18 Grat., 205; Lee v. Pile, 37 Ind., 107 Campbell v. Robins, 29 Ind., 271 (1868); Wilson v. Black, 6 Blackf., 509; Odam v. Beard, 1 Ibid., 191; Crocker v. Getchell, 23 Me., 392; Zarry v. Morse, 3 N H., 132; Bank of Albion v. Smith, 27 Barb., 489; Fuller v. McDonald, 8 Greenl.,

should be so expressed, and a drawer might as well offer evidence that the holder agreed to look only to the drawee. Nor could he show that his liability, according to agreement was to be that of a guarantor, or a surety, or a maker, or that his signature was written under that of the payee, merely in order to identify him; nor that it was stipulated that he was to be liable only when certain estates were sold; nor that the paper was only to be negotiated at a certain bank; nor that it was to be renewed for two months; nor that the liability was otherwise conditional or different from what the indorsement imported.

5

§ 719a. Whether cotemporaneous waiver of demand and notice may be shown by parol evidence. It has also been held that it can not be shown that the indorser agreed at the time of indorsement to be absolutely liable without demand and notice; but we concur with the authorities which sustain his freedom to waive his right to demand and notice at any time. He merely relieves the indorsee of the ordinary duties of diligence; of the necessity of

213; Hoare v. Graham, 3 Camp., 57; Bank U. S. v. Dunn, 6 Pet., 51, McLean, J.; Rodney v. Wilson, 67 Mo., 123; Lewis v. Dunlap, 72 Mo., 178; Courtney v. Hogan, 93 Ill., 101; Skelton v. Dustin, 92 Ill., 49; Jones v. Albee, 70 Ill., 37; Benjamin's Chalmers' Digest, p. 63; Abbott's Trial Evidence, 415. Contra, Mendenhall v. Davis, 72 N. Č., 150. In Skinner v. Church, 36 Iowa, 91, held such evidence is admissible between immediate parties, but not others. In Georgia, held under the Code admissible as between immediate parties, Lynch v. Goldsmith, 64 Ga., 42. See ante, §§ 699, 717, note.

'Hamburger v. Miller, 48 Md., 327 (semble); Howe v. Merrill, 5 Cush., 80; Dibble v. Duncan, 2 McLean, 353; Fuller v. McDonald, 8 Greenl., 213. Contra, Taylor v. French, 2 Lea., 257; Newell v. Williams, 5 Sneed, 209, McKinney, J.: "There is no question but that an indorser in blank may by his agreement enlarge or vary the liability created by law.”

"Hauer v. Patterson, 84 Penn. St., 275; Barnard v. Guslin, 23 Minn., 194. Finley v. Green, 85 Ill., 536.

'Prescott Bank v. Caverly, 7 Gray, 217; Stack v. Beach, S. C. of Indiana, Sept., 1881; Central L. J., Oct. 21, 1881, p. 317.

'Free v. Hawkins, 8 Taunt., 92; Holt's R., 550; 1 Moore, 535.

"Stubbs v. Goodall, 4 Ga., 106.

Hoare v. Graham, 3 Camp., 57.

Bank of Albion v. Smith, 27 Barb., 489; Barry v. Morse, 3 N. H., 132; see Free v. Hawkins, 3 Camp., 57, which is quoted for this doctrine, but is not clearly in support of it, by any means; Story on Notes, § 148; 2 Parsons N. & B., 520, note. See § 1093.

"See chapter on Excuses for want of Presentment and Notice, vol. 2, § 1093.