333

70

INDORSEMENT.

plete contract in itself and the law merchant holds that this indorseLent cannot be explained, varied or contradicted by parol evidence as against bona fide holders for value without notice of irregularities or conditions. But as to irregular indorsements by third persons before delivery the weight of authority is to the effect that parol evidence may be admissible in a proper case, especially as between the original parties. When a third party indorses a note the presumption is that the indorsement was made at the time of the date of the note or that he agreed to sign it, and subsequently carried out his greement.72 It is presumed that an indorsement was made at the place indicated by the instrument and that the indorser of the note resides at the place indicated." This presumption leads to another, which is that the parties contracted with reference to the law of that place. An indorser will not be allowed to prove that he signed withcut recourse when the instrument is in the hands of a bona fide holder for value, without notice, unless he expressly uses the words "without

75

78

v. Boyd, 11 N. H. 385, 35 Am. Dec. 501; Cook v. Southwick, 9 Tex. 615, 60 Am. Dec. 181; see also, Gumz v. Giegling, 108 Mich. 295, 66 N. W. 48; Schroeder v. Turner, 68 Md. 506, 13 Atl. 331; Fullerton v. Hill, 48 Kans. 558, 29 Pac. 583, 18 L. R. A. 33; Good v. Martin, 1 Colo. 165, 91 Am. Dec. 706; Castle v. Rickly, 44 Ohio St. 490, 9 N. E. 136, 58 Am. R.

839.

**Cake v. Pottsville Bank, 116 Pa. St. 264, 9 Atl. 302, 2 Am. St. 600; Taylor v. French, 2 Lea (Tenn.) 257, 31 Am. R. 609; Kiel v. Choate, 92 Wis. 517, 67 N. W. 431, 53 Am. St. 936; Adrian v. McCaskill, 103 N. Car. 182, 9 S. E. 284, 14 Am. St. 788, 3 L. R. A. 759; Holmes v. Lincoln First Nat. Bank, 38 Neb. 326, 56 N. W. 1011, 41 Am. St. 733; Baxter Nat. Bank v. Talbot, 154 Mass. 213, 28 N. E. 163, 13 L. R. A. 52; Marshalltown First Nat. Bank v. Crabtree, 86 Iowa 731, 52 N. W. 559; Stack v. Beach, 74 Ind. 571, 39 Am. R. 113; Spencer v. Sloan, 108 Ind.

183, 9 N. E. 150, 58 Am. R. 35; Dale v. Gear, 38 Conn. 15, 9 Am. R. 353; see for the conflicting views and authorities on the general subject, Vol. I, § 616.

71 See Vol. I, § 616.

72 Bradford v. Prescott, 85 Me. 482, 27 Atl. 461; Childs v. Wyman, 44 Me. 433, 69 Am. Dec. 111; Union Bank v. Willis, 8 Metc. (Mass.) 504, 41 Am. Dec. 541; Powell V. Thomas, 7 Mo. 440, 38 Am. Dec. 465; Cook v. Southwick, 9 Tex. 615, 60 Am. Dec. 181; Samson v. Thornton, 3 Metc. (Mass.) 275, 37 Am. Dec. 135; Powell v. Thomas, 7 Mo. 440, 38 Am. Dec. 465.

73 Hall v. Harris, 16 Ind. 180; Rudulph v. Brewer, 96 Ala. 189, 11 So.

the plaintiff any money.93 Where forgery is offered as a defense, it has been held that financial circumstances of the defendant may be taken into consideration as tending to show the improbability of his making such a note; so, on the other hand, it has been held that any proper circumstances which might cause defendant to make such a note may be shown; for example, giving the note to satisfy plaintiff because of adultery with plaintiff's wife.95 The actual date of execution may be shown by parol as between the original parties, but not when the note is in the hands of an innocent purchaser when it will work to the latter's disadvantage.97 If a note dated on Monday was really executed and delivered on Sunday, this, it has been held, will only be a defense as between the immediate parties. 98

96

§ 1832. Conditions.-Conditions expressed in the instrument are presumed to be a part of the obligation and are binding. An indorsement is upon the same basis and if it is conditional, the conditions expressed are presumed to have been made at the same time as the indorsement.99 As a note made in a foreign state is presumed to be made with reference to the laws of the state where it is payable, so with any condition expressed either on the face of the instrument or in an indorsement.100 The burden of proof is on the maker of a note to show that the condition which renders the note non-payable, has happened subsequent, and upon the holder to show that the contin

23 N. E. 626; Corser v. Paul, 41 N. H. 24, 77 Am. Dec. 753.

93 Gitchell v. Ryan, 24 Ill. App. 372.

Nickerson v. Gould, 82 Me. 512, 20 Atl. 86.

5 Crane v. Horton, 5 Wash. 479, 32 Pac. 223.

96 Burns v. Moore, 76 Ala. 339, 52 Am. R. 332; Almich v. Downey, 45 Minn. 460, 48 N. W. 197; Allen v. Deming, 14 N. H. 133, 40 Am. Dec. 179; Barlow v. Buckingham, 68 Iowa 169, 26 N. W. 58.

97 Cranson v. Goss, 107 Mass. 439, 9 Am. R. 45; Knox v. Clifford, 38 Wis. 651, 20 Am. R. 28; McFarland v. Sikes, 54 Conn. 250, 7 Atl. 408, 1 Am. St. 111; Robertson v. Rowell,

158 Mass. 94, 32 N. E. 898, 35 Am. St. 466; Smith V. Mussetter, 58 Minn. 159, 59 N. W. 995; McCormick Harvesting Co. v. Faulkner, 7 S. Dak. 363, 64 N. W. 163, 58 Am. St. 839.

98 See § 105.

"Specht v. Beindorf, 56 Neb. 553, 76 N. W. 1059, 42 L. R. A. 429; Grimison v. Russell, 14 Neb. 521, 16 N. W. 819, 45 Am. R. 126; Fletcher v. Blodgett, 16 Vt. 26, 42 Am. Dec. 487; Blake v. Coleman, 22 Wis. 415, 99 Am. Dec. 53; Barnard v. Cushing, 4 Metc. (Mass.) 230, 38 Am. Dec. 362.

100 Farmers' Trust Co. v. Schenuit, 83 Ill. App. 267.

gency has happened, when the payment depends upon it.101 It has been held that parol evidence may be used to show, as between the parties, an oral agreement that the instrument was to become binding only upon a future contingency 102 or that a note given for certain property should be returned if certain things happened to the property. 10 Conditional delivery may be shown by parol evidence as between the original parties or others having notice.104 And an instrument dated on Sunday may be shown to have been made valid by delivery on another day.105

§ 1833. Mistake.-The burden of proving that there is a mistake in an instrument is on the party alleging the mistake, but this, in general, can only be proved as between the original parties, or those having notice.106 A defense that there was a mistake as to the rate of interest or amount named in a note can succeed only when proof of the mistake has been clearly established.107 Circumstances, admissions or any other proper evidence tending to show the mistake may, however, be admitted as between the original parties.108 Parol evidence may be introduced to show a mistake between the parties upon an instrument in settlement,109 or to show the amount of actual indebtedness upon a note held by written agreement as collateral secur

Grimison v. Russell, 20 Neb. 337, 30 N. W. 240; Chandler v. Carey, 64 Mich. 237, 31 N. W. 309; Low v. Studabaker, 110 Ind. 57, 10 N. E. 30; McAfee v. Fisher, 64 Cal. 246, 30 Pac. 811.

Nutting v. Minnesota Fire &c. Co., 98 Wis. 26, 73 N. W. 432; Trumbull v. O'Hara, 71 Conn. 172, 41 Atl. 546; Penniman v. Alexander, 111 N. Car. 427, 16 S. E. 408; Smith v. Mussetter, 58 Minn. 159, 59 N. W. 995; Eckel v. Murphey, 15 Pa. St. 488, 53 Am. Dec. 607.

Labbe v. Johnson, 66 Vt. 234, 28 Atl. 986; Aultman v. Clifford, 55 Minn. 159, 56 N. W. 593; Denver Brewing Co. v. Barets, 9 Colo. App. 341, 48 Pac. 834; see, however, Vol. I. § 616.

McCormick Harvesting Co. v.

Faulkner, 7 S. Dak. 363, 64 N. W. 163, 58 Am. St. 839; Smith v. Mussetter, 58 Minn. 159, 59 N. W. 995; Robertson v. Rowell, 158 Mass. 94, 32 N. E. 898, 35 Am. St. 466; McFarland v. Sikes, 54 Conn. 250, 7 Atl. 408, 1 Am. St. 111.

105 Lovejoy v. Whipple, 18 Vt. 379; King v. Fleming, 72 Ill. 21, 22 Am. R. 131.

ity for the balance due on settlement.110 And it has also been held that parol evidence may be used to show that a note was to be held by a third person until settlement should be held between the maker and payee.111

§ 1834. Fraud and duress.—Parol evidence may be introduced in a proper case to show that the execution112 or indorsement of a note was obtained through fraud or misrepresentations;118 but to relieve the maker it must be clearly established.114 Fraud or duress may be proved by circumstances or admissions of the payee; and any proper state of facts or circumstances tending to show an absence of fraud or duress may be shown.115 A defense that the note was procured by duress or threats may be established by parol evidence,116 and while the burden is upon the party offering this as a defense, mere preponderance of evidence is sufficient.117

§ 1835. Presentment and Demand.—It has been held sufficient evidence of demand and refusal that no funds were provided to meet a note payable at a bank when properly presented when due, at the bank within banking hours.118 The burden is generally upon the holder

110 Osborne & Co. v. Stringham, 1 S. Dak. 406, 47 N. W. 408.

111 Lipscomb v. Lipscomb, 32 S. Car. 243, 10 S. E. 929.

112 Larrabee v. Fairbanks, 24 Me. 363, 41 Am. Dec. 389; Ramsdell v. Edgarton, 8 Metc. (Mass.) 227, 41 Am. Dec. 503; Middleton v. Griffith, 57 N. J. L. 442, 31 Atl. 405, 51 Am. St. 617; Walker v. Egbert, 29 Wis. 194, 9 Am. R. 548; and proof of fraud in the inception for the instrument usually requires the holder to show that he became a bona fide holder for value and before maturity, note in 11 Am. St. 324, and numerous authorities there cited.

113 Larrabee v. Fairbanks, 24 Me. 363, 41 Am. Dec. 389; Hill v. Ely, 5 S. & R. (Pa.) 363, 9 Am. Dec. 376.

114 Billingsly v. Craddock, 82 Iowa 721, 47 N. W. 893; Ross v. Webster, 63 Conn. 64, 26 Atl. 476; Stout v. Judd, 10 Kans. App. 579, 63 Pac.

663; Sheley v. Brooks, 114 Mich. 11, 72 N. W. 37.

115 Rossiter v. Loeber, 18 Mont. 372, 45 Pac. 560; Maxson v. Llewellyn, 122 Cal. 195, 54 Pac. 732; Cawker v. Seamans, 92 Wis. 328, 66 N. W. 253.

116 Bush v. Brown, 49 Ind. 573, 19 Am. R. 695; Stout v. Judd, 10 Kans. App. 579, 63 Pac. 662; French v. Talbot Pav. Co., 100 Mich. 443, 59 N. W. 166; Borrill v. Nightingale, 93 Cal. 452, 28 Pac. 1068, 27 Am. St. 207; Larrabee v. Fairbanks, 24 Me. 363, 41 Am. Dec. 389.

117 Rossiter v. Loeber, 18 Mont. 372, 45 Pac. 560; see also, Nebraska Mut. Bond Asso. v. Klee, (Neb.) 97 N. W. 476.

118 State Bank v. Napier, 6 Humph. (Tenn.) 270, 44 Am. Dec. 308; Shepherd v. Chamberlain, 8 Gray (Mass.) 225; Bank of United States v. Carneal, 2 Pet. (U. S.) 543.

of a negotiable instrument in an action against an indorser or drawer to show that it was properly presented, and demand made119 and that notice was given of dishonor,120 or the holder must show due diligence121 or good excuse in case of non-presentment122 and that it worked no injury, 123 or to show a waiver of presentment, protest or notice124 or that a new promise was made for the old.125 The burden, however, has been held to be upon the payee in certain cases to show that he was ready to pay at the proper date and at the proper place, any damage sustained,1 ,126 to show that he was never notified of dishonor,127 to prove that he had notified the holders of his change of residence,128 or to show any neglect of the holder. 129 It is presumed when a bill of exchange is drawn that it is drawn against funds sufficient to meet it;180 but it has been held that when there are no funds to meet it, then it is presumed that the drawer knew this and that he did not expect it to be paid, and that therefore it is not necessary to present and give notice as he could not be injured by such a failure.181 Posting a letter, properly addressed, containing a notice raises a presumption that the maker or indorser received notice. The envelope with postmark may be used as evidence and raises a presumption, which may be rebutted, concerning the date of mailing the notice. 132

119 Peabody Ins. Co. v. Wilson, 29 W. Va. 528, 2 S. E. 888; Kirkpatrick v. Puryear, 93 Tenn. 409, 24 S. W. 1130, 22 L. R. A. 785.

1 Dickens v. Beal, 10 Pet. (U.S.) 572; Tickner v. Roberts, 11 La. 14, 30 Am. Dec. 706; Apple v. Lesser, 93 Ga. 749, 21 S. E. 171.

121 Peabody Ins. Co. v. Wilson, 29 W. Va. 528, 2 S. E. 888.

122 Baxter V. Graves, 2 A. K. Marsh. (Ky.) 152, 12 Am. Dec. 374.

123 Kirkpatrick V. Puryear, 93 Tenn. 409, 24 S. W. 1130, 22 L. R. A. 785.

Wilkins v. Gillis, 20 La. Ann. 538, 96 Am. Dec. 425.

Hunt v. Wadleigh, 26 Me. 271,

45 Am. Dec. 108.

Allain v. Lazarus, 14 La. 327, 33 Am. Dec. 583.

128 McClain v. Lowther, 35 W. Va. 297, 13 S. E. 1003.

129 Oxnard v. Varnum, 111 Pa. St. 193, 2 Atl. 244, 56 Am. R. 255.

130 Adams v. Darby, 28 Mo. 162, 75 Am. Dec. 115; Heuertematte v. Morris, 101 N. Y. 63, 4 N. E. 1, 54 Am. R. 657; Baxter v. Graves, 2 A. K. Marsh, (Ky.) 152, 12 Am. Dec. 374; Merchants' Bank v. Easley, 44 Mo. 286, 100 Am. Dec. 287.

131 Merchants' Bank v. Easley, 44 Mo. 286, 100 Am. Dec. 287; Baxter v. Graves, 2 A. K. Marsh. (Ky.) 152, 12 Am. Dec. 374.

132 Roberts v. Wold, 61 Mian. 291, 63 N. W. 739; Jensen v. McCorkell, 154 Pa. St. 323, 23 Atl. 366, 35 Am. St. 843; Dickins v. Beal, 10 Pet. (U. S.) 572. See Apple v. Lesser, 93 Ga. 749, 21 S. E. 171; Phoenix

*Burgess v. Vreeland, 24 N. J. L. Brewing Co. v. Weiss, 23 Pa. Super.. 71, 59 Am. Dec. 408.

Ct. 519.