Bank of Bellows Falls v. Dorset Marble Co.

But it is not necessary to examine the law of other jurisdictions much, for it is well settled in this State, by a long line of decisions; and although some of them may be obnoxious to criticism as anomalous and illogical, yet they have been so long acted upon by our citizens that they cannot now be disturbed without danger of injustice; and besides, it is often of more consequence that the law should be stable than that it should be logical.

The cases on this subject, for present purposes, may conveniently be divided into two classes, namely, those of regular and those of irregular indorsements. In the case of irregular indorsements, that is, indorsements in blank by third persons above the name of the payee or when the payee does not indorse at all, there is very little diversity of holding. By such indorsements it is pretty generally held, nothing else appearing, that the party intended to assume an absolute undertaking, and usually that of maker; but that this presumption may be rebutted by showing a contract for a different undertaking.

But in the case of regular indorsements, that is, indorsements in blank of third persons under the name of the payee, a different rule pretty generally prevails, and such indorsements are held to impose only the obligation of second indorsers; and parol evidence is not received to vary that obligation, because it is said that there is no ambiguity arising from a regular indorsement in respect of the nature of the obligation intended to be assumed, as there is from an irregular indorsement, for on the face of the paper a regular indorser is liable as second indorser, and that it is no more competent to vary the legal effect of a written instrument by parol evidence than it is to vary its express terms.

But in this State no distinction has ever been made in this behalf between regular and irregular indorsements in blank of third persons, but they have alike been held, prima facie, to impose the obligation of maker. In most if not all of the cases before Sylvester v. Downer, 20 Vt. 355, the in dorsements were irregular, which brings the cases in line with a great majority of the cases in other jurisdictions. But in Sylvester v. Downer the

Bank of Bellows Falls v. Dorset Marble Co.

defendant's indorsement was regular, that is, his name was written in blank under the names of the payees. This seems to be so from the case, but we have a copy of the note before us, which shows it to be so. Downer was sued as sole maker of the note, and although it is true that the evidence tended to show, and the jury found, that he intended to assume an unconditional obligation to pay the note according to its tenor, yet the court adverted to that fact only as putting at rest all pretence that it was not understood that he assumed the obligation his signature imported, and said: On being produced, the note shows the name of the defendant indorsed upon it, and also the names of the payees. This, according to the decisions of this court repeatedly made, imposes upon the defendant the obligation of maker, with this difference, that his undertaking being in blank, as between him and the parties to it, it is susceptible of being controlled by oral evidence of the real obligation intended to be assumed at the time of signing.

In Pitkin v. Flanigans, 23 Vt. 160, the payee's name was indorsed first in position on the bill of exchange, then the defendant's, and then the plaintiff's, all in blank. The plaintiff had the bill to pay, and sought to recover the whole of it of the defendants, on the ground that as their names stood before his on the bill, they were liable to him as prior indorsers. But the court held that the position of their names made no difference, and let in parol evidence of the circumstances.

The result is, the defendants are held as makers, and the judgment is affirmed.

Royce, C. J., and Veazey, J., did not sit.

Blair v. White.

GEORGE P. BLAIR, EXECUTOR, v. JAMES WHITE, ADMINISTRATOR, ET AL.

Mortgage. Assignment of Notes. Legacy to Debtor.

1. Where the holder of mortgage notes assigns a portion of them without any agreement as to the mortgage security, such assignment carries with it by operation of law an assignment of a proportionate share of the security.

2. Where the assignee of a part of such mortgage notes has also another fund to which he can resort for their payment, he should first resort to such fund.

3. Where the maker of the notes was the legatee of the orator's testatrix, the foreclosure being brought for the benefit of the estate, held, that the acy was such a fund, and that the orator should apply that fund first in discharging other unsecured debts to the estate from the maker, and then in paying these mortgage notes.

4. The answer in this cause not being sufficient to permit the granting of the proper relief, the case was remanded to the court below, with costs to the orator up to this time, for the purpose of allowing such further proceedings as might be necessary in the premises.

Petition to foreclose a mortgage brought by the orator as the executor of Henrietta Henderson against Jacob Worthen, Nelson Forsyth, and the defendant White as the administrator of Elizabeth Forsyth, wife of Nelson Forsyth. The petition was taken as confessed as to all the defendants except the defendant Worthen, who filed an answer. The case was referred to a special master to hear and report the facts, and was heard at the December Term of the Caledonia County Court of Chancery, 1886, upon the pleadings, Master's report and exceptions by both parties thereto. Powers, Chancellor, decreed that the exceptions on both sides be overruled, and a decree entered for the petitioner covering the four notes in controversy between the petitioner and the defendant Worthen and the tenth note described in the mortgage, and in favor of the defendant Worthen

NOTE.-First heard at the May Term of the Caledonia County Supreme Court, 1887. Re-argued at the General Term, 1888.

Blair v. White.

covering the balance of the outstanding notes then held by him, with a day of redemption as to Forsyth and wife, with costs as against the defendant Worthen since the filing of his answer, for which the orator might have execution, and for the balance of his costs as against Forsyth and wife. The defendant Worthen appealed.

The master reported among other things the following facts On the 23d of March, 1881, Forsyth and wife executed the mortgage in question to the said Henrietta Henderson and the defendant Worthen. The mortgage was given to secure the payment of ten notes. The first nine were payable to the defendant Worthen, the first for one hundred dollars in one year from date, the next seven for two hundred dollars, payable in two, three, four, five, six, seven, and eight years from date, and the ninth for one hundred dollars payable in nine years from date. The tenth note was for four hundred and twenty-five dollars, payable to the order of Henrietta Henderson in ten years from date. It was conceded that the fifth note had been paid, and the premises discharged from the mortgage lien as to it. With reference to the first four notes it appeared that when they fell due the defendant Worthen presented them to Forsyth, the maker, and requested payment; that Forsyth was unable to pay them, and that they were in fact paid by the testatrix, Henrietta Henderson, to the defendant Worthen, who indorsed them without recourse and passed them over to her. The defendant Worthen claimed in his sworn answer that when the testatrix paid him these four notes, he supposed and understood that they were thereby paid and cancelled so far as his notes and the mortgage security were concerned, and that he should not have suffered these and his remaining notes to go unpaid, and the mortgagor, Forsyth, to conduct with reference to the mortgaged premises as he had in the cutting off of timber had he supposed that the testatrix had purchased the said notes, as the orator in his bill alleged, instead of paying them.

The master found upon this point that unless the answer was admissible as evidence, there was nothing to show what the

Blair v. White.

understanding was when the notes were paid by the testatrix to the defendant Worthen, and by him passed over to her. That if the answer was admissible the defendant Worthen did understand that the notes remaining in his possession were to have priority over those turned over to the testatrix, but that the state of facts connected with the transactions out of which this understanding on the part of said Worthen arose, was not such as would justify a reasonably prudent man in supposing that the testatrix, when she took up the first four notes, intended to discharge Forsyth from the payment thereof, or to relieve the mortgage premises to that extent, or to give the remaining notes held by the defendant Worthen priority of security to the notes so taken up by her.

As to the note for $425, being the tenth note secured by the mortgage in question, the defendant Worthen claimed, in his answer, that it was the understanding at the time the mortgage was executed that this note should stand postponed with respect to the mortgage security to the notes then given to said defendant. The language of the answer on this point was as follows: "At the time said mortgage and notes were executed it was understood, by all parties thereto, that 'this defendant's notes should be paid first and before Henrietta Henderson's note." The master reported that if the answer was admissible as evidence, and this language could be interpreted to'mean that there was an understanding at the time of the execution of the mortgage, by the terms of which the notes of the defendant Worthen were to take precedence, in the matter of the mortgage security, to the note of the testatrix, then he found such to be the fact. Otherwise that there was no evidence to this effect, and he found that they all stood alike.

The defendant Forsyth was a legatee of the testatrix. He also owed the testatrix and her estate certain debts other than the mortgage notes in suit, and the master found, that after deducting from the amount of the legacy these unsecured claims, there would still be due him upon said legacy $759.90.