42) American Bank v. Macondray & Co

3/12/2015 PHILIPPINE REPORTS ANNOTATED VOLUME 004

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VOL. 4, AUGUST 23, 1905 695American Bank vs. Macondray & Co.

[No. 1808. August 23, 1905.]

AMERICAN BANK, plaintiff and appellee, vs.MACONDRAY & Co. and V. S. WOLFF, defendants andappellants.

PROMISSORY NOTE OR BILL OF EXCHANGE,LIABILITY OF INDORSER THEREON.—The liability ofan indorser of a promissory note or bill of exchange, afterdue protest and dishonor, is the same as that of theoriginal obligors on such a contract.

ID.; MATERIAL ALTERATION.—Any material alterationin the terms of a commercial contract by the holder of thesame, without the consent of the obligor, will relieve suchobligor from all liability thereon.

ID.; INDORSER OR GUARANTOR, LIABILITY OF.—Anindorser upon a promissory note or bill of exchange whoindorses for the purpose of identifying the person only andnot for the purpose of incurring any liability as to thepayment of such promissory note or bill of exchange incursno liability. This indorsement or guaranty, however, mustclearly indicate that it is for the purpose of identificationonly.

APPEAL from a judgment of the court of First Instance ofManila.

The facts are stated in the opinion of the court.J. N. Wolfson, for appellants.Oscar Sutro, for appellee.

JOHNSON, J.:

This was an action by the plaintiff against the defendantMacondray & Co. as indorser and V. S. Wolff as



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696 PHILIPPINE REPORTS ANNOTATEDAmerican Bank vs. Macondray & Co.

drawer of a certain bill of exchange, which, as set out in thecomplaint of the plaintiff, is as follows:

"MANILA, P. I., August 12,1902.

"$300.00

"At sight pay to my order three hundred dollars, value received,and charge to my account.

"V. S. WOLFF.

"To F. H. TAYLOR & Co., "Louisville, Kentucky. "No ...............................

" [Indorsements. ]

"V. S. Wolff. The signature is O. K. Payment guaranteed.Protest, demand, and notice of nonpayment waived, Macondray &Company.

"Pay to First National Bank of San Francisco, or order.American Bank, Manila, P. I. H. B. Mulford, cashier.

"Pay to 3rd National Bank or order. The First National Bank ofSan Francisco. James K. Lynch,. cashier."

This alleged bill of exchange, in the alleged form as itappears above was sent to the correspondent of the saidAmerican Bank in the United States for payment, whichpayment was not made for the reasons which appear in theprotest made by a notary public in the United States, andwhich is as follows:

"STATE OF KENTUCKY, "City of Louisville, Jefferson, County

"On this 25th day of September, 1902, I, C. W. Dieruff, notarypublic, duly authorized and appointed as such, and residing in thecity of Louisville, at the petition of the Third National Bank ofLouisville, Kentucky, went with the original bill of exchange, atrue copy of which is hereto annexed, and made a diligent searchfor said F. H. Taylor & Company, in order to demand payment ofthe same, but I was unable to find said F. H. Taylor & Company,



nor a representative of said company with authority to pay thesame. I went also to various banks and demanded payment, whichwas denied.

"Therefore, I, the said notary public, have protested and

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for these reasons do solemnly protest against the drawer,indorser, and against all other persons, for the exchange,reëxchange, and all the expenses, damages, and interestsustained, or that will be sustained, by reason of the nonpaymentand dishonor of said bill of exchange.

"Protest and copy......................

$1.25

"For information.......................

1.00

"Postage stamps........................

02

[NOTARIAL SEAL.]

"$2.27

"Made and protested in said city and county, and my notarialseal affixed the said day and year, being written in my office, asrequired by the law.

"C. W. DIERUFF, Notary Public. "I hereby certify that on this 25th day of September, 1902, I

have deposited in the postoffice at Louisville, Kentucky, dulysealed, information of the said protest, directed to V. S. Wolff;Macondray & Company; American Bank, Manila, P. I.; The FirstNational Bank, San Francisco, Cal., inclosed to the First NationalBank, San Francisco, Cal.

"C. W. DIERUFF, Notary Public. "(My commission expires on the 22nd day of January, 1906).

"EXHIBIT.

MANILA, P. I., August 12,1902.

"$300.00

"At sight pay to my order three hundred dollars, valuereceived, and charge to my account.

"V. S. WOLFF,



"To. F. H. TAYLOR & COMPANY,

"Louisville, Kentucky.

"No .......................

" [ Indorsements. ]

"V. S. Wolff. The signature is O. K. Macondray & Company."Pay to the First National Bank of San Francisco, Cal.

American Bank, Manila, P. I. H. B. Mulford, cashier.

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698 PHILIPPINE REPORTS ANNOTATEDAmerican Bank vs. Macondray & Co.

"Pay to the Third National Bank or order. The First NationalBank of San Francisco, Cal. James K. Lynch, cashier."

The plaintiff claims the right to recover of the defendantthe amount of said bill of exchange, together with theexpenses incurred by the protest, upon the theory that thedefendant guaranteed the payment of said bill of exchangein the following form, as appears upon the said bill ofexchange, as the same is set out in the petition of theplaintiff:

"V. S. Wolff. The signature is O. K. Payment guaranteed. Protest,demand, and notice of nonpayment waived. Macondray &Company."

The defendant, by its representative, Atherton Macondray,testified that he did not intend to guarantee the payment ofsaid bill of exchange; that he only certified that thesignature, V. S. Wolff, to said bill of exchange was genuine,and that the statement which appears in the above allegedindorsement "Payment guaranteed. Protest, demand, andnotice of nonpayment waived" was not written on saidindorsement at the time he signed the firm name ofMacondray & Co.

The plaintiff, by its representative, H. B. Mulford,cashier, in his testimony stated that this statement"Payment guaranteed. Protest, demand, and notice ofnonpayment waived" were written on said bill of exchangebefore the same was signed by Macondray & Co.

The question presented in this case is whether or not



Macondray & Co. is liable upon said bill of exchange as anindorser. If the indorsement was made by Macondray & Co.in the form alleged by the plaintiff, said company is clearlyliable as an indorser upon said bill of exchange, providingthe same was duly protested for nonpayment. No questionis raised as to the legality of the protest.

Upon the question whether Macondray & Co. made andsigned the indorsement "V. S. Wolff. The signature is O. K.Payment guaranteed. Protest, demand, and notice ofnonpayment waived," as is alleged by the plaintiff, orwhether Macondray & Co. made and signed the indorse

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ment "V. S. Wolff. The signature is O. K." we have thepositive statement of H. B. Mulford, cashier of theAmerican Bank, that said indorsement was made byMacondray & Co. in the first form, and the positivestatement of Atherton Macondray that said indorsementwas made in the second form. In addition to theserespective and contrary statements of the only twowitnesses which were presented during the trial, one forthe plaintiff and the other for the defendant, we have theform of the bill of exchange, with its indorsements at thetime it was protested by the notary public of Louisville, Ky.The indorsement as certified to by said notary public at thetime said bill was protested, is in the following form:

"V. S. Wolff. The signature is O. K. Macondray & Co."

The theory of the defendant is that that part of thestatement which appears in his alleged indorsement,"Payment guaranteed. Protest, demand, and notice ofnonpayment waived," was added to said indorsement afterthe signature of Macondray & Co. had been affixed to saidindorsement. An examination of the alleged indorsement ofMacondray & Co. which appeared upon the said bill ofexchange at the time of the trial, and the indorsement ofsaid company at the time of the protest of said bill ofexchange, shows beyond peradventure of doubt that thecontention of the defendant is true, and that part of theindorsement which says "Payment guaranteed. Protest,



demand, and notice of nonpayment waived" was added bysome person after the signature of the defendant,Macondray & Co., and after the protest of said bill. Wetherefore hold that the indorsement made by Macondray &Co. was changed, after said indorsement by said company,by adding thereto the statement "Payment guaranteed.Protest, demand, and notice of nonpayment waived," andthat the indorsement actually made by Macondray & Co.was in the following form:

"V. S. Wolff. The signature is O. K. Macondray & Co."

The liability of an indorser of a bill of exchange, after

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700 PHILIPPINE REPORTS ANNOTATEDEx Parte Arcenas

due protest and notice of nonpayment and dishonor, is thesame as that of the original obligors on such a contract, andany material alteration in the terms of this contract by theholder of the same, without the consent of the obligor, willrelieve such obligor from all liability thereon.

Notwithstanding that. the defendant is relieved fromliability by reason of this material alteration in hisindorsement, we hold that his original indorsement createdno liability whatever. The original indorsement by thedefendant was for the purpose only of assuring the plaintiffthat the signature of V. S. Wolff, as attached to the originalbill of exchange, was genuine—that is to say, that theperson who signed the said bill of exchange was in f act V.S. Wolff, the person whom he represented himself to be. Itwas an indorsement for identification of the person only,and not for the purpose of incurring any liability as to thepayment of such bill of exchange. There was no attempt toshow that the drawer of said bill of exchange, V. S. Wolff,was not the person who actually drew and signed said billof exchange.

The judgment of the lower court is reversed, with thecosts of both instances to be charged against the plaintiff.After the expiration of twenty days judgment will beentered in conformity herewith and the cause will bereturned to the lower court f or execution. So ordered.



Arellano, C. J., Torres, Mapa, and Carson, JJ., concur.Willard, J., did not sit in this case.

Judgment reversed.

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42) American Bank v. Macondray & Co