
    Fleetwood Lanneau vs. Administrators of John F. Ervin.
    
      Sealed Note — Indorser—Practice—Writ of Inquiry— Bail — Appearance.
    The question, whether the obligee of a sealed note, who indorsed it in blank, can be made liable on parol evidence, showing that he intended to charge himself, made, but not decided.
    
    Upon the execution of a writ of inquiry, the only question is as to the amount of damages — all other allegations are admitted.
    The declaration contained counts against the defendant as maker of a note, drawer of a bill of exchange, guarantor, &c. Held, on the execution of a writ of inquiry, that the plaintiff showed the amount of damages to which he was entitled, by producing a sealed note, drawn by a third person, and proved to have been indorsed by defendant in blank.
    Giving bail, after arrest under bail process, does not amount to an appearance.
    BEFORE O’NEALL, J., AT CHARLESTON, JANUARY TERM,, 1858.
    A sufficient statement of this case is contained in the opinion delivered in the Court of Appeals.
    
      Wilkinson, for appellant.
    The instrument sued on is a sealed note, and does not support any of tbe counts in the declaration. Not the two first. Parks vs ..Dulces, 2 McC. 380; Benton vs. Gibson, 1 Hill, 58; Tryon vs. DeRcty, 7 Bicb. 13 : Not the counts upon the collateral undertaking. Parker vs. 
      Kennedy, 1 Bay, 398; Walker vs. Scott, 2 N. & M. 286; Tryon vs. DeHay, 7 Bich. 13 ; Boberts on Frauds, 231; The oral testimony, if intended to charge defendant directly upon, the contract, is excluded by the common law. If to charge him collaterally, as upon a guaranty, is obnoxious to the provisions of the Statute of Frauds. By the practice at common law and of this State, prior to 1809, bail to the action was appearance, in all cases commenced by arrest. 1 Sellon’s Prac. 137, 185, 190, 143, 355; 7 Stat.'215. Bail to the sheriff in this State is bail to the action. 7 Stat. 216; Do. 309; Loper vs. Antonio, 4 McC. 177; Stephens vs. Meeds, 1 M. Con. Rep. 316; Sanders vs. Hughes, 2 Bail. 512; Harwood vs. Robertson, 2 Hill, 237. He further cited Matthews vs. Sims, 2 McM. 203 ; Green vs. Hearne, 3 T. R. 302; 2 Hill, 556; WilMe vs. Walton, 2 Sp. 477; 2 Esp. 484.
    
      Simonton, contra,
    cited Edw. on Bills, 230; 3 Mass. R. 274; 1 Sp. 240.
    
      
      
         It may not be amiss to bring together in a note, for convenient refer-en- e, the principal cases which have been decided in this State, in which attempts were made to charge pai ties upon the irregular indorsements of sealed instruments.
      Besides the principal case, it is believed there are but five cases — -four reported and one unreported — belonging to this class. Taking them in the order of their dates, they are :
      1. Bayvs. Freazer, 1 Bay, 66, decided in 1789. The facts were these : J. F., being the obligee of a bond for £200, made by T. E., transferred it to J. H., with an indorsement as follows : “ Bay the within contents to J. H., or order. Yalue received. 12th July, 1785. J. F.” J. H. transferred the bond to the plaintiff, who brought assumpsit against J. F. upon his indorsement. The declaration contained three counts. 1. Upon the implied warranty of the solvency of the obligor. 2. Upon the indorsement as a bill of exchange for ¿£200, drawn by defendant in favor of J. H., or order, and by him indorsed to'tlie plaintiff; and 3. For money had and received. The case was tried before Waties and Drayton, Justices, and a special jury of merchants, and was argued with learning and ability on both sides. The court were of opinion that the plaintiff was entitled to reeover'on the second count, and the jury found in conformity with the opinion of the court.
      2. Parjcer vs. Kennedy, 1 Bay, 389, decided in 1795. In-1788, the defendant, being obligee of a bond for ¿£700, made by B. S., passed it, for valuable consideration, to the plaintiff, and indorsed it in blank. B. S. having died insolvent, this action was brought on the indorsement. The counts were the same as in Bay vs. Freazer, and that case was much relied on as authority for the plaintiff. Rutledge, Chief Justice, and Burke and Grimke, Justices, held that the plaintiff was not entitled to recover. Waties and Bay, Justices, delivered able and learned dissenting opinions,- holding that the plaintiff was entitled to recover, especially on the second count.
      " 3. Walker vs. Scott, 2 N. & McC., 286, note, decided about 1816. The defendant, D. S., being obligee of a bond, transferred it to the plaintiff by indorsement, as follows: 11 Charleston, 6th July, 1808. Col. Shubriek, please to pay to R. W., or order, the within bond, and his receipts will be in full. D. S.” The counts were again the same as in Bay vs. Freazer, the authority mainly relied on. The case was tried by Bay, J., who thought that the plaintiff was entitled to recover, but the jury found for defendant. An appeal was taken, and dismissed by a majority of the court. Nott, J., delivered a dissenting opinion, holding, on the authority of Bay vs. Freazer, which he did not consider as overruled by Parker vs. Kennedy, that the plaintiff was entitled.to recover on the special indorsement as a bill of exchange.
      4. Tucker vs. English, 2 Sp. 673, decided in 1844. A third person made a single bill payable to defendant or order, and defendant indorsed it in blank. Held, that defendant was not liable as maker of a promissory note.
      5. Booth vs. June, the unreported case referred to. It was decided at Columbia, 1848, on appeal from Withers, J., at Sumter, Spring Term, 1848. The report of his Honor, the notice and grounds of appeal, are as follows :
      ‘ Joel P. Booth, vs. John F. June. This was an action of assumpsit, wlierein the defendant by one count was charged as the drawer of a bill of exchange. None other was tenable.
      “The instrument of writing, upon which, he was charged, was in the following words:
      ‘ ‘ ‘ Jacksonville, So. Ca.
      “ ‘ On the first day of October, 1845, I promise to pay to the order of John F. June, at the Charleston Bank of South Carolina, five hundred and four dollars, for value received; as witness my hand and seal, this 26th January, 1844.
      (Signed) JOHN H. BAXTER,
      (Indorsed; JOHN F. JUNE.’
      “ The points raised in the case were :
      “ 1. Whether the defendant could be held liable as the drawer of a bill of exchange. s
      “ I decided that he might be so charged; that the maker of the note should be regarded as the drawer or acceptor, and the terms of it would supply the terms of the bill.
      “2. It being conceded that he was entitled to regular notice of demand and refusal, or that some circumstance dispensing therewith, or disentitling him to such notice, must be proved, the plaintiff produced the protest of a notary public, alleging the presentation of the note at the Bank of Charleston, for payment, on the 4th October, 1845, a refusal to pay, and notices thereof for defendant, and H. A. Perkins, cashier, addressed to ‘ H. A. Perkins, Cashier, Hartford, Connecticut.’
      “There being no proof that H. A. Perkins, Cashier, was authorized to receive such notice for defendant, or that the latter resided in Hartford, Connecticut — the date of the note seeming to indicate that he was resident at Jacksonville, South Carolina — this notice was of course insufficient. Whereupon the question was raised, founded in the ground of appeal, for a new trial, whether June had received from Baxter such .counter security or indemnity as dispensed with the right to notice at all.  That question being for the jury, a witness was called for plaintiff, who deposed :
      “ That he heard defendant say that he was security for Baxter to Booth, for about §500 ; is uncertain whether he said security or indorser. June
    
    
      
      
         Bank vs. Myers, 1 Bail. 412; Bond vs. Farnham, 5 Mass. WO ; Bayl. on Bills, 315 ; Corney vs. I)a Costa, 1 Esp. R. 302; Barton vs. Baker, 1 S. & R. 334. said soon after Baxter left the State, perhaps a month or so, that he supposed he would, have to lose by being Baxter’s security, but (said he) 11 have papers on people in Georgetown, and if I can collect them I will be safe.’ Did not say from whom he got them — but observed that he was security for seven hundred dollars, but the papers, if collected, would make him safe. This conversation was some time in the course of last summer, and since the action was commenced, which was on the 4th day of March, 1846.
      “It did not appear when Baxter left the State, nor when June had obtained the papers referred to.
      “ The jury were charged, that June being regarded as the drawer of a bill of exchange, was entitled to notice of demand upon and refusal of payment by Baxter, of which the protest was no evidence, unless he had taken counter indemnity from Baxter before'his liability attached. If he had, he might then be considered as though he had received notice, and be made to occupy the position of one drawing upon another in whose hands he had no funds, or having withdrawn his funds, and thus effected all for his benefit which notice was intended to enable him to accomplish. The jury were admonished that upon this point their verdict must turn for the plaintiff or defendant.
      “ They found for tlie plaintiff the amount of the note and interest from the time it fell due.”
      •“ The defendant appeals, upon the grounds annexed.
      “T. J. WITHERS.
      
        “24th April, 1848.”
      Geouhds of Appeal.
      “The defendant gives notice that he will renew his motion for a non-suit in this case, in the Court of Appeals on the grounds
      “ 1. That the defendant cannot be legally charged as the drawer of a bill of exchange, upon the proof made at the trial, and that the motion for non-suit, on thaf ground, ought to have been granted.
      “ 2. That there was no proof of notice to defendant of the non-payment by Baxter, the drawer of the note.
      “He will also move for a new trial, on the ground
      “That there was no evidence that defendant took from the said Baxter counter security, at any time, before the commencement of the suit, or that notes put into the hands of the defendant as counter security, were an adequate indemnity, and the finding of the jury to the contrary was entirely gratuitous and conjectural.”
      “ Hayuswoeths.”
      The case was argued by W. Kaynsworth, for appellant, and J. S. G. Richardson, contra. The motions for non-suit and new trial were both dismissed, but no opinion has ever been filed with the clerk. On one or more of the dockets, there is an entry to the following effect.
      “Motion dismissed.
      Opinion to be delivered hereafter by Withebs, J.”
      This case will perhaps be considered as having, to a certain extent, overruled Parker vs. Kennedy and Walker vs. Scott, and as having restored the authority of Bay vs. Freazer. Regarding then the case of Bay vs. Freazer, the dissenting opinions in Parker vs. Kennedy and Walker vs. Scott, and the decision in Booth vs. June, as containing the law applicable to such transactions, the principle would seem to be this : (1.) Where there is a special indorsement, ("as in Bay vs. Freazer,) the plaintiff mtist stand or fall by the terms of the indorsement itself. If it be a guaranty, and such cases are common, the defendant should be so charged. If it be nothing but an assignment, the plaintiff may not be able to recover at all, and if fairly interpreted, it be a bill of exchange, then it may be so treated. (2.) Where the indorsement is in blank, there it may be competent, and perhaps is necessary, to resort to parol or other evidence, for the purpose of showing the character in which the defendant intended to make himself liable, if he intended to make himself liable at all. The indorsement in blank, by A., of a common money bond, payable to A. or his assigns, would seem to import nothing more than an intention to assign ; but if it be of a sealed note, payable to the order of A., then it would import an intention to draw an order, and that would be a bill of exchange. In the case put of the indorsement of a common money bond, if the indorser really intended to authorize an order or a guaranty to be written above his name, an offer to introduce parol evidence in order to show the true character of the transaction, would encounter difficulty in the law merchant, which requires that a bill of exchange should be in writing, and perhaps in the statute of frauds ; but the difficulty might, perhaps, be gotten over by the rule which construes the indorsement as a power of attorney, authorizing the holder to write the contract above the indorsement. It will be observed in the case of Booth vs. June, that the plaintiff not only produced a sealed note payable to the order of the defendant, and proved his indorsement in blank, but he also proved that the defendant admitted he was “security or indorser.” How far this admission affected the judgment of the Court of Appeals, we i 'have no means of knowing, but from the report it would seem the circuit judge thought that the indorsement itself was sufficient, and that upon it alone the defendant could be charged as the drawer of a bill of exchange.
      This case, Booth vs. June, would seem to be direct authority for the decision in Lanneau vs. Admrs. of Ervin, even if that case had been tried upon the issue docket.
    
   The opinion of the Court was delivered by

Glover, J.

William H. Cannon made his note under seal, payable to the order of J. F. Ervin, who wrote his name on the note. Fleetwood Lanneau, the holder, arrested John F. Ervin on bail process, and filed his declaration containing five counts: 1. On a bill of Exchange: 2. On a promissory note: 3. On a special agreement, that if plaintiff would forbear and give time to W. H. Cannon, defendant would pay the debt. 4. On a guaranty, and 5. An account stated. No appearance was entered, and after an order was passed for interlocutory judgment, Ervin died, when the plaintiff issued a1 writ of scire facias to continue the original proceedings. The case was called for trial on the inquiry docket, at Charleston, January Term, 1858, before O’Neall, J. Parol evidence was offered to prove that Ervin, after he was held to bail, stated that he had been indorser for Cannon on a note held by plaintiff, which was protested at maturity : that either he or Cannon had been sued at Marion on the note: that an arrangement had been made whereby the .suit was stopped, a part being paid, and this sealed note given for the balance, which he, Ervin, indorsed: that he fully intended to pay it at its maturity, if Cannon did not: that he would have paid then, but preferred to make some inquiry at home before he did pay, and that he would remit the money as soon as he reached home. This evidence was objected to, but was admitted by the presiding Judge, who instructed the jury, that connecting it with the note and indorsement the plaintiff was entitled to recover. The jury found for the plaintiff the amount of the note and interest, and on the following grounds the defendants have appealed:

1. That the oral testimony was incompetent, because its effect was to alter the terms of a written contract.

2. That the case made by the testimony did not authorize a recovery of damages upon any of the counts in the declaration.

3. That the testimony proved plaintiff’s case within the Statute of Frauds, for which reasons the judge should have sent the case to the jury with directions to find nominal damages. A motion is also made to arrest the judgment upon the ground, that no rule to plead was published in this case.

It has been insisted with much zeal and great confidence, that although a sufficient cause of action is set out in the declaration, the proof does not sustain the allegations: that the defendant is charged as the maker of a promissory note, as the drawer of a bill of exchange, and as a guarantor, whereas the proof is that he indorsed a sealed note. Prima facie, the writing’ of his name by the obligee on his bond is only an assignment, and enables the assignee to she in his own name (5 Stat. 33.) Neither the law merchant nor the Act makes a specialty indorsed negotiable, nor can the indorser be held liable as the maker of a note (Tucker vs. English, 2 Sp. 673.) But where an indorsement is made which creates no liability, according to mercantile usage, the Courts endeavor to prevent the failure of such contracts, by allowing the holder to overwrite the indorser’s name with the real contract implied by law, or to recover against him as maker, drawer or guarantor. Where a party, not the payee, writes his name on the back of a note, he is liable as a co-maker, and his undertaking is original and not collateral. (Stoney vs. Beaubien, 2 McM. 319; Cockerell vs. Milling, 1 Strob. 446; Baker vs. Scott, 5 Rich. 310.) As the defendant did not appear to the action, and could not, therefore, make a full defence, it is unnecessary to inquire what liability, if any, attaches to the indorsement of a specialty, and if the holder may not show by parol a consideration and the real intention of the parties. The antecedent liability of Ervin as Cannon’s surety on a promissory note which was settled, in part, by this sealed note, may be regarded as a sufficient consideration to support a promise as the drawer of a bill of Exchange on Cannon for the amount specified in the note. (Williams vs. Leper, 3 Burr. 1886; Tucker vs. English.) But the grave doubts suggested by the counsel on this point do not require extended consideration, as the decision of the case depends upon other and .well-settled principles. Ervin, by his default, confessed the action, and in executing a writ of inquiry it was only necessary to ascertain the plaintiff’s damages. (Bank vs. Vaughan, 2 Hill, 556.) The defendant is restricted in his defence and evideuce to the mitigation of damages, and cannot offer evidence in discharge of the actiou which he has confessed, nor can he show payments or rely upon discounts. (Covington vs. Rogers, 2 Bail. 407.) The cause of action set out in the declaration, he admits, and in that he is alleged to be the maker of a promissory note, the drawer of a bill of exchange and a guarantor, &c. All this is confessed by the defendant’s default, and evidence to contradict these allegations is inadmissible. It is in vain to argue that the indorser of a specialty is not liable on either of these counts, and that the paper produced being a sealed note, the indorsement of it could have no other effect than an assignment under the Act, and without recourse on the indorser. The paper was produced to ascertain the damages, not to support the counts alleging that he was maker of a note, or drawer of a bill, which was established by the judgment entered on the defendant’s default. Without the parol evidence, the amount due on the sealed note and interest sufficiently ascertained the plaintiff’s damages, and support the verdict of the jury.

The argument in support of the motion to arrest the judgment is, that an arrest under bail process and the giving of bail operate as an appearance. Before the passage of the Act of 1809, (7 Stat. 309,) the appearance of the defendant was required, according to the condition of his bond entered into when he put in bail to the sheriff, and the undertaking of his bail was that he would appear and put in special bail to the action, called bail above. Since the passage pf the Act, the bond given to the sheriff is bail to the action, and the word appear, in the condition of the bail bond, means, that the defendant shall remain within the reach of the process of tj|0 Court to satisfy the judgment which may be rendered against him. But neither before nor since the Act of 1809, did the arrest of a defendant and the giving of bail constitute an appearance authorizing the defendant to plead to the plaintiff’s declaration. He must enter an appearance with the clerk during the sitting of the Court to which the writ was returnable, or the plaintiff may take judgment by default, without serving or posting any rule to plead.

The motions are dismissed.

O’Neall, Wardlaw, Withers, and Whitner, JJ., concurred.

Motions dismissed.  