C. S. Jones & Bro. v. Kuhn

The opinion of the court was delivered by Johnston, J.:

i indorsementguaranty. The certificate of deposit sued on in this case was executed by the Osage City Bank in favor of Julius Kuhn, and payable to his order in New York exchange, one year after date, with interest at seven per cent, per annum. At the time of its execution and delivery it was indorsed in blank by the defendants, C. S. Jones & Bro. The certificate contains words of promise like a promissory note, and is to be governed mainly by the rules applicable to promissory notes. There has been considerable discussion here regarding the negotiability of the instrument sued on, based upon the statement therein that it was payable in New York exchange, but this question is not necessarily nor properly in the case. C. S. Jones & Bro., having indorsed the instrument cotemporaneously with its execution, are liable thereon as guarantors, and not as*indorsers; and it is therefore unimportant whether or not it is negotiable. By the answer, the allegations in the petition of the execution of the certificate of deposit, and of the indorsement thereon, are admitted to be true. (Code, § 108.) And it has been held by this court that the indorsement of the uames of third persons in blank upon the back of ail instrument is prima facie evidence of a contract of guaranty. (Fuller v. Scott, 8 Kas. 25 ; Firman v. Blood, 7 id. 496.) The questions presented by the plaintiff in error arise upon the rulings of the court in excluding any tes *417 timony offered by them in support of the second and third counts of their answer. The second count failed to state a defense to the contract of guaranty indorsed upon the certificate of deposit. The allegations therein, like many things in the petition, were wholly immaterial and irrelevant to the issues of the case. They related only to antecedent matters, and to transactions between the parties prior to the making of the certificate of deposit, and the indorsement thereon, and which were settled and merged in that instrument. The court committed no error in excluding the testimony offered under that count.

The defense attempted to be set up in the third count of the answer is a want of consideration for the promise of guaranty. Of course the want of a sufficient legal consideration for the indorsement of the certificate, and the promise thereby made, would constitute a complete defense to the action; and if the allegations in that count of the answer properly allege a want of consideration, the refusal of the court to admit the testimony in support thereof would be error. The allegations of the count, after striking out that portion thereof which was abandoned by defendants, and upon which they did not desire to offer any proof, read as follows:

“ For a third and further defense, the said C. S. Jones and Oliver H. Jones, copartners under the firm-name and style of C. S. Jones & Bro., defendants, say that the indorsement of the firm-name of said defendants upon the back of said certificate of deposit, as set out in plaintiff’s petition, was without consideration or benefit to said defendants.”

*418

2‘ SiSration

*417 By this allegation the defendants impliedly admitted that their names were indorsed upon the certificate, as set forth in the plaintiff’s petition. The allegation in the petition to which they refer is to the effect that at the time the certificate was made, and before its delivery, C. S. Jones & Bro. indorsed their names upon the back thereof, and thereby guaranteed the payment of the same to the plaintiff, Julius Kuhn. The guaranty being made cotemporaneously with the making of the *418 certificate, it was not necessary that there should be a separate and a distinct consideration, as would be the case ir the contract of guaranty was subsequent to the principal transaction, and not for the benefit of the guarantor. The consideration upon which the certificate of deposit was executed is sufficient to sustain the written promise of guaranty which was indorsed upon the certificate before its delivery. In such a case the indorsement of guaranty is deemed to bé giveu for the benefit of the maker of the instrument; and it is also considered that the promise gave credit to the maker upon the strength of the liability of those whose promise of guaranty was written upon the back of the instrument. (Gillighan v. Boardman, 29 Me. 79 ; Campbell v. Knapp, 15 Pa. St. 27; Bickford v. Gibbs, 62 Mass. 154 ; Colburn v. Averill, 30 Me. 310 ; Manrow v. Durham, 3 Hill, 584 ; Purdy v. Peters, 35 Barb. 239 .)

3 Defense not stated. It will be noticed that the only allegation in the answer concerning a failure of consideration, is that the contract of guaranty was not beneficial to the defendants, C. S. Jones & Bro. This was clearly insufficient to constitute a defense under any theory of the case, as to constitute a valid consideration it was not necessary that C. S. Jones & Bro. should derive any benefit or advantage from the contract of guaranty. If the party to whom the promise was made has parted with something of value, has sustained some loss, or been put to any trouble, or has suffered some injury or inconvenience, it is sufficient to uphold the contract; and, as has been seen, if there was any consideration moving between the maker and payee of the certificate of deposit, it alone is sufficient to support the indorsement of guaranty.

It therefore appears that no defense was stated in the third count of the answer, and the court rightly excluded the testimony objected to. Judgment affirmed.

All the Justices concurring.