Rehearing denied April 17, 1928. ON PETITION FOR REHEARING. (266 P. 624.) Defendant Ashley has presented a very earnest and urgent petition for rehearing. No new authorities or additional reasons are assigned in the petition or brief for rehearing. The brief on petition for rehearing is ably presented but is not convincing.
The contention made by defendant Ashley and sustained by the learned circuit judge is that the indorsement on the note signed by defendants is a collateral contract or undertaking and not a direct liability on the note. This argument overlooks the fact that the indorsement was written on the back of the note and subscribed before the delivery or negotiation of the note. It was a part of the original transaction between the plaintiff and defendants. The complaint alleges that the consideration of the note was paid to the indorsers by plaintiff. The undertaking of defendant by their indorsement and guaranty was then a direct obligation to plaintiff and not collateral: Delsman v.Friedlander, 40 Or. 33, 35 (66 P. 297). In that case the indorsement was as follows:
"November 20, 1893, for value received, I or we hereby guaranty (guarantee) payment of the within note, and waive demand, notice of protest, and protest." *Page 266
The late Mr. Justice WOLVERTON wrote the opinion and in page 35 of the official Report (66 P. 298) says:
"Primarily, it may be stated as a legal proposition sustained and established by the very great weight of judicial opinion that a guaranty of the payment of a note or other obligation is an absolute undertaking to pay it when due, and that no demand or notice of nonpayment is necessary or requisite to fix the liability of the guarantor; and that mere passiveness on the part of the holder will not release such guarantor, even if the maker was solvent at its maturity, and thereafter became insolvent. (Citing many authorities.)"
And in page 37 (66 P. 299) says:
"Friedlander (the party signing the guaranty) was therefore, liable as an indorser, and this conclusion renders it unnecessary to consider the motion for nonsuit, as it is based upon the hypothesis that he was a guarantor."
It is true that Friedlander was the payee in the note and was passing the title. Under the allegations of the complaint, and there was evidence to support the allegation, defendants were also negotiating the note and received the money represented by the note instead of the ostensible maker thereof.
It is not for the court to determine the fact as to whether or not defendant Rumelin was authorized to sign the name of the partnership, Rumelin Ashley, to the indorsement on the note. That is a disputed question and should have been submitted to the jury under proper instructions. Defendants and the learned Circuit Court rely largely on the case of Noble v. Beeman,65 Or. 93, 100 (131 P. 1006, 1009, 46 L.R.A. (N.S.) 162), where this language is used: *Page 267
"It may be conceded that as to the bank the plaintiff, who signed the writing on the back of the note, and the defendants in this action, all of whom signed the note as makers, were all directly liable. Such is the doctrine taught by all the cases cited in defendant's brief. (Cases cited.)"
It thus appears that the learned justice who wrote the opinion relied upon with such assurance by defendants held that in the similar indorsement in the Noble case the guarantor's undertaking was direct and not collateral. The Noble case was brought by the guarantor who was compelled to and did pay the note against the other defendants who were accommodation makers and liable to Noble for the amount he paid. It was not a case where the payee or his indorsee was suing the guarantor who had indorsed his guaranty on the back of the note. The contract between Noble and the defendants was collateral to the obligation assumed by the makers of the note and the payee therein. The learned justice does use some language in his opinion which, taken alone and wrested from its setting in the facts, supports the contention of defendants and the holding of the learned circuit judge, but when taken in the light of all of the circumstances it is not authority that one who signs such an indorsement as appears in the instant case does not assume the liability of an indorser. To the extent that the Noble case does support the contention that a guarantor who signs an indorsement on the back of a note similar to the one involved in the instant case assumes a collateral contract as guarantor only, it was overruled in the case ofCady v. Bay City Land Co., 102 Or. 5 (201 P. 179, 21 A.L.R. 1367). The opinion in this case was written by the same learned justice who wrote the opinion in *Page 268 the Noble case. In the Cady case, page 9 of the official Report (201 P. 180), the learned justice wrote:
"We hold, therefore, that the allegation that Schiffman indorsed, transferred and assigned the note to plaintiff is sufficient to allow proof of his signature to the indorsement, unless the language `notice of protest waived and payment guaranteed,' is not to be construed as an indorsement. This is the important question in the case."
Again in page 16 (201 P. 182) the learned justice used this language:
"The language thereof does not limit, but on the contrary expands his liability into a condition where he is not entitled to notice of nonpayment or of demand on the maker for payment."
The Cady case goes on to quote with approval the language inDelsman v. Friedlander, above, and to hold that where a stranger to the instrument guarantees the payment, his undertaking would be collateral, but we cannot hold that a person or firm which signs the note or an indorsement written on the back of the note for the purpose of procuring the loan and receives the money can be a stranger to the instrument given to evince the loan. Under the allegations of the complaint in this case, which was supported by the evidence, defendants were the real parties in interest, the parties to whom the consideration accrued and for whom the ostensible maker was an accommodation party. The words "waive protest, demand and notice of nonpayment thereof" were useless in the instant case, unless defendants were indorsers. A guarantor is not entitled to notice and protest. An indorser is: Noble v. Beeman et al., above; Cady v. BayCity Land Co., above; Delsman v. Friedlander, above. Defendants' undertaking in the instant *Page 269 case was an indorsers' enlarged by that of a guarantor.
The former opinion is adhered to. The rehearing is denied.
REHEARING DENIED.