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Clark v. Thompson

This case involves a bill filed by Ida Clark seeking cancellation of a mortgage she executed as surety for her husband's debt. The court found that the money was lent to the husband, not the wife. The respondent argued they were a purchaser for value without notice as they bought the note and mortgage from the original payee. However, the indorsement transferring the note was made on a separate document, the mortgage, rather than on the note itself. The court ruled the indorsement was not sufficient to make the note negotiable as the Negotiable Instruments Law requires indorsements be made on the instrument itself or an allonge, a slip of paper attached, if there is no room on the instrument. As

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Jamiah Obillo Hulipas
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185 views1 page

Clark v. Thompson

This case involves a bill filed by Ida Clark seeking cancellation of a mortgage she executed as surety for her husband's debt. The court found that the money was lent to the husband, not the wife. The respondent argued they were a purchaser for value without notice as they bought the note and mortgage from the original payee. However, the indorsement transferring the note was made on a separate document, the mortgage, rather than on the note itself. The court ruled the indorsement was not sufficient to make the note negotiable as the Negotiable Instruments Law requires indorsements be made on the instrument itself or an allonge, a slip of paper attached, if there is no room on the instrument. As

Uploaded by

Jamiah Obillo Hulipas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
  • Negotiable Instrument

HULIPAS, JAMIAH

JURIS DOCTOR II NEGOTIABLE INSTRUMENT


CLARK v. THOMPSON et al.
194 Ala. 504, 69 So. 925 (1915)
FACTS:
Bill by Ida Clark against W.A. Thompson and another for the cancellation of a mortgage executed
as surety for the debt of her husband. From a decree dismissing the bill, complainant appeals which was
reversed and remanded.
Complainant files her bill for the cancellation of a certain mortgage executed by herself and her
husband on her realty to secure their joint negotiable note. The bill alleges, and the evidence, we think, very
clearly shows, that the money for which the note and-mortgage were given was lent to the husband, not to
the-wife, and that her relation to the debt. This was the finding of the chancellor, but the bill of complaint
was dismissed on the theory that the respondent was a purchaser for value in due course of the note and
mortgage, without notice of the infirmity charged.
Respondent bought the note and mortgage from the payee, W.A. Thompson; the note being
payable to Thompson, or order. In order to free the note of the defense available to complainant against the
payee, it was necessary for respondent to acquire it in due course by indorsement, as prescribed by the
Negotiable Instruments Law.
ISSUE:
WHETHER OR NOT THE INDORSEMENT MADE UPON AN ALLONGE WAS
SUFFICIENT TO MAKE THE NOTE NEGOTIABLE.
RULING:
NO. The indorsement must be written on the instrument itself or upon a paper attached thereto.
This is but a statutory affirmation of the rule of the old law merchant, which allowed indorsements to be
made upon an "allonge"; that is, upon a slip of paper tacked or pasted on to the instrument so as to become
a part of it. But the use of the allonge was allowable only when the back of the instrument itself was so
covered with previous indorsements that convenience or necessity required additional space for
further indorsements. Section 4986 of the Code sanctions the use of the allonge, but certainly it was not
intended to establish the loose and undesirable practice of making regular indorsements of commercial
paper by a writing on the back of any other paper or document to which it might be temporarily attached, as
by pinning, and, more especially, when there is ample space for indorsement on the back of the instrument
itself.
In the case of Doll v. Hollenbeck which is similar to the case at bar, the Supreme Court of
Nebraska has reached a like conclusion wherein “Webster” defines the word 'allonge' to mean 'a paper
attached to a bill of exchange for receiving indorsements too numerous to be written on the bill itself.' In
the case at bar the mortgage and note were not attached or fastened together; and, had they been, as there
was plenty of room remaining blank on the back of the note for indorsement thereon, it would be a forced
and inadmissible construction to treat the mortgage as an allonge of the note."
Moreover, in the case of Bishop v. Chase, it was held that a written transfer of a note, made on a
separate paper to which it was pinned, there being room on the back of the note itself for the transfer, was
an assignment merely, and not a commercial indorsement.
In the instant case, whether the note was pinned to the mortgage or not, we are constrained to treat
its transfer, in the manner shown, as a common-law assignment merely, and to hold that respondent was not
a holder in due course. It must be noted, however, that the evidence does not show that the note was pinned
to the mortgage when they were transferred to respondent, but only when they were delivered to the payee
nearly a year before; and we could not presume that such a superficial fastening, evidently for temporary
convenience only, still existed at the date of the transfer.
It results that the decree of the chancery court must be reversed, and a decree will be here rendered
granting to complainant the special relief prayed for in the bill of complaint.

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