2021 Georgia Code
Title 24 - Evidence
Chapter 3 - Parol Evidence
§ 24-3-10. Explanation of Blank Endorsements

Universal Citation: GA Code § 24-3-10 (2021)

Blank endorsements of negotiable paper may always be explained between the parties themselves or those taking with notice of dishonor or of the actual facts of such endorsements.

(Code 1981, §24-3-10, enacted by Ga. L. 2011, p. 99, § 2/HB 24.)

Cross references.

- Effect of blank endorsement generally, § 11-3-204.

Provision that signature on negotiable instrument is an endorsement unless instrument clearly indicates that signature was made in some other capacity, § 11-3-402.

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the statutory provisions, decisions under former Code 1873, § 3808, former Code 1882, § 3808, former Civil Code 1895, § 5209, former Civil Code 1910, § 5796, former Code 1933, § 38-509, and former O.C.G.A. § 24-6-10 are included in the annotations for this Code section.

Only blank endorsements affected by statute.

- Law of blank endorsements changes the rule that even a blank endorsement was not subject to be modified in the endorsement's legal effect by parol evidence, but the law does not expose any other endorsements to like modification. Meador v. Dollar Sav. Bank, 56 Ga. 605 (1876) (decided under former Code 1873, § 3808); Jones v. Commercial Credit Co., 52 Ga. App. 796, 184 S.E. 652 (1936);(decided under former Code 1933, § 38-509).

Application to parties or those taking with notice.

- As between the parties themselves, or those taking with notice of dishonor or of the actual facts of the endorsement, parol evidence was admissible to explain the endorsement. Pickett v. Bank of Ellijay, 182 Ga. 540, 186 S.E. 426, answer conformed to, 53 Ga. App. 607, 186 S.E. 746 (1936) (decided under former Code 1933, § 38-509); Hopkins Auto. Equip. Co. v. Lyon, 59 Ga. App. 468, 1 S.E.2d 460 (1939); Massell v. Prudential Ins. Co. of Am., 57 Ga. App. 460, 196 S.E. 115 (1938) (decided under former Code 1933, § 38-509).See also (decided under former Code 1933, § 38-509).

But not to innocent third parties.

- Law was plain and emphatic that a blank endorsement may be explained by parol, except as against subsequent holders for value, bona fide and without notice. McMillan v. Fourth Nat'l Bank, 17 Ga. App. 590, 87 S.E. 843 (1916) (decided under former Civil Code 1910, § 5796).

Law had application between the parties, or those taking with notice of dishonor, or of the actual facts of such endorsement, and had no application to the rights of third parties. Pickett v. Bank of Ellijay, 182 Ga. 540, 186 S.E. 426, answer conformed to, 53 Ga. App. 607, 186 S.E. 746 (1936) (decided under former Code 1933, § 38-509).

As against a third party, the holder of the note before maturity, for value, and without notice of dishonor or of the actual facts of the endorsement, parol evidence was not admissible to contradict or explain the capacity in which such written endorsement was signed, but the construction thereof was for the court. Guaranty Mtg. Co. v. National Life Ins. Co., 55 Ga. App. 104, 189 S.E. 603 (1936), aff'd, 184 Ga. 644, 192 S.E. 298 (1937) (decided under former Code 1933, § 38-509). Hopkins Auto. Equip. Co. v. Lyon, 59 Ga. App. 468, 1 S.E.2d 460 (1939) See also (decided under former Code 1933, § 38-509).

Endorsements.

- Former statute was not confined to technical endorsements, i.e., endorsements essential to transfer of title, but extended to endorsements in the broader sense which were irregular and unnecessary to pass title. Atkinson v. Bennett, 103 Ga. 508, 30 S.E. 599 (1898) (decided under former Civil Code 1895, § 5209).

Former statute was not confined merely to blank endorsements in the strict sense as when the endorser wrote only the endorser's name upon the negotiable instrument; the former statute related to all endorsements which were not full or complete. McMillan v. Fourth Nat'l Bank, 17 Ga. App. 590, 87 S.E. 843 (1916) (decided under former Civil Code 1910, § 5796); Procter v. Royster Guano Co., 21 Ga. App. 617, 94 S.E. 821 (1918); Bowden v. Owens, 33 Ga. App. 700, 127 S.E. 664 (1925) (decided under former Civil Code 1910, § 5796);(decided under former Civil Code 1910, § 5796).

Agreement to endorse may be construed as a contract of guarantee. Georgia Cas. Co. v. Dixie Trust & Sec. Co., 23 Ga. App. 447, 98 S.E. 414 (1919) (decided under former Civil Code 1910, § 5796).

Endorsement in full.

- If an endorsement in blank had been partially completed by a subsequent endorser writing the words, "without recourse," and signing the endorser's name, it was not an endorsement in full, and parol evidence was admissible. West Yellow Pine Co. v. Kendrick, 9 Ga. App. 350, 71 S.E. 504 (1911) (decided under former Civil Code 1910, § 5796).

When the endorsement was one "in full," though followed by the words "without recourse," parol evidence was not admissible to explain any unambiguous terms. Odom Realty Co. v. Central Trust Co., 22 Ga. App. 711, 97 S.E. 116 (1918) (decided under former Civil Code 1910, § 5796).

Endorsement for special purpose.

- It may be shown by parol evidence that the endorsement of a note was made for a special purpose. Carhart Bros. & Co. v. Wynn, 22 Ga. 24 (1857) (decided under former law).

Transfer for collection.

- When the payee of a note, payable to the payee or order, transfers the note in writing to a third person, without recourse, and signs the transfer, parol evidence was admissible, at the instance of the payee or the payee's executors to show that such transfer was made for collection. This was the rule at common law; and the former statute was not intended to abrogate this principle of the common law, the purpose of the former statute being, not to narrow the admission of parol evidence when it was permissible by common law, but to extend the admission of such evidence to the explanation of endorsements in blank, which was not permissible by that law. Sanders v. Ayers, 155 Ga. 630, 117 S.E. 651 (1923) (decided under former Civil Code 1910, § 5796).

Accommodation endorsements.

- Former law applied to accommodation endorsements. Taff v. Larey, 29 Ga. App. 631, 116 S.E. 866 (1923) (decided under former Civil Code 1910, § 5796).

Accommodation endorser had the right to stipulate the character of the liability which the endorser assumed in signing a particular paper. Taff v. Larey, 29 Ga. App. 631, 116 S.E. 866 (1923) (decided under former Civil Code 1910, § 5796).

Endorsements to pass title merely.

- Parol evidence was, in any given instance, admissible to show that such an endorsement upon a promissory note was made simply to pass title and not to create liability in the endorser. Bryan v. Windsor, 99 Ga. 176, 25 S.E. 268 (1896) (decided under former Civil Code 1895, § 5209); Cowart Co. v. Sheffield, 18 Ga. App. 512, 89 S.E. 1101 (1916); Stapler v. Burns, 43 Ga. 382 (1871) (decided under former Civil Code 1910, § 5796). Galceran v. Noble, 66 Ga. 367 (1881) See also (decided under former law);(suit by plaintiff who took note after dishonor) (decided under former Code 1873, § 3808).

In a suit by the payee of a promissory note signed in the name of a corporation as maker, a plea by certain individuals who had signed their names in blank upon the back of the note, to the effect that their names were so placed upon the instrument "only for the purpose of perfecting title and passing title, and upon the distinct understanding that they were not to be held liable thereon in any way," did not set up a good defense. Proctor v. Royster Guano Co., 21 Ga. App. 617, 94 S.E. 821 (1918) (decided under former Civil Code 1910, § 5796).

Assuming that the contract of suretyship or accommodation endorsement sued on should be taken as having been signed in blank, a plea merely denying all liability thereunder, without showing any bona fide reason why the endorsement was entered for a purpose other than that of incurring liability, cannot be taken as an effort to explain the true nature and intent of the contract, as was permitted by the former statute, and did not set up a good defense. Pearce v. Swift & Co. Fertilizer Works, 21 Ga. App. 622, 94 S.E. 915 (1918) (see former Civil Code 1910, § 5796).

Capacity of signers.

- When a promissory note was upon the note's face payable to the order of the payee at a chartered bank, though reading "we promise to pay," etc., and signed by one person only, the prima facie import of an endorsement thereon in blank by a third person was that such endorser undertook to be liable as a second endorser, and not as a joint maker. The true intent of the parties, however, in an action by the payee upon the instrument, was open to explanation by parol evidence. Neal & Co. v. Wilson, 79 Ga. 736, 5 S.E. 54 (1887) (decided under former Code 1882, § 3808).

Party signing negotiable paper in blank may show by parol that the party was a surety only. Sibley v. American Exch. Nat'l Bank, 97 Ga. 126, 25 S.E. 470 (1895) (decided under former Code 1882, § 3808).

When several parties are sued on a check, one as maker and the others as endorsers, the payee could show by parol that those signing apparently as endorsers were in fact sureties or joint makers. James v. Calder, 7 Ga. App. 707, 67 S.E. 1125 (1910) (decided under former Civil Code 1910, § 5796).

Evidence could not be introduced, as against third persons, to show a different capacity, but could be introduced to show as between the immediate parties, an agreement that the person signing should be bound in a capacity different from that shown by the instrument. Massell v. Prudential Ins. Co. of Am., 57 Ga. App. 460, 196 S.E. 115 (1938) (decided under former Code 1933, § 38-509).

Showing agency of drawer.

- Agency of the drawer and knowledge by the payee and endorsee cannot be shown by parol in defense to a suit on a draft. Bedell v. Scarlett, 75 Ga. 56 (1885) (decided under former Code 1882, § 3808).

Endorsement of mortgage note.

- Blank endorsement of a mortgage note may be explained by parol to show an agreement that an indebtedness of the mortgagee was to be first satisfied out of the mortgaged property. Willingham & Cone v. Huguenin, 129 Ga. 835, 60 S.E. 186 (1908) (decided under former Civil Code 1895, § 5209).

Cited in Rai v. Reid, 294 Ga. 270, 751 S.E.2d 821 (2013).

RESEARCH REFERENCES

ALR.

- Endorsement, "to the order of any bank or banker," as a restrictive endorsement, 10 A.L.R. 709.

Admissibility of parol evidence to vary or explain the contract implied from the regular endorsement of a bill or note, 35 A.L.R. 1120; 54 A.L.R. 999; 92 A.L.R. 721.

Parol evidence as to liability of irregular endorser to payee, 37 A.L.R. 1222.

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