Bills and Notes – Indorsements – Effect of Contemporaneous Agreement on the Indorsement Contract
Plaintiff, payee of a promissory note, indorsed and negotiated the note to the defendant bank. Attached to the note was a separate agreement of assignment and warranty in which the plaintiff assigned the note and a conditional sales contract to defendant, and further agreed to repurchase the note if any of the warranties in the contemporaneous agreement were breached. The maker of the note defaulted and defendant, after due presentment and notice, debited plaintiff’s account for the face amount of the note. Plaintiff brought suit to recover the money from defendant on the theory that the contemporaneous agreement had qualified the general indorsement contract implied by statute from his signature on the note. The trial court held that the plaintiff was an unqualified indorser and gave judgment for defendant. On appeal, held, affirmed. While the indorsement of the note and the contemporaneous agreement should be construed as one contract, the language of assignment in the contemporaneous agreement is not sufficient to make plaintiff a qualified indorser. Allison Ford Sales v. Farmers State Bank, (Iowa 1957) 86 N .W. (2d) 896.