This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If a party to a negotiable instrument who has signed in such a way as to assume a personal liability, attempts to show that the oral understanding of the parties was that he was signing merely as agent on behalf of another and thus to relieve himself from liability on the instrument, such attempt violates two rules at once - the rule requiring a negotiable instrument to consist entirely of writing, and the parol evidence rule which forbids the contradiction of any complete written contract by a prior or contemporaneous oral contract.1 Accordingly, such oral agreements are without effect and the party bound by the terms of the instrument can not relieve himself from liability thereon by this means.2 This rule applies even though the agent thus executing the instrument adds the word "agent" or some word of equivalent import to his signature, as long as the form of the signature is such that the word thus added is regarded as a mere descriptio personae and does not affect the nature of the liability assumed.3 The conflict that exists as to the nature of personal liability arises out of a difference in judicial opinion as to what is a mere descriptio personae and what shows an intent not to assume personal liability.4 Even if the maker describes himself in the body of the negotiable instrument as an agent, but signs his individual name without the addition of any designation of agency, such contract is held in many jurisdictions to impose an individual liability upon the agent, and to be so free from ambiguity that oral evidence is inadmissible to discharge the agent.5 Thus a note whereby "We or either of us as directors" of a certain corporation promise to pay, signed by individual names, can not be shown to be the note of the corporation for the purpose of relieving the makers from liability.6 In some jurisdictions the addition of some word denoting agency to the names of the promisors in a negotiable instrument in the body of the instrument, and to their signatures, still leaves them liable individually and extrinsic evidence is inadmissible to relieve them from liability. Thus a note whereby "We the Trustees' of a certain cemetery association promise to pay, signed by their individual names, with the addition of the word "trustee," imposes personal liability so clearly that oral evidence is inadmissible to disprove it.7 In some jurisdictions it is held that when the form of signature is ambiguous the real understanding of the parties may be shown for the purpose of determining the character of the liabilitv assumed.8
387, 17 Am. St. Rep. 171, 5 L. R. A. 496, 43 N. .W. 166.
22 Anderson v. Flourinjr Mills, 37 Or. 483, 82 Am. St. Rep. 771, TO L. R. A. 235, 60 Pac. 839.
23 Reeve v. Bank, 54 N. J. L. 208, 33 Am. St. Rep. 675, 16 L. R. A. 143, 23 Atl. 853.
24 Harnott v. IToldred<re. 73 Neb. 570, 110 Am. St. Rep. 005, 103 N. W. 277.
25 Petty v. Hacking, 97 Ark. 217, 33 L. R. A. (N.S.) 175, 133 S. W. 832.
1 See ch. LXIX and Sec. 2305 et seq. The extent to which the liability of sureties, indorsers, etc., may be modified by extrinsic evidence is discussed in Sec. 2198 et seq.
2 United States. Nash v. Towne, 72 U. S. (5 Wall.) 680, 18 L. ed. 527.
Illinois. Hypes v. Griffin, 89 111. 134, 31 Am. Rep. 71.
Iowa. Mathews v. Mattress Co., 87 Ia. 246 [sub nomine, Matthews v. Mattress Co., 19 . R. A. 676, 54 N. W. 225].
Massachusetts. Morell v. Codding, 8(5 Mass. (4 All.) 403.
Washington. Van Tassel v. McGrail, 93 Wash. 380, 160 Pac. 1053.
West Virginia. Clark v. Talbott, 72 W. Va. 46, 44 L. R. A. (N.S.) 731, 77 S. E. 523.
Wisconsin. Liebscher v. Kraus, 74 Wis. 387, 17 Am. St. Rep. 171, 5 L. R A. 496, 43 X. W. 166-
3 See Sec. 2205 et seq.
4 See ch. LXVI.
5 Nash v. Towne, 72 U. S. (5 Wall.) 689, 18 L. ed. 527; Hypes v. Griffin, 89 111. 135, 31 Am. Rep. 71.
6 Titus v. Kyle, 10 O. 8. 444.
7 Reiff v. Mulholland, 65 O. R. 178, 62 N. E. 124. (In this case reformation had been sought in equity and refused. On trial at law oral evidence was admitted and judgment rendered for defendants. The Supreme Court reversed this judgment and entered judgment for plaintiff on the conceded facts.)
See also, Vliet v. Simanton, 63 X. J. L. 458, 43 Atl. 738.
8 Kean v. Davis, 21 N. J. L. 683; Megowan v. Peterson, 173 N. Y. 1, 65 N. E. 738; Denman v. Brenneman, 48 Okla. 566, L. R, A. 1915E, 1047, 149 Pac. 1106.