Rehearing denied April 17, 1928.

On Petition eor Rehearing.

(266 Pac. 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 Pac. 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.”

*266 The late Mr. Justice Wolverton wrote the opinion and in page 35 of the official Report (66 Pac. 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 Pac. 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 non-suit, 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 Pac. 1006, 1009, 46 L. R. A. (N. S.) 162), where this language is used:

*267 “It may be conceded that as to tbe bank tbe plaintiff, who signed the writing on tbe back of tbe note, and tbe defendants in tbis action, all of whom signed tbe note as makers, were all directly liable. Such is tbe doctrine tangbt by all tbe cases cited in defendant’s brief. (Cases cited.)”

It thus appears that tbe learned justice who wrote tbe opinion rebed upon with such assurance by defendants held that in tbe similar indorsement in tbe Noble case tbe guarantor’s undertaking was direct and not collateral. Tbe Noble case was brought by tbe guarantor who was compelled to and did pay tbe note against tbe other defendants who were accommodation makers and liable to Noble for tbe amount be paid. It was not a case where the payee or bis indorsee was suing tbe guarantor who bad indorsed bis guaranty on tbe back of the note. Tbe contract between Noble and tbe defendants was collateral to tbe obligation assumed by tbe makers of the note and tbe payee therein. Tbe learned justice does use some language in bis opinion which, taken alone and wrested from its setting in tbe facts, supports tbe contention of defendants and tbe bolding of tbe learned circuit judge, but when taken in tbe light of all of the circumstances it is not authority that one who signs such an indorsement as appears in tbe instant case does not assume tbe liability of an indorser. To the extent that tbe Noble case does support tbe contention that a guarantor who signs an indorsement on tbe back of a note similar to tbe one involved in tbe instant case assumes a collateral contract as guarantor only, it was overruled in the case of Cady v. Bay City Land Co., 102 Or. 5 (201 Pac. 179, 21 A. L. R. 1367). Tbe opinion in tbis ease was written by tbe same learned justice who wrote tbe opinion in *268 the Noble case. In the Cady case, page 9 of the official Report (201 Pac. 180), the learned justice wrote:

“We hold, therefore, that the allegation that Sehiffman 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 Pac. 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 in Delsman 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. Bay City Land Co., above; Delsman v, Friedlander, above. Defendants’ undertaking in the instant *269 case was an indorsers’ enlarged by that of a guarantor.

The former opinion is adhered to. The rehearing is denied. Rehearing Denied.

This court has determined that a writing on the back of a note, of the tenor involved in the instant case, constitutes an indorsement with additional liability and is not a collateral contract to guarantee the payment of the note only: Cady v. Bay City Land Co., 102 Or. 5 (201 Pac. 179, 21 A. L. R. 1367). See, also, National Bank of the Republic v. Price, 65 Utah, 57 (234 Pac. 231, 234).

The indorsement in the instant case was a blank indorsement and was made before delivery of the instrument. This principle is further discussed at g’reat *264 length in Case v. McKinnis, 107 Or. 223 (213 Pac. 422, 32 A. L. R. 167). It is there held that an indorsement in blank, similar to the writing here involved, before the delivery of a note, makes the indorsers liable as indorsers, not as makers or guarantors only. This was the holding of this court as early as 1894 when Wade v. Creighton, 25 Or. 455 (36 Pac. 289), was decided.

Parol evidence is not admissible to vary the liability assumed by defendants as shown by the written instrument itself: Case v. McKinnis, above. The instrument having been set out in full in the complaint, it is the duty of the judge presiding at the trial to define the liability of the maker and the indorsers thereon.

There was a question of fact involved and that was whether or not C. E. Eumelin was authorized to subscribe the name of Ashley & Eumelin to the indorsement. Their liability, if they did sign the indorsement, is fixed by statute. It follows that the court erred in directing a verdict in favor of defendant Ashley.

The judgment is reversed and the cause remanded for further proceedings in harmony with this opinion.

Eeversed and Eemanded.