Majority
p. 368Turman against Haskin.
Headnote
A promissory note, payable on demand, if negotiated by the payee a long time after made, is, in the hands of his endorsee, subject to all the equities to which it would have been liable in the hands of the payee himself. What shall be a reasonable time for demanding payment of a note payable on demand, is, when the facts are agreed on, matter of law. If a debtor, for the benefit of all creditors, give to trustees a bond to the amount of all his debts, on which judgment is recovered, and he after-wards give a note to an individual creditor for the amount of his separate debt, such note will be satisfied by such creditor’s discharging the debtor from execution on the judgment issued at the request of the creditor, and the assent of the trustees to the discharge will be implied. A plea in bar, admitting the note declared on, cannot depart from the venue in the declaration, and need not therefore give one. In all cases of demurrer, if it be _~.ot a frivolous one, the court will, even after judgment pronounced, give leave to withdraw it, ¿tad plead issuably, if asked for during the term in which judgment was given.On demurrer. Tbe plaintiff declared against the defendant, as maker of a promissory note, dated on the 19th
p. 369
of July, 1793, payable on demand to "William Buckle 01 order, and by him, on the same day, endorsed to the plaintiff. To this the defendant pleaded, 1st. Non assumpsit, 2d. The statute of limitations; 3d. That he was, on the first day of January, 1793, indebted to Buckle in the sum for which the note was made, and on that day executed a bond to Anthony Franklin, Joseph Bird, and Edmund Prior, for £9,000 for and on account of the money due to Buckle, and of all other debts which he, the defendant, owed; upon which bond the obligees, in April term, 1793, recovered judgment against him, averring that the note was made and delivered to Buckle, for the same sum of money as was due to him on the first of January, 1793, as aforesaid, that the judgment exceeded the amount of everything owed by the defendant, that the above sum due to Buckle was part of the £9,000, for which debt Buckle did, on the first of August, 1793, accept the judgment in full satisfaction, and on the next day caused a ca. sa. to be sued out thereon, upon which the defendant was taken, and was afterwards, on the first of January, 1795, by consent of Buckle, discharged therefrom,.since which time he negotiated the note to the plaintiff.
Demurrer inde, assigning for causes, 1st. That the defendant did not allege that the bond of the first of January, 1793, was given and executed at the request or by the consent of Buckle, nor that it was agreed between them that the bond should cancel the debt due from the defendant to Buckle; 2d. That it did not appear that the bond was executed to Franklin, Bird, and Prior, as trustees for the creditors of the defendant generally, or for Buckle in particular; 3d. That it appeared the note was made after the execution of the bond and judgment entered thereon; 4th. That the note being negotiated, and negotiated to the plaintiff, cannot be defeated, *or controlled by any agreement between the defendant and Buckle; 5th. That the judgment was alleged to have exceeded the whole amount of the debts owing by the do
p. 370
fendant, but it is not alleged that the sum inserted in the condition of the bond exceeded the same • 6th. That the plea is uncertain, argumentative, not issuable, and wants form.
Harison, in support of the demurrer.
Though the whole plea is defective and informal, I shall confine myself to chat alone which is matter of substance. The declaration states a note payable on demand. The plea sets forth certain transactions and dates, '‘since which time” the note was negotiated. As between the maker and payee, these things might be material, but against an innocent endorsee, for a valuable consideration, they can have no effect. The .note is of a nature which cannot be supposed to be dishonored after any lapse of time short of the statute of limitations. There is no period fixed by law for the presentment of notes payable on demand. When left with the payee, after the circumstances relied on by the defendant, it enabled the holder to pass it away in-the course of business, and if so done, it is good against the maker. The cases to the contrary arise on notes payable after date, and if negotiated beyond the period when due, the law allows a presumption that they have been dishonored. But there is nothing on this instrument to show any such time had passed. Therefore, on this plea, the court cannot decide what is a reasonable time for the negotiation of this note. It is a fact which ought, under the direction of the court, to have been submitted for the determination of the jury. The, custom is, to consider these notes binding till demanded. Admitting, therefore, that the taking in execution and subsequent discharge would have been a satisfaction of the note, as between Buckle and Haskin, the point to be tried is, when was it negotiated? Was it within a reasonable period ? This was the fact that ought to have been laid before the court with all the circumstances which would have made it triable. Time and place ought to have oeen shown. The latter, because there ought to be a place from whence tbe venue would arise. 6 Mod. 222 ; 3 Salk. 881. Tbe plea consequently is bad altogether. It may be said that the venue laid in the declaration cannot be departed from. . This, however, does not supersede the necessity of laying a venue, though it be the same. This being a defect in substance is available of, though not specially assigned.
Biker, contra.
The special causes are not true; therefore, the whole turns on the general demurrer. We contend, 1. That the acceptance of a bond or higher security merges and extinguishes a note; 2. That the discharge of the defendant from execution, by the consent of Buckle, satisfied the judgment; 3. That the maker of a promissory note payable on demand, having satisfied it, may urge that satisfaction against a holder taking it long after made ; in short, that on this point there is no difference between a note payable on demand, and one payable after date. On the first point, Boades v. Barnes, 1 Burr. 9.
Kent, Oh. J. Go to your third point.
Biker. In Banks v. Colwell, cited 1 D. & E., Buller, J, in an action by the holder against the maker of a promissory note, endorsed eighteen months after it was made, allowed the defendant to show the consideration was illegal, and nonsuited the plaintiff, though no privity was brought home to him. This is because a person thus taking a note receives it subject to all the equities the maker may be entitled to. This principle is acknowledged, in Chitty, 114, to be applicable equally to checks and bills payable on demand. Lord Kenyon, in Boehm v. Sterling, 7 D. & E. 430, admits he once thought there was a distinction, in this respect, between paper payable on demand, and that which is so after date; but, he adds, “ on further consideration, I do not think that distinction well founded.” _n
p. 371
Saslcin v. Seaman, (since reported 2 Johns. Cas. 195 ) January, 1801, this court recognized the same doctrine. The only difference between the cases is, that the one cited was on a sealed note. As to tbe venue the exception cannot hold.
Harison, in reply.
Where the instrument is payable on demand, the negotiation must be attended with suspicious circumstances, even though the transfer be long after the date, in order to allow of any equities against the holder. If the paper be payable after date, the time for which drawn being expired is in itself a cause for suspicion. It is from thence to be presumed the bill or note has been dishonored. When the payment is on demand, this implication cannot arise on the face of the instrument, and circumstances, therefore, must be called in. In the case before Buller, J., which was only a nisi prim decision, the judge told the jury they ought, from the evidence, to presume against the plaintiff. (Buller, J. nonsuited him.) With the distinctions now laid down all the English authorities will be reconciled. Had there been a verdict, then indeed the objection as to the want of a venue *would not hold. But as this is a case of demurrer, it is not helped by the statute of jeofails, and must be fatal against the defendant.
delivered the opinion of the court. The two objections to this plea, which require consideration, are, 1. That the plaintiff being an innocent endorsee without notice, is not affected by the transactions which took place between Buckle and the defendant; 2. That there is no venue in that part of the plea, alleging the time when the note was negotiated. As to the first, it is a general rule, that a note payable on demand must be presented for payment within a reasonable time, or it will be considered as a note out of time, and dishonored. Chitty, 114,. 146.[1]
(a) (a) What shall he a reasonable time depends on the circumstances oi the *372 case. Where a note payable on demand to order was made in England, and the maker removed to this state, it was held that a transfer and action brought within a year was not such a lapse of time as place the instrument in the situation of a dishonored note. Hendricks v. Judah, 1 Johns. Rep. 319 . But where a note was drawn in this state payable to bearer on demand, and negotiated two months and a half after its date, the period was ruled sufficient to let in the equities of the maker against the payee, as a defenco to an action by the endorsee. Losee v. Dunkin, 1 Johns. Rep. 70 .
p. 372
Wbat is a reasonable time is a question of law, if tbe facts be agreed on. Tindal v. Brown, 1 D. & E. 168. In tbe present case we are to assume it as a fact, tbat the note was not negotiated to tbe plaintiff until after tbe first of January, 1795 ; or near eighteen months from tbe period when it was given. This fact is averred in tbe plea, and of course admitted by tbe demurrer. . This lapse of time must clearly be considered as placing tbe note in the situation of one dúe, and dishonored, and as imposing on tbe endorsee tbe same risk. No person of common prudence will take such a note without inquiry concerning tbe occasion of its being so long outstanding, and it is in-umbent on him to satisfy himself tbat it is good. He takes it on tbe credit of tbe person from whom be receives it. Tbe case of Banks v. Colwell, cited in 3 D. & E., is in point. Tbe judge in that case allowed the maker to impeach tbe consideration as being a note negotiated after it was due, and sufficiently suspicious to throw tbe risk on tbe endorsee. This decision bf Buller, J. was cited and sanctioned by tbe court of K. B. in tbe case of Brown v. Davies, 3 D. & E. 80. If the defendant here be allowed to set up tbe same defence as be would have done if Buckle was tbe defendant, tbe facts stated in tbe plea constitute a valid defence. They are embraced by tbe decision of this court, in tbe case of Seaman v. Haskin, January term, 1801, in which a plea, containing the same facts in substance was held good. It was there determined, that as a cestuy que trust, bad affirmed tbe trust, accepted the judgment in satisfaction of his debt, and exercised the power of it by charging tbe defendant in execution, and afterwards discharging him, the assent of the trustees was to be intended. On the second point, that the want *of a venue, in that part of the plea which avers the time of the endorsement, is a defect in substance, and bad on demurrer, without being specially assigned, we are of opinion it is, in the present case, but matter of form; because the plea cannot vary from the place in the declaration, when the nature of the defence does not otherwise require it. 3 Lev. 113 ; Oom. Dig. tit. Pleader, E. 4. As the defendant must, therefore, have followed the venue of the plaintiff, it appears to me it can only be matter of form, and is not essential to the right of the case, on which depends the distinction between matter of form and matter of substancu Hob. 233. Judgment ought, therefore, to be for the defendant.
Hanson. We have, then, to ask leave of the court to withdraw the demurrer and take issue on the fact.
Take it; for it is allowable in all cases where the demurrer is not frivolous, if applied for in the same term.
Judgment for the defendant, with leave to withdraw the demurrer and plead issuably. '
Cases cited
- Seaman v. Haskins 2 Johns. Cas. 195 p. 371