Clarke v. Ward — 11 N.Y. Super. Ct. 206

Majority

p. 206

Clarke et al. Respondents, v. Ward, Appellant.

Headnote

The defendant, being the payee of a note payable in Augusta, Georgia, negotiated it to the plaintiffs, who sent it to a bank in Augusta, to be collected for them. They did not instruct the bank to notify the defendant in the event of its being protested. It was protested for non-payment, and a notice for the defendant was sent to the plaintiffs in a letter from the bank to them. The usual time of communicating by mail was about five days. The plaintiffs, about ninety days after the note matured, wrote to the bank for information, and in reply, were promptly advised of the facts. The plaintiffs and the defendant resided in the city "of New York. The plaintiffs, on being informed that the note had been protested, notified the defendant.

Held, that as the defendant was known to the plaintiffs to reside in the same place with themselves, and the note was protested by their agent, and for them, due diligence had not been used to notify the endorser. Not having required their agent to mail a notice of protest direct to the endorser, they took the risk of the safe transmission of the notice, and of its receipt in time to make due service of it. That an omission for so long a period after notice of non-payment, or advice of payment should have been received, to inquire respecting the note, unexeused, constituted laches, which discharged the defendant.

A motion for a new trial, on the ground of newly discovered evidence, cannot be heard in the first instance at the General Term. It must be made at special term. If denied, an appeal may be taken from the order denying it. Such appeal will be heard, at the same time as the appeal from the judgment.

(Before Campbell, Boswobth and Hoffman, J.J.)

January 8; January 27, 1855.

The defendant is sued as endorser of a note for $234T\\, dated at tbe city of New York, July 30th, 1850, and payable six months from its date, at Augusta, Georgia, to the order of the defendant, and by him endorsed to the plaintiffs.

The complaint alleges presentment of the note to the maker, demand of payment; neglect to pay it; protest of the note, and dire notice thereof to defendant.

The answer puts in issue the presentment to, and demand of payment of the maker, and also notice of presentment and of nonpayment to the defendant. The answer contained no new matter. Yet the plaintiffs put in a reply, which avers due presentment,

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demand of payment, neglect to pay, protest of tbe note, and the immediate mailing of original protest, and notices of non-payment, one of which was addressed to the defendant, and mailed to the plaintiffs, who were subsequent endorsers of the note. It also alleges that the mail was lost, and that the notices so mailed never came to hand, and this without fault or negligence of the plaintiffs, and that “ as soon as the fact of said loss came to their knowledge, they notified the defendant thereof,” and he thereupon or soon thereafter promised to pay the note.

The issues were refered to Hon. M. Ulshoeffer, as referee, and he reported, as facts found by him, that the note was duly presented and protested, February 1, 1852. The notary duly mailed the note, and a notice of protest for the defendant, under cover of a letter addressed to the plaintiffs, at New York, where they and the defendant resided, that plaintiffs never received the same, nor were they aware of such non-payment' until the 15th day of May, 1851, when without delay, they notified the defendant.

The plaintiffs being owners of the note, had sent it to a bank at Augusta, for collection, and the notary, on protesting the note, forwarded notices as has been stated.

It appeared in evidence that the usual period of communicating by mail between New York and Augusta, was five days. The plaintiffs, not having been advised in relation to this note, by the bank to which they had sent it, wrote to the bank on the subject, and were informed by a letter dated on the 10th of May, that the note was protested on the 1st of February, and mailed to their address on the 2d of February. The plaintiffs had bought the note of the defendant, who resided in the city of New York, which fact was known to them when they bought the note.

John D. Maxwell, a witness for the plaintiffs, testified that on the day of the receipt of this letter, he called at defendant’s place of business to see him on the subject, and not finding him, left for him a letter advising him that the note had been protested. This occurred about the 15th of May, 1851.

The referee reported in favor of the plaintiffs. The defendant, in connection with his appeal from the judgment, moves for a new trial on affidavits of newly discovered evidence, being the very letter referred to by Maxwell, as the defendant alleges, and

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bearing date on tbe 12⅞ of June, 1851, and which defendant avers on his belief to be the date of its delivery. The plaintiffs denied the right of the defendant to be heard on this motion', it not having been first made at the Special Term.

John Tan Burén, for Appellant.

M. S. Bidwell, for Respondents.

By the Court.

It seems to be settled law, in this state, that when the holder of a note sends it out of the state to be presented for payment, at the place where, by its terms, it is payable, and it is protested for non-payment, and notice of protest is duly mailed to the owner of the note, prior endorsers will be holden, if the owner of the note gives them prompt notice, upon the receipt of the notice mailed to himself. This result will follow, even though it appears that the prior endorsers would have received notice at an earlier day if the notices had been mailed directly -to them. (Mead v. Engs, 5 Cow., R. 808; Bank of U. S. v. Davis, 2 Hill. 457 -8; Palen v. Shurtleff, 9 Metcalf, 581.) In the cases here cited, the notices, though not mailed direct to the endorsers sought to be charged, were received by due eourse of mail by the endorser to whom they had been enclosed, and he on the receipt of them duly notified the prior endorsers.

In this case, the notice enclosed to the plaintiffs for the defendant was not received by them at all. It was no part of the purpose of mailing notices to the plaintiffs, to charge them as endorsers. They owned the note, and it had been protested for them by their agent.

A question may here arise, whether an owner who sends a note out of the state for collection, endorsed by persons residing, and known to him to reside, in the same place with himself, if he does not advise his agent where the endorsers reside, so that notice may be mailed direct to them, in case the note is protested, does not take the risk of the mail, if notices for the endorsers are sent enclosed in a letter directed to himself If instead of being owner, he was merely endorser of a note owned by others, it would seem to be reasonable, that as soon as without laches on

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bis part, he received a notice, the mailing of which fixed his liability, he might charge a prior endorser by giving him prompt notice, especially when it is held that he is not discharged from liability, ■ by an omission of the holder to notify the prior endorsers.

A mere endorser might well suppose a note was paid, not having received a notice of its protest within the time it should arrive, if the proper steps had been taken to charge him. Naturally so supposing, he would not be apt to inquire whether it had been paid or not. But an owner of the note, who had sent it to an agent for collection, and who, as in this case, should have received notice of protest of the note, by the 7th or 8th of February, at the farthest, or advice of payment at a date not much later, but not having received either within the usual time, would naturally infer, that some omission of duty by his agent, or some casualty had occurred, to prevent the receipt of notices that he might probably be expected to have forwarded.

In such a case, interest, if not duty to the endorsers before him, if diligence alone on his part could charge them, would seem to require of the owner that he should ascertain what had been done with the note, so that if any claim was to be made on the prior endorsers, he should notify them of it as soon, as by the use of ordinary diligence, he would ascertain that the note, instead of being paid, had been protested.

Yery slight diligence would have enabled the plaintiffs to ascertain, during February, what had been done with the note, and to have notified the defendant. No inquiries were made by the plaintiffs, however, until the last of April or first of May. Those inquiries were promptly answered, and the earliest notice to the defendant that can be pretended, was given as late as the middle of May.

It is, as a general rule, the duty of the holder of a note, to give on the day after a note is protested, notice of the fact to any party he intends to charge, either by personally serving it, or mailing it, as the facts of the case mayrequire.

The question is obviously reduced to this: is a bank which acts as a mere agent to collect, or if not paid,- to protest a note, to be treated in all respects as owher, for the purpose of giving notice to its principal, the actual owner ? and will a notice mailed

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to tbe latter, so as to charge him as endorser, if not owner, enable him, whether the notice reaches him or not, on being informed of the fact of the dishonor and protest, to charge a prior endorser, by promptly notifying him, although information of the fact may not have been acquired earlier than ninety days after the protest, when, by due course of mail, it should .have been received in six or seven days at the longest ?

Or is such an endorser, and actual owner, who receives neither notice of protest, nor advice of payment, at the time notice should have been received, if mailed at the proper time, or advice of payment should have been received, if forwarded, according to the usual course of business, bound to inquire of his agent, and use some diligence to give notice to a prior endorser, if it shall turn out that the note has been protested?

Is he bound to inquire at all, at the peril of losing the responsibility of prior endorsers? or may he continue passive, until at some uncertain period, he may casually learn that the note was not paid, but was protested ? If bound to inquire at all, how long may he delay inquiry, after the expiration of the period, at which he should have been advised in relation to the note ? Will he he exempt from the imputation of negligence, if after double the usual period has elapsed, he omits to inquire ? If the result of this controversy turns wholly on the question of due diligence, then that question, in this case, is one of law, as the facts on which its determination depends are undisputed, and neither have been found by the referee, nor are to be found by us upon conflicting evidence. (Carroll v. Upton, 8 Coms. 272.)

If it was the duty of the plaintiffs to make any inquiries of their-agent, in order to preserve the liability of the defendant as a prior endorser, in consequence of not receiving notice of protest in the usual time, or advice of payment according to the course of business, then it will not be denied, I think, that there was a want of due diligence in this case, even if the right 'to recover depends on that question alone, unless it can be made to appear as matter of fact, that it was according to the customary course of business, to omit giving such advice for a period, substantially, as long as had elapsed before the plaintiffs wrote to their agent for information.

As the rule is stated in elementary works, “ each party to a

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bill or note, whether by endorsement or mere delivery, has, in all cases, until the day after he has received notice, to give or forward notice to his prior endorser, and so on till the notice has reached the drawer.” (Chitty on Bills, 520, 521.)

And a bank or banker, and, perhaps, other agents, holding a bill or note, to obtain payment, when not acting as a mere servant, is considered, as respects this rule, as a distinct party to the instrument, and is allowed a day to give notice to his customer or employer, as if he had himself been a holder in his own right. (Id. Colt v. Noble, 5 Mass., 167 , and cases cited above; Howard v. Jones, 1 Hill, 263 .)

Adopting this rule, and applying it to the full extent to which the facts of any adjudged case, to which our attention has been called, carries it, we are still without any direct authority upon the question, whether in a case like this, the owner of a note, on failing to receive advice respecting it in the due course of mail, either of payment according to the ordinary course of business, or of protest according to the methods of proceeding requisite to charge an endorser, is subject to the imputation of laches, by which his former endorser is discharged.

If the plaintiffs had instructed the bank to which they sent the note for collection, where the endorser resided, and to mail notice to him in case it was protested, no question could have arisen, if the instructions had been followed. In such a case due diligence would have been used to notify the endorser, and his liability would have been fixed, whether he received the notice or not. Not having done that, but on the contrary having allowed the bank to mail notice to themselves only, we are inclined to the opinion that they took the risk of the notice reaching them by due course of mail, and that, failing to so receive it, and to notify the defendant as early as would have been necessary, if they had so received it, he is discharged.

But it is not necessary to decide, that if, on failure to receive notice of protest or advice of payment, they had written promptly, on such intelligence being due, to ascertain the fate of the note, and on being promptly informed, they had notified the defendant, he would nevertheless have been discharged.

Even if such diligence would be sufficient to retain the liability of the endorser, yet as according to the facts of this case, as they

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now appear, no sucb diligence can be pretended, the judgment must be reversed. The plaintiffs did not write for information, until the latter part of April. This long delay is wholly unexcused.

What facts may be established, and what questions they may present, cannot be anticipated. It is enough to say, that on the facts deducible from the evidence given on the trial of this action, the defendant is not liable.

This result renders it unnecessary to act upon the motion for a new trial, made on the ground of newly discovered evidence. Such a motion can properly be made only at Special Term. If . made there, and denied, an appeal from the order denying a new trial, will entitle the appellant to be heard on the appeal at General Term, on all the papers on which his motion was decided at the Special Term.

The judgment must be reversed, the report of the referee set aside, the rule of reference vacated, and a new trial, granted, with costs to abide the event.