Majority
p. 593Milton St. John, Plaintiff and Respondent, v. John P. Roberts and Sylvester Lay, Defendants and Appellants. (Before Bosworth, Ch. J., and Pierrepont and Moncrief, J. J.) Heard, May 15th; decided, June 2d, 1860.
Headnote
1. Where a note, of §595.80, made by C. A. W., payable to the order of B., and indorsed by him and one L., being the property of B., is, after it has matured and been protested, sold, together with a collateral note, by an auctioneer at public auction, and the auctioneer, at the time of the sale, holds up the note and says, “Note for $595.80, of Charles A. Waterbury, with collateral attached, for the benefit of. whom it may concern," and stated “ that the note, with collateral, is sold for whom it may concern," and the said indorsements of B. and L. are neither read nor mentioned, the purchaser at such sale will not thereby acquire the liability of B. and L., as fixed indorsers thereof.2. Such a transaction is a sale of the note, and the liability of the maker thereof, and of the said collateral note, and of nothing more.
3. Even if the delivery of the note, thus indorsed, to the purchaser, is equivalent to the indorsing of a note on reissuing it after its maturity, the defendants could not be held as indorsers without a due subsequent demand of payment, and notice to them if payment should be refused.
p. 594
A CASE upon questions of law arising at the trial, and there ordered to be first heard at the General Term.
The suit is by the plaintiff as indorsee, and against the defendants as indorsers, of a note which, with its indorsements, is in the words following, viz.:
‘‘$595.80. Hew York, January 21, 1856.
“ Thirty days after date I promise to pay to John P. Roberts, or order, five hundred and ninety-five TW dollars, for value received, at my office, Ho. 8 Wall street, Hew York, having deposited with him, as collateral security, my own note, dated Sept. 15, 1855, for $1,000, indorsed by Bayard Clarke, with authority to sell the same at the Brokers’ Board, or at public or private. sale, or otherwise, at his option, on the non-performance of this promise, without notice; and with authority to use, transfer or hypothecate the same at his option, he being required, on payment or tender of the amount loaned, and interest, to return said note.
“ C. A. Waterbury.”
Indorsed,
“John P. Roberts, “ Sylvester Lay.”
It was admitted by the counsel of the plaintiff and defendants that the note in suit was given for money loaned to Charles A. Waterbury, the maker of the note, and for services rendered by Mr. Lay, one of the defendants in this action, for said Waterbury.
It was proved that, just prior to the maturity of the note, Roberts indorsed it and sent it to Lay for collection, and that Lay indorsed it and deposited in his Bank for collection, and; not being paid at maturity, it was protested. Roberts then sent his check to Lay to take up the note. He did so; and Roberts, then owning the note, requested Lay to procure the note, and the collateral for $1,000, made by Waterbury and indorsed by one Bayard Clarke, to be sold at auction. Lay took the note and collateral to A. H. Hicolay, auctioneer, who advertised them for sale, and sold them on the 13th of March, 1856.
p. 595I. The questions to be decided are purely questions of law upon the undisputed facts; that is, upon the facts admitted by the pleadings and proved upon the trial, without any respect or reference to the questions or offers of evidence put or made by the defendants, and which were excluded by the Judge upon the trial, and upon such undisputed facts the Court is to pronounce the proper judgment. II. The plaintiff, when he had read the note and indorsements in evidence, and the proof of protest and notice, and had proved
At the sale, “ the note and collateral were sold together: the auctioneer held up the paper, and said, 1 Note for $595 T%\, of Charles A. Waterbury, with collateral attached, for the benefit of whom it may concern,’ and stated that the fióte collateral was by C. A. Waterbury and indorsed by Bayard Clarke, and stated that the note, with collateral, was sold for whom it might concern, and asked for bids; the indorsements on the back of the note in suit were not read, nor mentioned: the bidding then commenced, and the note was struck off for $500.”
• At the time of the sale, there was a protest annexed to the note, but no certificate that notice of protest had been served on either of the indorsers. Payment of the note was not demanded of Waterbury after this sale before suit brought; nor was any notice of any claim against either defendant presented to or served upon him. This suit was commenced about the 8th of June, 1857, and was tried before Mr. Justice Woodruff and a jury November 16, 1858.
When the testimony was closed the defendants’ counsel “admitted that there is no fact in dispute,” but they insisted that the defendants were entitled to a verdict, and to an instruction to that effect, and thereupon, by consent of counsel of the respective parties, the Court directed a verdict for the plaintiff for the amount of the note and interest, and that the case be first heard at the General Term, with leave to the General Term to set aside the verdict and order a dismissal of the complaint, if of the opinion that the defendants were entitled to that relief. The jury found a verdict of $708.17 for the plaintiff. The case now comes before the General Term on these facts and this stipulation.
Dan Marvin, for plaintiff.
p. 596the amount due on the note, had made out a case, on which he was entitled to judgment. He had proved, by proof and necessary presumption of law: .. 1. That he was the owner and holder of the note for a valuable consideration as purchaser. 2. That the whole amount of principal stated in the note, with interest, was due thereon. 3. That the liability of the defendants, as indorsers, had been fixed by the notice and protest. 4. That the note had been protested at the request of the Corn Exchange Bank. By presumption of law, that he had received the note from the Corn Exchange Bank, and that the further negotiation of the note, mentioned in the complaint, was from the bank to the plaintiff. ' The note had already been protested, and the liability of the indorsers fixed, and the protest and notice inured to the benefit of all subsequent holders. (Williams v. Matthews, 3 Cow., 252 ; Edw. on Bills and Notes, pp. 258, 494; Story on Bills, § 304; Chapman v. Keane, 3 Ad. & EL, 193; S. G, 30 Eng. Com. Law, 69; Wilson v. Swabey, 2 id., 283 .) IV. When a bill or note is circulated after maturity, it is only necessary to protest it, and notify the indorsers in the following cases: . 1. When there has been no protest and notice at the maturity of the note. 2. When the indorsements are made subsequent to the maturity of the note, and that fact appears upon the face of the indorsements, or is known to the holder. In all the reported cases, the indorsement was made subsequent to the maturity of the bill or note. (Leavitt v. Putnam, 3 Comst., 494, and cases cited.) V. The plaintiff, as holder, had no notice by whom the note was sold. He found, upon inspection and inquiry, that the note had been protested and the indorsers fixed.
III. It was not necessary for the plaintiff, after purchasing the note, to have it protested, or the indorsers notified a second time.
p. 597He was not bound to protest the note again, unless he had been notified by the indorsers that they were the parties who were putting the note again in circulation. There was nothing on the face of the note to give him that information. VI. The want of a second protest and notice could not by any possibility prejudice either of the defendants, and the want of it, therefore, cannot discharge them. The plaintiff is entitled to judgment. I. The defendants have not become liable upon the note by reissuing it to the plaintiff, inasmuch as since such reissue it has not been presented to the maker for payment, and notice of its non-payment given to them. They were not liable to any person on the note before it was reissued. The contract which they made by such reissue after its maturity, was a new one, entirely independent of any contract that existed prior to that time, and it was that they would pay it if the maker, on demand, did not. Thus, it has been repeatedly held, that where a party indorses and transfers a note after its payment at maturity, it is in substance a bill drawn by the indorser upon the maker of the note, payable on demand to the indorsee. In legal form, it is a promise to pay the note to the indorsee, if the maker fail to pay it on demand, and due notice be given of such non-payment. (Leavitt v. Putnam, 1 Sand. S. C. R., pp. 205, 203; 3 Comst., 494; Berry v. Robinson, 9 Johns., 121 ; Van Hoesen v. Van Alstyn, 3 Wend., 75 ; Edwards on Bills, 261, 287, 288.) It can make no difference in principle whether the name of the indorsee was upon the note before maturity, if the indorser was not charged before maturity, or whether the name be written on it after maturity at the time of its reissue. (Edwards on Bills, p. 286; Marvin v. McCullum, 20 Johns., 288 .) The contract in either case arises at the time of the reissue when the note is delivered. (Parsons on Mercantile Law, p. 85, and many cases cited in note 2.)
W. Stanley, for defendants.
p. 598This is very distinctly shown by contrasting the legal effect of accepting and indorsing. Thus, it is said, in Wilde v. Sheridan, (11 Eng. Law and Eq., 380,) where an acceptance was written on a bill in London, and the bill delivered to the payee in Norwich, and the question was, at which place the bill was accepted, it was held, per Coleridge, J., that the acceptance of a bill, though revocable at any time before delivery, is, if unrevoked, complete as soon as written on the bill, and the contract is made in that place where the bill is accepted, not where it is issued. The purpose of an indorsement is to pass the property in a bill, and that purpose is not effected until a real or constructive delivery. But the acceptor has no property in the bill, either before or after an acceptance. He must be supposed to receive the drawer’s paper, and on it to write his promises, without thereby in any way altering the property in the bill. II. An indorser of a note taken up by himself cannot reissue it after maturity, so as to bind any one, if it would have the effect of prejudicing any subsequent party upon it. (Beck v. Robley, 1 H. Bl., 89, n. a.; Callow v. Lawrence, 3 M. & S., 95; Guild v. Eager, 17 Mass., 615 ; Havens v. Huntington, 1 Cow., 387 ; Hopkins v. Farwell, 32 N. H., 425 ; Price v. Sharp, 2 Ired., 417 ; Ballard v. Greenleaf, 24 Maine, 336.) It is clear that Roberts owned the note at maturity and took it up. He could not, therefore, reissue it so as to bind Lay, if he intended so to do, and all parties on the note are discharged. III. The transfer of the note conveyed only the interest which the owner had in it, and did not create a new and original liability. IV. A purchaser of a note at auction, after maturity, is not a holder in the regular and usual course of business, and he takes it subject to all legal defenses. If Lay issued it, he could not recover of Roberts, neither could any subsequent party. V. The suit is an after-thought and a mere speculation. The purchaser at the auction sale knew that the omission to strike off the names of the defendants was a mere accident.
At the time Nicolay was employed as auctioneer to sell the note in question, neither Lay nor Roberts was liable, as indorser of it, to any person.
p. 599
Had Nicolay then owned the note and had he transferred it as owner, (Lay & Roberts not being liable as indorsees,) the plaintiff, as purchaser of it from Nicolay, could not maintain an action against either indorser.
Being transferred after it was due, the indorsee would take it subject to all defenses existing in favor of the indorser or maker.
Nicolay did not sell it claiming to be the owner of it. He stated that he sold it “ for whom it might concern.” That was enough to induce an inquiry for the name of the principal or owner for whom the sale was made; if knowledge of that fact would affect the purchaser’s rights.
Nicolay did not profess to offer for sale a note on which the defendants were liable as indorsers, or which was to be indorsed by them on transferring it. But the thing offered for sale, as announced and described at the time, was a “ note for $595.80 of Charles A. Waterbury with collateral attached.” That fairly imports as I think, an offer to sell a note made by Waterbury, secured by the collateral attached to it and nothing more.
If Lay, instead of Nicolay, had made the sale, and had said, I offer to sell for Mr. Roberts or for myself and Roberts, a note (exhibiting it) of Charles A. Waterbury with collateral attached, and the plaintiff had then bought, I think it quite clear that a sale thus made would not, by the terms or fair import of such a contract, impose upon Lay or Roberts any liability as guarantor or indorser.
The sale having been made by Nicolay as an auctioneer, and having, at the time, been declared to be made for the benefit of whom it may concern, the plaintiff’s rights are not greater than they would have been, in the case last supposed.
If a delivery of the note, with the names of Lay & Roberts upon it as indorsers, is to be regarded of the same effect, as if they had written their names thereon, on delivering it to the plaintiff, then a subsequent demand of payment of the maker, and in case of non-payment notice thereof to the defendants, would be necessary, to maintain an action against them as indorsers of a note, indorsed after its maturity. (Leavitt v. Putnam, 1 Sand. S. C. R., 203; 3 Comst., 494.) No such demand has been made.
p. 600
In either view the defendants are not liable. Under the stipulation made at the trial and stated in the case, the verdict must be set aside and the complaint dismissed.