9 Pick. 547 26 Mass. 547

Nathaniel Church et al. versus William B. Barlow.

A note indorsed by the defendant and plaintiffs and discounted at a bank in Connecticut, was indorsed by the cashier to the cashier of a bank at New York, where the maker lived, and there a notary public demanded payment of the maker, which being refused, die notary sent a notice of non-payment to the cashier of the Connecticut bank, who immediately sent notices to the defendant and the plaintiffs, and the plaintiffs paid the note at that bank. It was held, that these facts showed that the Connecticut bank were the holders of the note at the time of its dishonor, and that so the notary was their agent; and the notice to the defendant, which was by the usual course of the mails, was held to be sufficient, though it was not so early as notice direct from New York would have been.

The relative rights and duties of parties who indorse a promissory note for the accommodation of the maker, are the same as in the case of a business note; so that due notice of the dishonor of such accommodation note having been given, a subsequent indorser who pays it, may recover of a prior indorser the whole amount paid, and not merely a contribution as in the case of sureties.

Assumpsit on a promissory note dated October 1st, 1828, signed by Abiel K. Botsford, payable in four months, to the order of Paul A. Sabbaton, and indorsed successively by Sabbaton, Tarsus Botsford & Co., J. & A. Hawley, William B. Barlow, and Bradley & Church, and lastly by Charles Spencer, cashier, payable to the order of John Fleming, cashier, Fleming being the cashier of a bank at New York.

At the trial, before Putnam J., it appeared, that payment was demanded of the maker in New York by a notary public, on February 4th, 1829, and refused. Notice from the notary, of non-payment, was put into the post-office in New York on the same day, directed to the defendant at Lenox (Massachusetts), which was not his place of residence, and an extra notice to the defendant was sent by the notary under cover to Charles *558Spencer, cashier of the Phoenix bank, Litchfield, Connecticut. This extra notice was received by Spencer at Litchfield on the or 7th of February, and directed by him to the defendant at Lee (Massachusetts), his place of residence, and was put into the post-office at Litchfield on the day that Spencer received it. The plaintiffs paid the amount of the note to the Phoenix bank.

The defendant contended, that he was not duly notified of the default of the maker, inasmuch as the notice which was put into the post-office at New York was directed to Lenox instead of Lee, and the notice sent through the hands of Spencer was greatly delayed by the course of the mails.

It was proved that the note was made for the accommodation of Tarsus Botsford & Co., and that they procured Abiel K. Botsford, of New York, to make the note payable to Sabbaton, that Sabbaton then indorsed it, and then Tarsus Bots-ford & Co., and that Tarsus Botsford then procured J. & A Hawley, Barlow, and Bradley & Church to indorse it successively, and that he told the several indorsers, at the time of their respective indorsements, that his object was to raise money on the note by having it discounted at some bank ; and that accordingly it was discounted at the Phoenix bank, Litchfield, having never been negotiated till it was so discounted.

The defendant contended on this evidence, that he was not liable as indorser, as he did not transfer the note to the plaintiffs, nor receive of them any consideration therefor ; and that at most, he was liable only as co-surety for contribution. The plaintiffs objected to the admission of this evidence, but it was admitted for the purpose of taking the opinion of the full Court thereon.

A nonsuit or default was to be entered, according to the opinion of the Court.

Porter and Tucker, for the defendant,

said that if the notary public had been the agent of the Phoenix bank, the notice would have been sufficient, according to Colt v. Noble, 5 Mass. R. 167, and Eagle Bank v. Chapin, 3 Pick. 180 ; but it was not proved that the Phoenix bank were the holders, and in the absence of such proof the presumption is that the note belonged to the last indorsee.

*559To show that the defendant was liable only to contribution as a co-surety, they cited Stackpole v. Arnold, 11 Mass. R. 32 ; Barker v. Prentiss, 6 Mass. R. 430 ; JVIachell v. Kin-near, 1 Stark. R. 499 ; 2 Stark. Ev. 252, 267 ; Hill v. Buckminster, 5 Pick. 391 ; Chit. Bills. (5th ed.) 91 ; Tenney v. Prince, 4 Pick. 387 ; Baker v. Briggs, 8 Pick. 122.

Hubbard and Bishop, contra,

were stopped by the Court.

Per Curiam.

The notice sent to Lenox by the notary, that not being the place of the defendant’s residence, was not sufficient to charge him as indorser. But we think that the notice sent to the defendant at Lee, through the Phoenix bank, was sufficient. It has been determined, that where a bill or note has been transmitted by the holder to an agent for collection, and it is presented by the agent and dishonored, if the protest or other evidence of dishonor is transmitted by the agent to his principal, and by him seasonably sent to the indorser, it is sufficient, although the indorser does not in fact receive it so soon, as if it had been transmitted directly by the agent to the indorser. Colt v. Noble, 5 Mass. R. 167.1

The question then is, whether the notary was the agent of the Phoenix bank of Connecticut, or in other words, whether they were the real and actual holders of the note ; and we think upon the facts stated that they were. The evidence which was offered by the defendant shows, that the note was discounted at the Phoenix bank, and was paid at the same bank, and shows satisfactorily, that it was sent to the cashier of a bank in New York for collection only. The indorsement of the bill by the cashier of the Phoenix bank to the cashier of a bank in New York, is not conclusive evidence of a transfer of the property in the bill. The indorsement may operate as a transfer of the property, or as an authority to collect ; it is therefore competent to show by other evidence, where the fac* becomes material, whether it operated in the one way or the other. It was therefore competent to show, and we think the evidence does show, that the Phoenix bank were the real holders of the note, that their cashier indorsed it to Fleming for *560collection only, for which purpose he placed it in the hands of ^ie notai7) that the notary thus became the agent of the Phcenix bank, and did right in transmitting to them the evidence of the non-payment, and that it was for them to determine, whom, among the numerous indorsers, they would look to for payment, and to notify them accordingly ; and they having seasonably transmitted the notice to the defendant after they received it, he thereby became liable.

The defendant further objects, that as between the plaintiffs and himself, there was no consideration ;jhat it was a mere accommodation note, and if liable at all, that he is liable only to contribute as a surety, proportionably with those who likewise became sureties by their respective indorsements. The Court are all of opinion that this is an entirely incorrect view of the transaction ; and that it would greatly tend to impair the credit and check the circulation of indorsed negotiable instruments, if such were the construction put upon them.

Nor do the authorities cited support the position taken by the defendant.

The general rule is, that in regard to negotiable instruments, a consideration is implied by law, not only as between the promisor and promisee, but also as between each indorser and indorsee. Another rule, familiar to every lawyer and merchant, and of universal application, is, that any indorser who may be called upon to pay, may look to his immediate indorser, or to either of the prior parties, for an indemnity, for the whole amount thus paid ; and that every indorser is conditionally liable to pay, in case of the failure of the maker or acceptor, that is, upon the conditions, that the bill or note is presented to the acceptor or maker, when due, and if not paid, that such indorser be seasonably notified of its non-payment. These principles are extremely familiar, and we think they are quite sufficient to establish the validity, and render safe the currency of indorsed accommodation bills. By the fact of indorsement, the indorser admits a consideration equal to the value of the bill ; an admission by which he is bound. He takes upon himself the conditional obligation of indorser, and that only, and of course is responsible only after seasonable presentment to the promiser for payment, his refusal or neglect to pay, and *561seasonable notice of that fact given to himself by the holder. It follows of course, that he becomes entitled to all the privileges and immunities of an indorser, one of which is, to have a remedy over for the whole amount against either of the prior parties. To this each and every one, by the fact of indorsement, is by the law considered as assenting. The consequence therefore is, that the rights and duties of the several parties to an accommodation note or bill of exchange, are the same as upon those which are denominated business notes, such being the legal effect of the contract, into which they respectively enter, by becoming such parties.1

Defendant defaulted.

Church v. Barlow
9 Pick. 547 26 Mass. 547

Case Details

Name
Church v. Barlow
Decision Date
Sep 1, 1830
Citations

9 Pick. 547

26 Mass. 547

Jurisdiction
Massachusetts

References

Referencing

Nothing yet... Still searching!

Referenced By

Nothing yet... Still searching!