Riggs v. Hatch
| Decision Date | 08 May 1883 |
| Citation | 16 F. 838 |
| Parties | RIGGS v. HATCH and another. |
| Court | U.S. District Court — Southern District of New York |
Lindsay & Flammer, (Gratz Nathan, of counsel,) for plaintiff.
Turner Lee & McClure, for defendants.
This is an action upon a promissory note for $2,000, made by Asa L Hatch at New York, dated there, payable at a bank there, to his own order, 12 months after date, indorsed by him, and by Elizabeth R. Hatch, who is his wife, with the words, 'I hereby intend to charge my separate estate with the payment of the within note,' and delivered to Stone & Co., from whom the plaintiff procured it. The cause has been tried by jury, to whom a question of fact as to an alleged alteration of note was submitted, and has now, after verdict for the plaintiff, been heard upon a motion for a new trial founded upon questions of law reserved.
One question made by Elizabeth R. Hatch is whether her liability as indorser was duly fixed by protest and notice. On the hearing of this motion the point is made that this question was not properly raised by the pleadings. In her answer she denies that she 'received due notice of non-payment,' and knowledge of the protest. It is urged that this is not a denial that notice was duly sent, and raises no question but that it was so sent as to be sufficient to charge her although not received. The denial is quite meager, but still it is a full denial of due notice, which might, without violence, be considered a denial of the constructive notice arising from the due sending as well as of the actual notice arising from the receipt of a notice, and be held sufficient. And, whether it would be or not, as the evidence was all received without objection on this account, it is too late to raise the question on this motion.
The defendants reside together at Astoria, and he had a place of business in New York. His name as A. L. Hatch was in the directory of New York, with his place of business, and there were in the directory the names of two other persons as A. L. Hatch, with their residences or places of business. Her name was not in the directory and did not belong there. There was nothing on the note to indicate the residence or address of any of the parties to it, except what might be inferred from the place of date and of payment, and the notary had no knowledge on the subject except that derivable from the note. He looked in the directory for Asa L. Hatch and Elizabeth R. Hatch, found the three names of A. L. Hatch, mailed a notice to Asa L. Hatch at the street and number given with the first A. L. Hatch, and to New York, and to Elizabeth R. Hatch at New York, and did nothing more about giving notice. He received his notice; it was not shown that she received hers, and she offered to show that she did not receive it. The law of the state of New York (Laws 1857, c. 416) required 'diligent inquiry,' and the law-merchant would require due diligence, to ascertain her whereabouts or true address, before notice directed to any other address, and not shown to have been received, would be sufficient to charge her. There is no real difference in the meaning of these expressions. Each would seem to require such efforts as a prudent man, interested to give her notice of any fact, would make to find her or her address in order to accomplish that object. Had her name, by reason of former residence or otherwise, been found in the directory with an address, it would seem that a notice mailed to her at that address, without further inquiry, would not have been sufficient. Greenwich Bank v. De Groot, 7 Hun, 210; Baer v. Leppert, 12 Hun, 516. Her name might be that of another person of the same name, or, if that of the right person, the address might not be the present address. Inquiry at the place might remove these chances for mistake. Here the form of her indorsement would indicate that she was a married woman, and the becoming a party to his note, that he was her husband. This is so treated by counsel on each side in argument. Either one of the three persons put down in the directory as A. L. Hatch might be her husband; and where the residence was given it might be her residence, and where the place of business without residence was given it would indicate that that A. L. Hatch did not reside in the city, and if he was her husband that she did not. A prudent man sincerely desirous of finding her or her address would have inquired at these places for the right A. L. Hatch, and, if found, of him in regard to her. Such inquiry would probably have resulted in finding her true address. Not only was all such inquiry omitted, but no notice was sent to her at what was assumed to be the address of her husband. None of the cases cited for the plaintiff, nor any of several others which have been examined, came up to the point of holding that what was done in this case would amount to diligent inquiry or due diligence; and it cannot, in the light of the views now entertained, be held to be such.
As the case stands, this note was without consideration as between Asa L. Hatch and Stone & Co. The plaintiff had no knowledge of this infirmity and took it in good faith, before it was due, in payment of two notes against members of that firm, amounting to about $1,200, and gave his own negotiable note payable on time, but long overdue and unpaid at the time of trial, for the balance. Upon this state of facts he was a holder for value. Railroad Co. v. National Bank, 102 U.S. 14; Swift v. Smith, Id. 442. Still, there is a question whether he is entitled to recover the whole amount of the note, as against the maker, or only the amount he actually paid by giving up the two notes. The language of the court in the cases just cited, as well as in many others, seems to indicate that the becoming a bona fide holder for value cuts off all equities of makers and prior indorsers, and leaves the holder entitled to recover the full amount, without regard to the precise amount paid. Some cases seem to hold that as he can only recover because he has paid, he can only recover what he has paid. Williams v. Smith, 2 Hill, 301; Youngs v. Lee, 18 Barb. 189; 12 N.Y. 551; Cardwell v. Hicks, 37 Barb. 458; Huff v. Wagner, 63 Barb. 215. In this case, however, the plaintiff's own negotiable note is still outstanding. It was now shown whether it remained where he could defend on account of the infirmity of the note he bought, or whether it had been negotiated so as to cut off such defense. He may be compelled to pay it, and without a showing on the part of the defendants that it was so situated that he could not be, it would seem that he is entitled to stand as a holder for full value.
There is no other question about the liability of Asa L Hatch. for he was not only the maker of the note, but he received notice, and his liability as indorser was duly fixed. He is not entitled to a new trial; but as the verdict is against both, if the verdict is set aside and a new trial granted as to her, there will be no verdict against him and there must be a new trial as to both. The plaintiff may, however, prefer to discontinue as to her and retain the verdict as to him; and, if he does, that will save all the rights of the defendants. Opportunity will therefore be given to the plaintiff for the space of 15 days for that purpose.
Unless the plaintiff does, within 15 days after the filing of this decision and notice thereof to his attorneys, discontinue the suit as to Elizabeth R. Hatch, the verdict is to be set aside and a new trial granted; if he does so discontinue, the motion of Asa L. Hatch for a new trial is overruled, and the stay of proceedings vacated.
SERVICE OF NOTICE OF DISHONOR BY MAIL. The law requires the holder of a bill or note to use reasonable diligence in giving notice of its dishonor to an indorser whom he wishes to charge; and the rules as to the time and manner of giving the notice have been adopted only in view of this requirement. It was early recognized by the courts that reasonable diligence did not require the holder to employ a special messenger to deliver the notice to an indorser residing in a distant place, but that the requirement was satisfied by the deposit of a letter containing the notice in the post-office, duly addressed to the indorser; and this rule has received a liberal application. 'Courts are and should be extremely cautious in admitting or recognizing any changes which trench upon these established regulations' as to the manner of transmitting notice. 'Still, inasmuch as they are founded upon general interest and convenience, and grow mainly out of the custom of merchants, it is obvious that they must, from time to time, admit of modifications to suit them to the actual condition and business of man. ' They must expand according to the exigencies of society."' [1]
WHEN ALLOWED. Where the party giving the notice and the party notified reside in different places, between which there is regular communication by mail, [a] mailing notice by letter duly addressed is not only prima facie proof of notice, [b] but is conclusive of the fact, and is sufficient, though, by the miscarriage of the mail, never received. [c] On the other hand, if the parties reside in the same place, the mail cannot be used with this effect. [d] This is so, although the indorser has a place of business elsewhere; this does not give the holder the right to resort to the mail for service of the notice. When the mail is not used, notice may be served as well at the indorser's place of business as at his residence, and when the parties reside in different places, notice by mail may be addressed indifferently to the indorser's residence or place of business. But ...
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