Maddox v. Duncan

• Citation: 45 S.W. 688,143 Mo. 613
• Parties: MADDOX v. DUNCAN.
• Decision Date: 20 April 1898
• Court: United States State Supreme Court of Missouri

45 S.W. 688

143 Mo. 613

MADDOX v. DUNCAN.

Supreme Court of Missouri, Division No. 2.

April 20, 1898.

BILLS AND NOTES — INDORSEMENT — GUARANTY — LIMITATION OF ACTIONS — ACCRUAL OF CAUSE — PART PAYMENT.

1. Where an indorser waives notice of protest and demand, his liability becomes fixed, and the statute of limitations begins to run on default of the maker at maturity.

2. The indorser of a note does not become a guarantor by an indorsement waiving notice and demand, and guarantying payment.

3. Rev. St. 1889, §§ 6793, 6794, 6795, provide that, in actions on contract, no promise is evidence of a new or continuing contract unless in writing subscribed by the party to be charged, and, if there be two or more contractors, no one of them will be charged on such new promise subscribed by the others, but that these provisions shall not lessen the effect of the payment of interest or principal by any person. Held, that a payment by the maker of a note will not arrest the statute as to an indorser, since the latter's obligation is separate and distinct from that of the maker.

Appeal from circuit court, Audrain county; E. M. Hughes, Judge.

Action by G. S. Maddox against M. G. Duncan. There was a judgment for plaintiff. From a judgment of the St. Louis court of appeals (62 Mo. App. 474) affirming the judgment, defendant appeals. Reversed.

Geo. Robertson, for appellant. R. D. Rodgers and W. W. Fry, for respondent.

BURGESS, J.

On June 1, 1877, James T. Carter executed his note to the defendant for the sum of $2,000, due three years after date, with interest at the rate of 10 per cent. per annum, compounded annually. Thereafter defendant, by the following indorsement, assigned said note to Samuel Grant: "Waiving notice and protest and demand, I assign the within note to Samuel Grant, for value received, and I guaranty the payment of it. August 8, 1877. M. G. Duncan." Grant assigned the note to plaintiff about June 1, 1891. The petition was in two counts. The first count was an action against the defendant as indorser, and the second count was against him as indorser and surety. The answer was a plea of the 10-years statute of limitations. Numerous payments were made upon the note by the maker, Carter. The last payment made by him was $150, paid January 27, 1891. The note, however, was secured by deed of trust on a tract of land in Audrain county, which was sold thereunder by J. N. Stephens, sheriff and acting trustee, and $1,915.93 realized from the sale, which was applied as a credit on said note on March 16, 1894. No payment was ever made upon the note by defendant. At the September term, 1895, of the circuit court of Audrain county, the case was tried to the court without the aid of a jury, and judgment rendered in favor of plaintiff for $2,680.24, from which defendant appealed.

It is a rule of universal application in commercial law that every indorsement of a promissory note, whether for accommodation or otherwise, is essentially a new contract, independent of any contract obligations of the maker. Edw. Bills (3d Ed.) § 383; Beach, Mod. Cont. § 605; Tied. Com. Paper, § 256; Dunnigan v. Stevens, 122 Ill. 396, 13 N. E. 651; Trabue v. Short, 18 La. Ann. 257; Trimble v. Thorne, 16 Johns. 152; Aymar v. Sheldon, 12 Wend. 439; Hunt v. Standart, 15 Ind. 35. In Furgerson v. Staples, 82 Me. 159, 19 Atl. 158, it is said: "The indorsement of a note is a new contract. The indorser engages that the note shall be paid according to its tenor; that is, upon proper presentment, demand, and notice. He engages that it is genuine, and the legal obligation that it purports to be, and that he has title to it, and a right to indorse it." Story, Prom. Notes, § 135; 1 Daniel, Neg. Inst. § 669; Bank v. Fearing, 16 Pick. 533; Bank v. Caverly, 7 Gray, 217. "All engagements of the indorser, except payment, conditioned upon demand and notice, and possibly the validity of the note when it is voidable only, are absolute warranties, and not dependent upon any condition whatever. If the note transferred by indorsement be a forgery, or absolutely void for any other reason, the indorser may be sued for the original consideration paid him, or may be held as party without demand and notice." 1 Daniel, Neg. Inst. §§ 669, 675; 2 Daniel, Neg. Inst. § 1113; Pars. Bills & N. 444; Copp v. McDugall, 9 Mass. 1; Burrill v. Smith, 7 Pick. 291. The indorser's liability, as such, becomes fixed when demand of payment of the note is made of the principal on the day that it falls due, is refused, and he is notified thereof. These conditions were expressly waived by the indorser in this case, so that the liability of Duncan became fixed when the note became due, and default was made in the payment.

The question to be determined is with respect to the relation that defendant bore to the holder of the note, — whether that of indorser or surety. It is perfectly clear that he was not a surety; so that, whether he be indorser or guarantor, he could not, in the absence of statutory enactment, be joined in the same action with the maker. Ross v. Jones, 22 Wall. 576; Graham v. Ringo, 67 Mo. 324. But by section 1995, Rev. St. 1889, it is provided that "every person who shall have a cause of action against several persons, including parties to bills of exchange and promissory notes, and who shall be entitled by law to one satisfaction therefor, may bring suit thereon jointly against all or as many of the persons liable as he may think proper"; so that plaintiff, had he desired to do so, might have maintained an action against Duncan and the maker of the note jointly. In Vanzant v. Arnold, 31 Ga. 210, the defendant negotiated notes with the following indorsement on the back: "For value received, we assign the within notes to A. J. & H. and H. E. D. & Co., waiving demand and notice, and guaranty the payment of the same." And it was held that the defendants were liable on said notes as indorsers. In Weitz v. Wolfe, 28 Neb. 500, 44 N. W. 485, the payee of a negotiable promissory note sold the same with the following written on the back: "I guaranty the payment of the within note, waiving demand and notice of protest," — which was signed by the payee, and it was ruled that he was indorser. By guarantying the payment of the note, the...