Airey v. Pearson

• Decision Date: 31 March 1866
• Citation: 37 Mo. 424
• Parties: JAMES AIREY, Respondent, v. JOHN M. PEARSON et als., Appellants.
• Court: Missouri Supreme Court

37 Mo. 424

JAMES AIREY, Respondent,

v.JOHN M. PEARSON et als., Appellants.

Supreme Court of Missouri.

March Term, 1866.

Appeal from St. Louis Circuit Court.

Napton, for appellants.

The Circuit Court construed the endorsement as an absolute promise, on the part of Hickman, to pay, at the end of two years, without demand and notice at the expiration of four months, or at the expiration of two years, and without any prosecution of a suit against Pearson, or proof that a suit would have been unavailing. In other words, the court held that Hickman was neither entitled to that demand and notice which as endorser of a negotiable note would be essential to hold him responsible, nor to that diligence which is exacted of a holder of a note not negotiable. His endorsement, under the view of that court, was an absolute obligation to pay Pearson's debt at the end of two years, if Pearson did not sooner pay it, without any demand, any suit, any notice, or any proof of insolvency.

The case of Allen v. Rightmere, 20 J. R. 365, decided by Judge Spencer, in a few lines, seems to be the only case which affords any countenance to such a construction of this endorsement, and that opinion is not approved by Judge Story in his able work on this subject. (Sto. Prom. N. 147, and note.) In that case, the endorser is treated not as incidentally or secondarily bound, but as primarily; and, of course, if he is so bound, he is not entitled to demand or notice.

The case of Upham v. Prince, 12 Mass. 14, a leading one on this subject, shows a very different view of the law from this New York decision. Judge Story says in relation to this case of Upham v. Prince, (Sto. Prom. N., note to § 147,) “this last decision seems to contain the true doctrine, and it is not easy to perceive what reasonable objection lies to it. The endorsement amounts, in legal effect, to an agreement to be bound for six months as endorser, and that a demand need not be made upon the maker of a note at an earlier period. It is therefore a mere waiver of the ordinary rule of law as to reasonable demand and notice upon notes payable on demand. (Taylor v. Burney, 7 Mass.)

Where the payee endorses and guarantees, he does not lose his character as endorser, but can convey title, as the recent cases hold, and as Judge Story concurs, and he ought only to be held to waive such demand and notice as he expressly or impliedly waives by the terms of his guaranty.

Lackland & Martin, for respondent.

I. The note made by Pearson was a negotiable promissory note. Hickman was the payee expressed in the body of the note, and therefore the only one who could become the first endorser of it. In placing his name on the back of the note, the liability of first endorser is the one which would primarily attach to his position; but it was competent for him, at the time of the transfer, to write over his name any other contract or obligation, or to qualify or limit or extend his obligation as endorser. This is what he has done.

II. The obligation of an endorser is to pay the note if it is not paid at maturity, provided the proper steps are taken by the holder, which consist of presentment and notice of non-payment. (Barclay v. Weaver, 19 Penn. 396.)

III. In the words written by Hickman above his endorsement will be found two distinct elements, either of which have always been held to constitute a waiver of demand and notice by an endorser.

1. He agrees that the time of payment shall be extended from four months to two years. (Ridgway et al. v. Day, 13 Penn. 208; Williams v. Brobsch, 10 Watts, 111; Amoskeag Bk. v. Moore, 37 N. H. 539.)

2. He agrees to hold himself responsible for the note. (Ridgway et al. v. Day, 13 Penn. 208; McDonald v. Bailey, 14 Me. 101; Blanchard v. Wood, 26 Me. 358; Bean v. Arnold, 16 Me. 251.)

It will be seen from the following authorities that a guaranty of payment is an absolute guaranty unlike any other, and that demand and notice are not required to make out a liability: Donley v. Camp, 22 Ala. 659; Allen v. Rightmere, 20 Johns. 365; Kitchell v. Burns, 24 Wend. 456; Hugh v. Gray, 19 Wend. 202; Williams v. Granger, 4 Day, 444; Clark v. Burdett, 2 Hall, 197; Manrow v. Durham, 3 Hill, 588; Liggett v. Raymond, 6 Hill, 641; Cobb v. Little, 2 Greenl., Me. 261; Brown v. Curtis, 2 Comst. 225.

HOLMES, Judge, delivered the opinion of the court.

The suit is on a promissory note, negotiable under the statute as an inland bill of exchange. It was endorsed by the payee, before due, in these words: “For value received, I assign the within note to Josiah Thornburgh, and hold myself responsible for the payment of the same; the said Pearson [the maker] to have two years in which to pay the same, unless he prefers to pay sooner; interest on same to be paid annually.” The note was then indorsed by Thornburgh to the plaintiff in these words: “I hold myself responsible for the payment of the within note.”

The answer admitted the endorsement, and that the defendant thereby agreed that he would hold himself responsible for the payment of said note, though the maker was to have two years in which to pay the same, unless he preferred to pay it sooner, with interest to be paid annually; but denied that he agreed to pay the said note, if the same was not paid within two years, without demand and notice, and without all reasonable means being used to collect the note of the maker.

The court instructed the jury for the plaintiff, that the endorsement of the payee...