American Nat. Bank v. Junk Bros. Lumber & Mfg. Co.

• Decision Date: 03 May 1895
• Parties: AMERICAN NAT. BANK v. JUNK BROS. LUMBER & MANUF'G CO.
• Court: Tennessee Supreme Court

30 S.W. 753

94 Tenn. 624

AMERICAN NAT. BANK v. JUNK BROS. LUMBER & MANUF'G CO.

Supreme Court of Tennessee.

May 3, 1895

Appeal from chancery court, Davidson county; Andrew Allison Chancellor.

Action by the American National Bank against Junk Bros. Lumber & Manufacturing Company as indorser on certain promissory notes. From a judgment for plaintiff, defendant appeals. Affirmed.

A. N Grisham, for appellant.

J. M Gant and J. S. Pilcher, for appellee.

BEARD J.

This suit was instituted against the Junk Bros. Lumber & Manufacturing Company, a corporation, with its situs in Nashville, as the indorser for value of certain domestic negotiable notes. The defendant resisted recovery on the ground that notice of dishonor of the paper was not given as the law requires. A decree having been pronounced against the corporation, it has filed the record in this court, and the action of the court below in overruling this defense is assigned as error.

Before coming to the general question raised by the assignments, it is proper to dispose of five of these notes, which are shown by the proof to have been made for the accommodation of this corporation, and afterwards indorsed by it to the complainant. As to these notes, their makers stood in the situation of sureties to the indorser, and it was the latter's duty to provide funds to meet them at maturity and it was therefore bound to the holder without presentment protest, or notice. 2 Am. & Eng. Enc. Law, 399; 2 Daniel, Neg. Inst. § 1085; 3 Rand. Com. Paper, § 1205; Black v. Fizer, 10 Heisk. 48. Thus disposing of those 5 notes, the question recurs as to the liability of the defendant as indorser of the remaining 35. The facts disclosed in the record are that for a considerable period of time the Junk Bros. Lumber & Manufacturing Company was engaged in manufacturing in Nashville, with its business office located at the corner of First and Woodland streets in that city. Its books were kept there, and there its mail, with that of the principal officers and its various employés, was delivered. On the 28th of May, 1892, the corporation, being insolvent, made a general assignment of all its property, both real and personal, to one Stainback, as assignee, for the benefit of all its creditors. This assignment was a full surrender to the assignee, and by its terms "vested him with all powers and authority to do all acts and things which may be necessary in the premises to the full extent of the trust" created, and it authorized him "to ask, demand, recover, and receive of and from all and every person or persons all property, debts, and demands due, owing, and belonging to" said assignee, and "to give acquittances and discharges for the same," "to execute and deliver deeds," and to use the name of the assignor whenever the purpose of the trust required. Immediately on the execution of the assignment the assignee took charge of the property covered by it, and went into possession of the office of the corporation, with its books, iron safe, etc., and employed at this office a young man to do such clerical work as was required in the administration of the trust. For a limited time after the day of the appointment, with the old employés of the corporation, he continued to run its machinery, for the purpose of converting its raw material into manufactured goods. In winding up the affairs of this trust he took into his service as such assignee one Spain, who was a stockholder, as well as the director and general manager of this corporation at the date of the assignment, and who continued, according to the testimony in the case, to sustain these relations to it after that date. It is true, the duties imposed by the assignee upon Spain made it necessary for him to be principally in the yard and about the plant; but the proof is that he was in this office every day, and sometimes more than once during the day. The mail of the corporation was delivered there as before, and, assuming to be entitled to the control of it, the assignee opened it personally or by his clerk, and gave it such attention as it required; and no officer of the corporation ever called in question his right to control it, although, in the nature of things, all the officers must have known that he was receiving it, and so dealing with it. After the assignment, the corporation abandoned business, and all of its executive officers (with the single exception of the general manager) were scattered, and each one pursued his own private affairs at other points in the city of Nashville. After that time it had no other office, and there were but two meetings of the board of directors, and these were held in private offices, and with regard to past and unimportant transactions. Beginning with the date of the assignment, and for several months thereafter, the paper sued on matured, and, payment on proper demand having been refused, it was protested by the notary public, and notice of the protest in each instance save two was directed by him to the corporation by name, and was left by him at the office heretofore mentioned. In the two excepted cases or instances the notices were addressed to "George W. Stainback, Assignee of the Junk Bros. Lumber and Mfg. Co." In all these cases, as notices were received, the clerk of the assignee entered a memorandum of the protest in the books of the corporation, kept by him, and generally deposited these notices in the safe. The officers of the corporation insist that they did not receive these notices. Conceding this to be true, is the defendant bound as indorser under the foregoing facts, notwithstanding the lack of actual receipt of these notices? Where the indorser has failed to receive notice, he is discharged, unless the holder can show that he has used due diligence in his effort to communicate notice. Where this can be shown, however, it is immaterial that the notice does not reach the indorser. Harris v. Robinson, 4 How. 336. So it is that legal notice is not necessarily actual notice. Bank v. Sanborn, 63 Me. 340. Thus, an indorser who changes his residence without the knowledge of the holder of the protested paper is bound by notice sent to his former place of residence, if the holder is not guilty of negligence in his failure to have knowledge of the change. In such a case the holder, in the absence of any fact to put him on inquiry, can well assume that the indorser's residence continues where it formerly was. He is not bound to go upon the street to ascertain a fact which he has the right to assume he already knows. Bank v. Sanborn, supra; Bank v. Phillips, 3 Wend. 408; Requa v. Collins, 51...