Bank v. Chilton

• Decision Date: 31 January 1894
• Citation: 40 W.Va. 491,21 S.E. 774
• Parties: BIG SANDY NAT. BANK. v. CHILTON et al.
• Court: West Virginia Supreme Court

21 S.E. 774

40 W.Va. 491

BIG SANDY NAT. BANK.

v.CHILTON et al.

Supreme Court of Appeals of West Virginia.

Jan. Term, 1894.

Negotiable Instruments—Indorsement—Notice or Nonpayment.

1. Where a negotiable note, indorsed by several parties, residing at different places, is made payable at a bank in the city of H., and before maturity it is discounted by a bank in the town of C., and by the last-named bank it is indorsed to a bank in the city of H. for collection, and one of the indorsers resides in said city of H. when said note matures and is presented for payment, and payment is refused, and the note is duly protested, the bank to which said note was indorsed for collection is only bound to give notice to the bank in C, its immediate indorser.

2. When notice has thus been given to said bank in the town of C, the duty devolves upon it to give notice of such protest to the prior indorsers, if it wishes to hold them as such.

3. Although one of said indorsers resides in the city of H., where said note was payable, said bank in the town of C. may send notice of such protest through the mail; and, if sent in due time, said indorser will be held, although he never receives the notice so sent.

4. Under the circumstances of this case, the indorser residing in the city of H., where said note was payable, is not entitled to personal service of the notice of such protest, although he resided in the city where said note was made payable.

(Syllabus by the Court)

Error to circuit court, Cabell county.

Action by the Big Sandy National Bank against W. E. Chilton and others. There was judgment for plaintiff against part of defendants, and it brings error. Reversed.

Simms & Enslow, for plaintiff in error.

Campbell & Holt, for defendants in error.

ENGLISH, J. On the 29th day of June, 1892, the Big Sandy National Bank brought an action of assumpsit in the circuit court of Cabell county against W. E. Chilton, M. B. Mullins, Thomas H. Harvey, Z. T. Vinson, J. C. Williamson, and W. H. Crum, on a certain negotiable note made by W. E. Chilton, dated January 13, 1891, whereby, three months after date, without grace, he promised to pay to order of M. B. Mullins $2,000, payable at the First National Bank of Huntington, value received, with interest from date, which note was indorsed by M. B. Mullins, Thomas H. Harvey, Z. T. Vinson, J. C. Williamson, and W. H. Crum to the said Big Sandy National Bank. The defendants Z. T. Vinson and T. H. Harvey filed nonassumpsit and issue was joined thereon. The case was submitted to a jury, and resulted in a verdict for the defendants Z. T. Vinson and T. H. Harvey, and against the defendants M. B. Mullins and W. E. Chilton, for the sum of $2,160.94; and thereupon the plaintiff moved the court to set aside said verdict so far as it found a verdict for the defendants T. H. Harvey and Z. T. Vinson, and award it a new trial, on the ground that so much of said verdict was contrary to the law and the evidence, and because the court misdirected the jury, which motion was overruled by the court, and judgment was rendered in accordance with said verdict; and thereupon the plaintiff excepted to the rulings of the court and tendered its bill of exceptions, which was signed, sealed, and made a part of the record in the cause.

After the testimony in the case was concluded, the plaintiff asked the court to give the jury the following instruction: "The court instructs the jury that if they find from the evidence that the note sued on was duly presented at the counter of the bank at which it was payable on the day it was due, and payment demanded, at the close of banking hours, and payment was refused, and it was on the same day duly protested by the notary who presented it, and the notices of protest were duly sent by the United States mail that day to the Big Sandy National Bank or M. H. Houston, the cashier thereof, and the cashier, Houston, on the same day he received the said notices, duly mailed them to T. H. Harvey and Z. T. Vinson, Huntington, W. Va. (their place of residence), and placed them so addressed in post-paid envelopes in the post office at Catlettsburg, Ky., then you should find for the plaintiff against the said T. H. Harvey and Z. T. Vinson." The defendants T. H. Harvey and Z. T. Vinson objected to said instruction, and the court sustained said objection, and refused to give said instruction, to which ruling the plaintiffexcepted. The said defendants Harvey and Vinson asked the court to give the following instruction to the jury: "The court instructs the jury that if they find from the evidence in this case that the defendants T. H. Harvey and Z. T. Vinson were indorsers of the note in suit, and were resident in the same city or town where demand for the payment of said note was made, and if they further find from the evidence that no notice of protest was personally given to or left at the dwelling house or place of business of said indorser, then said indorsers, Harvey and Vinson, are not liable, and the verdict of the jury must be for them." The plaintiff objected to the giving of said instruction to the jury. The court overruled said objection, and gave said instruction, to which ruling the plaintiff again excepted; and thereupon the plaintiff applied for and obtained this writ of error.

The sole question presented for our consideration is whether the defendants T. H. Harvey and Z. T. Vinson were legally and properly served with notice of the protest of the note sued upon, so as to bind them as indorsers of the same. The facts in regard to the protest and notice are as follows: On the day said note matured, it was presented at the counter of the First National Bank of Huntington, and payment thereof was demanded, and, being refused, was protested by E. B. Enslow, a notary public, who prepared notices of the protest, inclosed them ail in one envelope, and mailed them to the cashier of the Big Sandy National Bank at Catlettsburg, Ky., which bank was the owner and holder of said note on the 13th of April, 1891, at 6 o'clock p. m., which notices were received by said cashier the next morning after the •protest, and were mailed by him on the same day to Thomas H. Harvey and Z. T. Vinson, directed to Huntington, W. Va., but were never received by them. In considering the questions presented in this record, I shall first inquire what are the duties of a bank to which a negotiable note is indorsed by the holder for collection with reference to said note when the same matures. Daniel on Negotiable Instruments (volume 1, § 331) says: "Sometimes a bank holding indorsed paper for collection sends notice in the event of its dishonor to the indorser from whom it was received. Sometimes it sends notices, not only to him, but also to the drawer and to all the indorsers, addressed to their post offices, or delivered at their places of business, respectively. Sometimes it incloses notices for all the parties entitled thereto under one envelope, in company with notice to the last indorser, that he may thus be conveniently supplied with the means of transmitting notice to the successive indorsers, and to the drawer antecedent to him, if such there be. But how far the duty of the bank extends in this regard, and what it must do to discharge itself of liability, is a question upon which opin ion has divided. The weight of authority, however, is strongly to the effect, and the law may be assumed to be, that it is only necessary for the bank to notify its immediate predecessor, —that is, the party from whom it received the paper, —no matter what may be the nature of the title or interest of that party to or in it." So it was held in the case of Phipps v. Bank, 8 Mete. (Mass.) 79, that "a bank that receives from another bank for collection a note indorsed by the cashier of that bank is bound to present it to the maker for payment at maturity, and, if it is not paid, to give notice of nonpayment to the bank from which the note was received; but it is not bound, unless by special agreement, to give such notice to the other parties to the note." Edwards on Bills and Notes (volume 2, § 834) says: "The holder should give notice of dishonor to all the parties to whom he intends to look for payment, but it is enough for him to send or give, due notice to his indorsers for the purpose of charging the party indorsing the bill over to him, and it is the business of each indorser to take care that the party responsible to him is duly notified." Again, in the case of Bank v. Goddard, 5 Mason, 366, Fed. Cas. No. 917, it was held that where a note is made payable at a particular place, and the indorser resides there, if the holder remits it to his agent at such place for payment, and it is dishonored, the agent is not bound to give notice of the dishonor to the indorser, but his duty is to give notice to his principal, who may then give notice to the indorser, and, if given in due time after the principal has received notice, the indorser is bound." In the case of Phipps v. Bank, supra, the court, in speaking of the case of Bank v. Goddard, says: "The case was thoroughly argued, and an elaborate opinion given by the learned judge of the circuit court of the United States, in favor of the plaintiffs, that the agent was not bound to give notice of dishonor to the indorser, even though living in the same place, but only to his principal." In the case of Howard v. Ives, 1 Hill, 263, "where H., an indorsee of a bill of exchange, indorsed it to a bank for the mere purpose of collection, and the notary employed by the bank transmitted notice of protest by mail to H. on the next business day after presentment, etc., who on the next day after receiving it mailed notice to his indorser, held sufficient to fix the liability of the latter, though, had the notice been sent directly to him, he would have received it sooner; and this semble whether the notary be regarded as H.'s agent or that of the bank." We also find it held in the case of Mead...