Bonart v. Rabito. In Re Bonart
| Decision Date | 11 June 1917 |
| Docket Number | 22381 |
| Citation | 76 So. 166,141 La. 970 |
| Court | Louisiana Supreme Court |
| Parties | BONART v. RABITO. In re BONART |
(Syllabus by the Court.)
In a suit against the indorser of a promissory note containing the stipulation that the indorser waived presentment for payment demand, notice of nonpayment, protest, and all pleas of division or discussion, and consented that time of payment might be extended without notice thereof, the defendant having admitted in her answer to the suit that she was an accommodation indorser on the note, verbal testimony offered by the defendant to show how long the debt had existed before the note was issued, or how many previous notes, representing the same debt, had been indorsed by the defendant, is irrelevant, of no importance, and was therefore properly excluded.
One who indorses a negotiable promissory note thereby binds himself to all of the obligations which, on the face of the note, are expressly declared to be binding upon any and all indorsers.
A promissory note, otherwise negotiable, is not rendered nonnegotiable by stipulations in the note that do not render the promise to pay conditional, or affect the fixity or determinability of the time of payment, or make the sum to be paid uncertain, as, for example: (1) A stipulation whereby the indorser consents that time of payment may be extended without notice thereof; (2) a stipulation that the note shall immediately become due and payable if the maker should fail in business or ask a respite or become a bankrupt before the date of maturity first stated in the note; or (3) a stipulation that, if the note be not paid at maturity, any money, stocks, bonds, or other property on deposit or otherwise to the credit of the maker or any indorsers on the books of the bank at which the note is made payable shall at once stand applied to the payment of the note.
The consent of the indorser that time of payment may be extended without notice thereof, if expressed in the face of the note at the time it was made and indorsed, is not necessarily limited to only one extension of the time of payment. Of course, such a stipulation does not permit the maker and the payee, by an agreement between themselves, to extend the time of payment as long as they may see fit, and thereby deprive the indorser of his right to become immediately subrogated to an action against the maker by paying the note at or after its maturity. But the indorser's consent that time of payment may be extended without notice thereof authorizes the payee and the maker to extend the time of payment from time to time, without notice to the indorser and without thereby releasing him from liability, until and unless the indorser sees fit to pay the note at any time after maturity, and become immediately subrogated to a right of action against the maker.
Although an indorser of a negotiable promissory note may be, as to the maker, only an indorser or surety, entitled to reimbursement from the maker if the indorser pays the note, nevertheless, as to the payee, the indorser is primarily liable, in the terms of the Negotiable Instrument Law, if the note, on its face, recites that the signers, indorsers, guarantors, and sureties are liable in solido.
Edgar M. Cahn, of New Orleans, for plaintiff.
Dart, Kernan & Dart, of New Orleans, for defendant.
O'NIELL, J.
This suit was brought by the payee against the indorser of a promissory note signed by one W. A. Leininger. Here is a copy of the note, annexed to the plaintiff's petition, viz.:
'$ 350.00. Due Jan. 1/14.
'New Orleans, July 1st, 1913.
'Six months after date, for value received, we the signers, indorsers, guarantors, and sureties, and each of us in solido, promise to pay to the order of Sam Bonart the sum of three hundred and fifty dollars, at the Commercial-Germania Trust & Savings Bank, New Orleans, with interest at the rate of 8 per cent. from maturity until paid.
'The makers, indorsers, guarantors, and sureties of this note hereby severally waive presentment for payment, demand, notice of nonpayment, and protest, all pleas of division or discussion, and consent that time of payment may be extended without notice thereof, and, in the event of nonpayment at maturity, it is agreed to pay all attorney's fees incurred in the collection of this note, or any portion thereof including interest, which fees are hereby fixed at 10 per cent. on the amount to be collected.
'Should the maker of this note fail in business, ask a respite, or become a bankrupt, before the maturity of this note, this note and all the said liabilities shall become and be immediately due and payable without demand or notice, notwithstanding any credit or time allowed the undersigned by any instrument evidencing any of said liabilities.
'At the maturity of this note, or when otherwise due, as above provided, any money, stocks, bonds, or other property of any kind whatsoever, on deposit or otherwise to the credit of the maker or any of the indorsers, on the books of said Commercial-Germania Trust & Savings Bank, or in its possession, shall at once stand applied to the payment of this note, or any other indebtedness, unless it be otherwise paid.
[Signed] W. A. Leininger.'
On the back of the note, below the signature of Mrs. A. P. Rabito, are the following memoranda:
'Interest on this note paid to July 1/14.
'Interest on this note paid to Jan. 1/15.'
The plaintiff acknowledged in his petition that the interest on the note had been paid, and the time of payment extended to the 1st of July, 1914, and that the interest had also been paid, and the time of payment of the principal again extended to the 1st of January, 1915, as shown by the memoranda on the back of the note. He alleged, however, that by the terms of the note the defendant had bound herself in solido with the maker for the payment of the debt; that she, as indorser of the note, had therein expressly consented that time of payment might be extended without notice thereof, and had expressly waived presentment for payment, demand, notice of nonpayment, and protest, and all pleas of division or discussion. The plaintiff alleged in his petition that the maker of the note had gone into voluntary bankruptcy, and was, on his own petition, adjudged a bankrupt on the 24th of November, 1914.
The defendant filed an exception of no cause of action, which, by consent of both parties, and without prejudice to either, was referred to the merits. Reserving the benefit of the exception, the defendant answered, acknowledging her signature on the back of the note, but alleging that she had signed only as an accommodation indorser and without receiving any consideration. She alleged that the debt represented by the note had been contracted several years before, and that a number of notes of the same import had been made; that at the maturity of each note the plaintiff had required that a new note be made and the old note canceled; but that, when the note sued on became due, she refused to reindorse it for the plaintiff, and that he then extended the time of payment, against her will, and re-extended the time, without her consent. She alleged that, after the first extension of the time of payment, the note was not presented to her for payment, no demand was made upon her, nor notice of nonpayment given her, nor was the note protested; and that, by the plaintiff's omissions in that respect, she was released from all or any liability.
On the trial of the case the plaintiff introduced evidence only the note sued on and a certified copy of the judgment of the federal court decreeing the maker of the note a bankrupt. The defendant then called the plaintiff to the witness stand to prove how long the money had been loaned before the note sued on was executed and how many notes had been previously issued and indorsed by the defendant, and to prove that each of the previous notes had been presented to the defendant for her indorsement. The attorney for the plaintiff objected to the introduction of any testimony to contradict or alter or modify the terms of the written instrument. The court sustained the objection, except to the extent of allowing the defendant's attorney, if he saw fit, to prove whether the agreement for an extension of the time of payment of the note without notice to the indorser permitted only one extension, or more than one extension, without notice to her. The defendant's attorney then announced that he desired to prove the interpretation put upon the contract by the parties, and the judge replied that his ruling forbade that; that the written instrument should speak for itself. Reserving a bill of exceptions to the ruling, the defendant's attorney then offered to prove by the verbal testimony of the defendant the same facts which he had attempted to prove by the testimony of the plaintiff. The plaintiff's counsel repeated his objection, the court made the same ruling, and another bill of exceptions was reserved by the defendant's counsel. The case was then submitted on the pleadings and the instrument sued on, and judgment was rendered in favor of the plaintiff for the amount of the note with interest and attorney's fees as therein stipulated.
On the defendant's appeal the Court of Appeal for the parish of Orleans reversed the judgment of the district court, and rejected the plaintiff's demand.
On application of the plaintiff a rehearing was granted by the Court of Appeal; and, as no evidence had been admitted in the lower court to prove that the defendant had not in fact consented to the extensions of the time of payment of the note, the decree was amended so as to make it only a judgment of nonsuit against the plaintiff.
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