City Sav. Bank v. Hopson

• Decision Date: 31 May 1886
• Citation: 5 A. 601,53 Conn. 453
• Court: Connecticut Supreme Court
• Parties: CITY SAV. BANK v. HOPSON and others.

5 A. 601

53 Conn. 453

CITY SAV. BANK

v. HOPSON and others.

Supreme Court of Errors of Connecticut.

May 31, 1886.

Reserved by superior court.

Action on a promissory note. The facts are stated in the opinion.

Ailing & Webb, for plaintiff.

Doolittle & Bennett, for defendants.

PARDEE, J. On January 13, 1876, the defendants, Hopson, Wilmot, Clarke, and Waller, for value received, executed and delivered to the plaintiff their joint and several promissory note for $20,700, payable on demand, with interest semi-annually, on the first days of January and July in each year, in advance. In pursuance of an agreement then made, on April 4, 1876, the plaintiff received from Clarke and Wilmot, by way of collateral security for the note, two notes,—one for $4,950, payable on demand; the other for $5,050, payable six months from date,—both dated March 3, 1876, made by the ætna Spring & Axle Company to the order of Wilmot and Clarke, indorsed by the payees, guarantied by O. P. Lewis and William H. Wilson. Partial payment of the note for $20,700 has been made. This suit is for the unpaid balance.

It is the claim of the defendants that when the collateral notes matured the plaintiff neither made demand upon the maker, nor notified the indorsers, nor enforced payment; that then all parties to the notes were solvent, and could have been compelled to pay; and that the amount due upon the notes having been lost by the negligence of the plaintiff, the law indorses this amount as a payment upon the principal note. But when the note of $5,050 was delivered to the plaintiff, there was written upon it as follows: "I hereby acknowledge the receipt of notice of protest on the within note;" and this was signed by all of the indorsers thereon. Herein the word "protest" includes all acts necessary to hold indorsers, and the legal effect of the acknowledgment is to release the plaintiff from any obligation to make demand or give notice. 2 Daniel, Neg. Inst. §§ 1094, 1095; Emery v. Hobson, 62 Me. 578; Woodman v. Thurston, 8 Cush. 157.

Upon the note for $4,950 there was written as follows: "For value received, we guaranty the within note until paid;" and this was signed by Lewis, Wilson, Clarke, and Wilmot, the only names upon the note other than that of the maker. This was an absolute and unqualified contract by each of the signers to pay the note if the maker did not. Upon non-payment at maturity, it became, and has since continued to be, their duty to go to the holder and pay it, and this without demand or notice. Breed v. Hillhouse, 7 Conn. 523. It results, therefore, that no party to either note was released from liability thereon by reason of any omission to act on the part of the plaintiff.

Again, the receipt given by the plaintiff to Wilmot and Clarke, setting forth the terms upon which it received the notes in question, covered other notes by the same maker, some having the same, others different, indorsers. In this receipt the plaintiff is careful to say that, by the acceptance of the notes as collateral security, there is to be "no release from the joint and several note; all are to be held." This pro vision is without force, unless it is to be understood as meaning that the plaintiff in receiving them should not jeopardize its hold upon the makers of the principal note by coming under any obligation to demand payment, notify indorsers, or commence suit. Only this: that it should not act in intentional bad faith, nor hinder the pledgeors in enforcing payment. The contract has been interpreted by the act of the other parties to it. As to some of the other notes covered by it, they took the initiative in, and assumed the control and expense of, legal proceedings to compel payment. With knowledge during more than a year that the notes had matured, and were unpaid; that the maker was solvent, and had sufficient personal property exposed to attachment,—they made no demand upon the plaintiff either that it should commence suit, or permit them to do so; and there was no evidence tending to show that it was not during that time ready and willing to allow them to enforce payment. Therefore, by the terms of reception of the collaterals, it was under no legal obligation, at its own expense, without request, to enforce payment.

Again, the finding is that, as between the defendants themselves, it was the duty of each to pay one-fourth of the principal note. Upon the collateral notes, Clarke and Wilmot were first, Lewis and Wilson second, indorsers. If the plaintiff had enforced payment against the latter, they in turn would have enforced it against the former; and if...