Conn v. Atkinson

• Decision Date: 29 January 1929
• Citation: 227 Ky. 594
• Parties: Conn v. Atkinson et al.
• Court: United States State Supreme Court — District of Kentucky

227 Ky. 594

Conn v. Atkinson et al.

Court of Appeals of Kentucky.

Decided January 29, 1929.

1. Guaranty. — So long as maker of note was not discharged from liability, guarantors remained bound by their contract, under Ky. Stats., secs. 3720b-190, 3720b-191.

2. Bills and Notes. — Notice of dishonor or nonpayment need not be given to makers or guarantors of a promissory note, under Ky. Stats., secs. 3720b-60, 3720b-89.

3. Bills and Notes. — Payee transferring notes by indorsement was only an "indorser" of note, under Ky. Stats., sec. 3720b-63.

4. Bills and Notes. — Where neither pleading nor proof showed that notice of dishonor or nonpayment of note was given to indorser, as required by Ky. Stats., sec. 3720b-89, and indorser was not within any of exceptions specified in section 3720b-115, indorser was not liable on note.

5. Limitation of Actions. — It must be presumed, in absence of showing to contrary, that substantial and regular payments of interest on notes, relied on to prevent running of statute of limitations, Ky. Stats., sec. 2515, were made by persons who were obligated to make them.

6. Limitation of Actions. — Maker of note and his guarantors were in same class as obligors, and payment of interest by either would prevent running of statute of limitations, Ky. Stats., sec. 2515, as to the others.

7. Limitation of Actions. — Annual payment of interest prevented running of statute of limitations, Ky. Stats., sec. 2515, as to maker of note and his guarantors.

Appeal from Logan Circuit Court.

E.C. O'REAR, ALLEN PREWITT and I.G. MASON for appellant.

COLEMAN TAYLOR and E.J. FELTS for appellees.

OPINION OF THE COURT BY JUDGE WILLIS.

Reversing in part and affirming in part.

E.P. Conn sued Eugene Atkinson, Frank Barker, R.C. Dockins, and J.B. Dockins to recover a personal judgment on seven promissory notes of $100 each, and to enforce a vendor's lien on land located in Logan county. The notes were alike, bore the same date, were payable one each year beginning January 1, 1921, and contained an acceleration clause if not paid within 30 days after maturity. They were executed and delivered by Eugene Atkinson to Frank Barker as part of the consideration for a conveyance of land, and a vendor's lien was retained in the deed to secure payment of the notes. Barker transferred the notes by indorsement to R.C. Dockins. Thereafter and before maturity of any of the notes, R.C. Dockins sold them to E.P. Conn, who required R.C. Dockins and J.B. Dockins to guarantee payment, and they placed upon each of the notes the following indorsement: "I assign the within note to E.P. Conn and guarantee payment of same. R.C. Dockins. J.B Dockins." Each note filed with the petition bears six separate credits of interest payments made annually and including January 1, 1925. A.N. Fagg was made a party and alleged to have some interest in the land, but it does not appear in the record what the interest was or when it was acquired by him. It is said in the briefs that he bought the land and assumed payment of the debt secured by the lien thereon. He filed no pleading. The land was subjected to the plaintiff's debt, but did not bring enough to pay it. The question now presented is the liability of the various other defendants for the balance due on the notes.

Separate answers were filed by the several defendants, but substantially the same defenses were presented. They relied mainly upon the failure to give notice of dishonor and nonpayment of the notes when the first default occurred, and that the action was barred by the statute of limitations of five years. The court dismissed the action, and Conn has entered a motion for an appeal.

The several appellees have filed a joint brief, insisting that the judgment below should be affirmed, because no notice of dishonor or nonpayment of the notes was given any of the defendants, and that the negotiation of the notes before maturity placed them upon the footing of bills of exchange, and, the notes having been due for more than five years before the suit was filed, the action was barred by the statute of limitations. Ky. Stats., sec. 2515.

Frank Barker was the only one of the defendants who was an indorser of the paper. Atkinson was the maker of the notes, and the other two defendants were absolute guarantors of payment. Atkinson, as the maker of the notes, was primarily liable to Conn, and, so long as the maker was not discharged from liability, the guarantors remained bound by their contract. Ky. Stats., secs. 3720b-190, 3720b-191; McGowan v. Wells' Trustee, 184 Ky. 772, 213 S.W. 573; Marshall v. Hollingsworth, 166 Ky. 190, 179 S.W. 34; Yager v. Ky. Title Co., 112 Ky. 932, 66 S.W. 1027, 23 Ky. Law Rep. 2240.

It is well settled that notice of dishonor or nonpayment is not required to be given to the makers or guarantors of a promissory note. Ky. Stats., secs. 3720b-89, 3720b-60. The only requirement as to notice is that, where a negotiable instrument has been dishonored by nonacceptance or nonpayment, notice of dishonor must be given to the drawer and to each indorser, except as otherwise provided in the Negotiable Instruments Act, Ky. Stats., sec. 3720b-89. Section 3720b-114 provides when notice of dishonor is not required to be given to a drawer, and section 3720b-115 provides when such notice need not be given to an indorser. Section 3720b-109 provides that the notice may be waived in the manner defined in sections 3720b-110 et seq. There is no provision of the statutes requiring notice of dishonor to the makers or guarantors of negotiable instruments, and such duty is purely statutory. As to Frank Barker, however, the point is well taken. He was only an indorser of the note (Ky. Stats., sec. 3720b-63; Brown v. Crofton, 76 S.W. 373, 25 Ky. Law Rep. 753; Farmers' Bank & Trust Co. v. Dent, 206 Ky. 405, 267 S.W. 202; First National Bank v. Bickel, 154 Ky. 11, 156 S.W. 856; Frazee v. Phoenix Nat....