Engen v. Medberry Farmers' Equity Elevator Co.

• Decision Date: 11 March 1925
• Citation: 203 N.W. 182,52 N.D. 410
• Parties: ENGEN v. MEDBERRY FARMERS' EQUITY ELEVATOR CO. et al.
• Court: North Dakota Supreme Court

52 N.D. 410

203 N.W. 182

ENGEN

v.MEDBERRY FARMERS' EQUITY ELEVATOR CO. et al.

Supreme Court of North Dakota.

March 11, 1925.

Syllabus by the Court.

An irregular indorser of a negotiable promissory note is entitled to the rights of a regular indorser, under sections 6955-6959, Comp. Laws 1913 (sections 70 to 74, Uniform Negotiable Instruments Law), pertaining to presentment, protest, and notice of protest.

A negotiable promissory note, payable in a named village, but without designating any particular place within the village, is sufficiently presented, so as to charge indorsers, when it is in the possession of a notary in the place named with authority to receive payment, and to protest it for nonpayment; the maker not having any place of business or residence within the place named in the note.

Appeal from District Court, La Moure County; M. J. Englert, Judge.

Action by O. L. Engen, as receiver of the Citizens' State Bank of Edgeley, against the Medberry Farmers' Equity Elevator Company and others. From judgment for plaintiff, defendant N. J. Paulson and another appeal. Affirmed.A. G. Porter, of Edgeley, and Hutchinson & Lynch, of La Moure, for appellants.

O. S. Gunderson and Conmy, Young & Burnett, and Emanuel Sgutt, all of Fargo, for respondent.

JOHNSON, J.

[1] Plaintiff, as receiver of the Citizens' State Bank of Edgeley, brought suit against the appellants on a promissory note executed by the Medberry Elevator Company of Medberry, N. D., as maker. The appellants, with others who do not appeal, indorsed the note in suit before delivery. The note evidenced a loan of $5,000 simultaneously made to the elevator company. The maker's place of business was at Medberry. The defendants answered separately, specifically denying the allegations of the complaint. In the sixth paragraph of the complaint it was alleged that the note was duly presented for payment, and that payment was refused by the maker; that thereupon the note was duly protested for nonpayment and written notice given the indorsers.

The essential facts were stipulated, as alleged, except as to presentment and notice of dishonor. At the conclusion of the trial the defendants moved to dismiss the action upon the ground that plaintiff had failed to prove due presentment; the plaintiff then requested the court to direct a verdict, whereupon the case was withdrawn from the jury. Later a judgment was ordered and entered for the plaintiff for the amount of the note, with interest.

The court made no findings of fact; no objection is raised on this score. A memorandum decision was filed, but whether the trial court was of the opinion that a legal and sufficient presentment of the note had been proved is not clear. It seems to have been the view of the court that because the defendants were officers and stockholders of the Medberry Elevator Company, and assisted in procuring the loan for it, no presentment was necessary. This conclusion appears to rest largely on the case of Fosdick v. Government Mineral Springs Co., 115 Wash. 127, 196 P. 652.

The principal contention of the appellants is that the evidence shows: First, that the appealing defendants indorsed the note in suit before it was delivered to the bank, which thereafter closed, and therefore are indorsers within the provisions of sections 63 and 64 of the Negotiable Instruments Law, being sections 6948 and 6949, C. L. 1913; second, since defendants were liable, if at all, as indorsers, it was the duty of the holder to present the note for payment to the person primarily liable, in the manner prescribed in the Negotiable Instruments Law, due notice thereof. The appellants contend that the evidence fails to show presentment, and that therefore they are not liable.

Respondent contends that the irregular indorser, under sections 63 and 64 of the Negotiable Instruments Law, is not entitled to notice of nonpayment and protest; that presentment for payment is not necessary in order to hold him; that, if such presentment be necessary, the evidence in the instant case sufficiently shows a presentment.

The note is in the ordinary form, and does not contain a waiver of notice of protest or of presentment for payment. It is payable “at Edgeley.” It was protested at that place on the 15th of March, 1921. The notarial certificate recites that the notary on that date “did present the original note which is hereto attached for $5,000 accrued interest thereon, $4,000, dated March 15, 1920, No. 7078, and demanded payment on said note, which was refused, unable to meet it. * * *” The certificate then alleges the facts showing that notice of dishonor was given all indorsers, including the appellants. On the date the note was due it was in the possession of another bank in Edgeley of which the notary who protested the instrument was assistant cashier.

An indorser's liability under the Negotiable Instruments Law is secondary, and it is, ordinarily, necessary to make legal presentment to the person primarily liable before the indorser can be charged. The status and liability of the irregular indorser is fixed by sections 63 and 64 of the Negotiable Instruments Law; he is an indorser. See Bank v. Stary (N. D.) 200 N. W. 505. The rule is settled in this state that a person who places his signature upon a promissory note before delivery, otherwise than as maker, is an indorser, and entitled to the rights of a general indorser under the Negotiable Instruments Law as to presentment and notice of dishonor, unless, by appropriate words, he indicates that he intends to be bound in some other capacity. Farquhar Co. v. Higham, 16 N. D. 106, 112 N. W. 557. See, also, Brannan, Neg. Inst. p. 238. It follows that, if legal presentment was not made to the maker, the appealing indorsers are not liable, unless, as respondent contends, section 6965, C. L. 1913 (N. I. L. § 80), is applicable and controlling.

The evidence shows that the defendants were officers of the maker of the note; they were members of its board of directors. It does not appear that either of them was the active manager of the elevator company, or that either was its president. We think the rule is sound that the mere fact than an irregular indorser is also an officer of the maker of a note does not alone excuse failure to present the instrument. Section 6965, supra (section 80 of the act), provides:

“Presentment for payment is not required in order to charge an indorser where the instrument was made or accepted for his accommodation, and he has no reason to expect that the instrument will be paid if presented.”

There is not the slightest evidence tending to show that the instrument was made for the accommodation of the indorsers, or that they had reason to suppose that the instrument would not be paid if presented. See Lincoln, etc., v. Sandmeyer, 164 Ill. App. 98;Bennet v. Kistler (Sup.) 163 N. Y. S. 555;Houser v. Fayssoux, 168 N. C. 1, 83 S. E. 692, Ann. Cas. 1917B, 835;First Nat. Bank v. Bickel, 143 Ky. 754, 137 S. W. 790;Nolan v. Wilcox, 134 Tenn. 667, 195 S. W. 581.

Section 6955, C. L. 1913, being section 70 of the Negotiable Instruments Law, provides that presentment for payment is necessary to charge indorsers, except as otherwise provided in the act. No facts appear dispensing with the necessity of presenting the note. Does the evidence show legal presentment? The certificate of the notary who protested the instrument was admitted without objection. It is the duty of the plaintiff to plead and prove presentment, or facts excusing it. Uniform Laws Annotated, vol. 5, p. 333. Section 6956, C. L. 19...