Farmers' & Merchants' Bank v. Davies
Decision Date | 06 January 1919 |
Docket Number | 23061 |
Citation | 144 La. 532,80 So. 713 |
Parties | FARMERS' & MERCHANTS' BANK v. DAVIES et al |
Court | Louisiana Supreme Court |
Rehearing Denied February 3, 1919
Purser & Magruder, of Amite, and Solomon Wolff, of New Orleans, for appellant.
Columbus Reid, of Amite, for appellee Reid.
Plaintiff sued in solido the makers and indorsers of two instruments of the following tenor, to wit:
'On April 10th, 1917, after date for value received, promise to pay to the order of Farmers' & Merchants' Bank, five thousand five hundred and forty & no/100 dollars, payable to the Farmers' & Merchants' Bank, Independence, La with interest thereon at the rate of eight per cent. per annum from maturity until paid with all costs of collection including ten per cent. attorney's fees in case of collection by suit or through an attorney.
'Each of us, whether principal, security, grantor, or other party thereto, hereby severally waive protest, notice of protest and consent that time of payment may be extended without notice thereof and renounce each for himself and family any and all homestead or exemption rights, any or all exemption of daily, weekly, monthly or yearly wages or salary of each of us from the process of garnishment, either of us or the family of either of us may have under or by virtue of the Constitution or laws, state or federal, as against this debt or any renewal thereof.
J J. Terry.
'C. L. Buck.'
Upon the back of each appeared the following indorsements (the words on the second note being slightly transposed), to wit:
'To secure the within note or other liability to the bank I do hereby pledge to the Farmers' & Merchants' Bank or its assigns as collateral security for the payment of said note and other liabilities the following, viz.:
'1 mtge note of Aug. 26, 16, due April 10th, 1917, for $ 5,000.00.
'1 mtge note of June 10, 15 & due Nov. 1, 1916, for $ 6,500.00.
J. J. Terry.
'C. L. Buck.
'Ed. Geo. Davies.
'Farmers' & Merchants' Bank,
'Per O. W. Herring, Pres.'
While it would appear from the manner in which the notes and indorsements thereon are copied into the record that Reid and Davies were parties to the act of pledge, the record otherwise shows that those two individuals placed their names thereon only as indorsers, and really at the bottom of the back of the notes.
Ed. Geo. Davies being a nonresident, no personal service could he had as to him, and plaintiff reserved its right to sue at his domicile.
Judgment went by default as against Terry and Buck, and they have not appealed.
Defendant Reid answered, admitting all of the paragraphs of the petition except No. 9, which was merely for protest fees. He next set forth the collaterals mentioned on the back of the notes, and averred that plaintiff should apply to the payment of the principal notes all specially pledged securities before proceeding against the indorsers. The prayer was for a dismissal of the suit, and, in the alternative, for a stay of proceedings until the collaterals were exhausted, and for judgment against the makers for whatever amount might be recovered against defendant.
The case was submitted to the court below the first time June 19, 1917, on the pleadings, notes, collaterals, and protest papers which were filed in evidence by the plaintiff. Defendant Reid offered no evidence whatever, and the case was taken under advisement by the court. Afterwards, on July 9, 1917, and before the case had been decided, Reid filed a plea of division, setting up that he and Davies were accommodation indorsers and liable only as sureties. His prayer was for a division of liability as between himself and Davies. This plea was ordered filed and assigned for trial, apparently over the objection of plaintiff, was subsequently tried and sustained, and the case reinstated on the trial docket. Having been submitted, both on the plea and on the merits, on March 11, 1918, judgment was rendered, holding the notes sued on nonnegotiable, sustaining the plea of division, and in favor of plaintiff for one-half only of the amount claimed, with a stay of execution until the collaterals were exhausted. The item of protest fees was also rejected.
From this judgment, plaintiff has appealed.
Opinion.We will dispose of the plea of discussion first, for, conceding for its purposes that the principal notes were nonnegotiable and defendant Reid's liability that of a surety, the manner and time of urging it, in our opinion, precluded its consideration by either the district court or by ourselves. The plea was dilatory in its nature, and therefore governed by articles 332 and 333 of the Code of Practice. Article 332 reads:
The next article requires 'that they should be pleaded in limine litis, before issue joined, otherwise they shall not be admitted,' and plainly states that such exceptions shall not be allowed after judgment by default, nor shall they 'be allowed in any answer in any cause.' See authorities cited under these articles in Garland's Revised Code of Practice.
The plea of discussion therefore came too late.
Plea of Division.
The plea of division is based upon the contention that the notes sued upon are nonnegotiable, and, as a consequence, the liability of Reid and Davies is as sureties, governed by the provisions of articles 3045 to 3049, inclusive, of the R. C. C., instead of that of indorsers of commercial paper, controlled by the Negotiable Instruments Law and the general law merchant. It is argued that the clause in the memoranda of pledge on the back of the principal notes, binding the collaterals to the payment of 'other liabilities' to the payee, destroys their negotiability; that the pledge obligates the makers to do something in addition to the payment of a sum of money, and makes the obligation of the indorsers more hazardous.
At this point, we digress from the question of negotiability for a moment to say that the contention of plaintiff's counsel, made in brief and argument, that defendant Reid, in his answer, judicially admits the solidary nature of the obligation, so as to preclude himself from urging the plea of division, is not, in our opinion, well founded. In the first place, the petition and notes must be read together, and, when so read, the notes being annexed and made part thereof, control the pleading. We take it that this principle is so well recognized as to need no citation of authority. Reading the answer, we find that it, in effect, admits the execution, indorsement, and delivery of the notes in the manner and form alleged, but denies liability to the extent claimed by the plaintiff. Besides, the character of the liability is a question of law, and only on questions of fact, with few exceptions, can one estop himself by pleading. Rul. Cas. Law, vol. 10, p. 673, tit., Estoppel, § 1, and authorities there cited.
Returning to the question of the negotiability of the notes which are the subject of this litigation, if they did not have the pledge memoranda on their backs, or, if the words 'to secure other liabilities' were eliminated, it could hardly be contended that they were nonnegotiable, as all other stipulations, both on their faces and in the act of pledge, are expressly authorized by Act No. 64 of 1904, and supported by the law merchant. It will be noted that the objectionable language, unlike the Dresser Case, 132 La. 532, 61 So. 561, and the Rabito Case, 141 La. 970, 76 So. 166, forms no part of the face of the notes, but appears as a part of a distinct act of pledge which could easily have been made separately and independently therefrom. The same result, from a legal standpoint, could have been obtained had the makers attached the collaterals to the notes here and indorsed upon the other obligations the fact that such collaterals were pledged for the payment of those also.
Both the contracts of pledge and indorsement are essentially different in their natures and legal effects from the note proper, as well as from each other, and are governed in many respects by entirely different laws. The maker of a promissory note is bound primarily and unconditionally, while the obligation of the indorser is secondary and conditional. The former promises to pay a stated sum at all events on a fixed or determinable date, while the latter agrees that he will do so in event the maker does not, upon proper notice, at which time his obligation becomes fixed. The contract of pledge must follow certain well-recognized legal forms as to delivery and possession, etc., but otherwise may vary according to the whims of the contracting parties. The three contracts may be, and often are, made and affected by the laws of different states, though a part of the same undertaking.
Defendant Reid relies on the Dresser Case, supra, as holding specifically that the including of a stipulation in the face of a note, pledging collaterals to the payment of obligations other than the note itself, destroys its negotiability. As stated in the Rabito Case above referred to, the...
To continue reading
Request your trial-
McCornick & Co. v. Gem State Oil & Products Co.
... ... (Utah State Nat. Bank v. Smith, 180 Cal. 1, 179 P ... 160; Nickell v. Bradshaw, 94 Ore. 580, 1 A. L. R ... 623, 183 P. 12; Farmers & Merchants' Bank v ... Davis, 144 La. 532, 80 So. 713; Acceleration ... Judge Dawkins in ... Farmers' & Merchants' Bank v. Davies, 144 ... La. 532, 80 So. 713, very aptly said: ... "The ... ...
-
Woods v. Spann
... ... transferred by the holder to the State Bank Commissioner, in ... charge of the Bank at Altheimer, and by the Deputy ... negotiable instrument itself, Farmers' & Merchants' Bank v. Davies, 80 So. 713; 144 ... La. 532; and (b) even ... ...
-
Anderson v. Border
... ... $10,304.85, payable six months after date to the Empire Bank & Trust Company, at Lewistown, Mont., with interest at the ... rate of 10 ... by the court. Farmers' Bank v. Davies, 80 So ... 713, 144 La. 532; Jones County Bank v ... U.S. Nat. Bk ... v. Shupak, 172 P. 324, 54 Mont. 542; Merchants' ... Nat. Bk. v. Smith, 196 P. 523, 59 Mont. 280, 15 A. L. R ... 430 ... ...
-
Mitchell v. Holomon
... ... litis (C. P., Arts. 332, 333; Farmers' & ... Merchants' Bank vs. Davies, 144 La. 532, 80 So ... 713), and ... ...