First Nat. Bank Of Henderson v. Johnson

• Decision Date: 29 September 1915
• Docket Number: (No. 110.)
• Citation: 169 N.C. 526,86 S.E. 360
• Court: North Carolina Supreme Court
• Parties: FIRST NAT. BANK OF HENDERSON. v. JOHNSON.

86 S.E. 360

169 N.C. 526

FIRST NAT. BANK OF HENDERSON.

v.JOHNSON.

(No. 110.)

Supreme Court of North Carolina.

Sept. 29, 1915.

Clark, C. J., dissenting.

Appeal from Superior Court, Vance County; Ferguson, Judge.

Action by the First National Bank of Henderson against S. H. Johnson. Judgment for defendant, and plaintiff appeals. Reversed.

The action is brought to recover on the following promissory note:

"$600.00. Henderson, N. C, March 30, 1914.

"Ninety days after date, for value received, I promise to pay to the First National Bank of Henderson, N. C., or order, six hundred dollars, negotiable and payable at said bank, with interest at the rate of six per cent. per annum, after maturity, having deposited with said bank as collateral security for payment of this or any other liability or liabilities of——to said bank, due or to become due, or which may hereafter be contracted, the following property, viz.: Two notes $250.00 each, signed by M. W. and Nannie Askew, secured by real estate, with such additional collateral as may from time to timebe required by the president or cashier of the First National Bank of Henderson, N. C., and which additional collaterals I hereby promise to give at any time on demand, and if not so given when demanded, then this note to become due and payable at once, with full power and authority to said bank to sell, assign, and deliver the whole or any part thereof, or any substitutes therefor, or any additions thereto, at any brokers' board, or at public or private sale as the option of said bank, or its president or cashier, or its or their, or either of their assigns, on the nonperformance of this promise, or the nonpayment of any of the liabilities above mentioned, or at any time or times thereafter, without advertisement or notice, which are hereby expressly waived; and upon such sale the holder hereof may purchase the whole or any part of such securities discharged from any right of redemption and by these presents; and after deducting all legal or other costs and expenses for collection, sale, and delivery, to apply the residue of the proceeds of such sale or sales so to be made to pay any, either, or all of said liabilities to said bank or its assigns as its president or cashier, or it, or its or their, or either of their assigns, shall deem proper, returning the overplus, if any, to the undersigned. And the undersigned agrees to be and remain liable to the holder hereof for any deficiency.

"The subscribers and indorsers hereby agree to continue and remain bound for the payment of this note and all interest and charges thereon, notwithstanding any extension of time granted to the principal, hereby waiving all notice of such extension of time.

"[Signed] M. H. Johnston.

"R. H. Johnston.

"Int. paid to Aug. 27th.

"Int. paid to Sept. 26th.

"Int. paid to Nov. 15th."

The name of defendant written on back of note as indorser. No notice of dishonor or of nonpayment was given by the plaintiff to the defendant at or before maturity. The defendant pleaded this want of notice as a bar to any recovery against him.

The court rendered judgment in favor of the defendant, and the plaintiff appealed.

T. T. Hicks, of Henderson, for appellant.

A. C. & J. P. Zollicoffer, of Henderson, for appellee.

BROWN, J. (after stating the facts as above). The following statutes are in point:

Revisal, § 2239:

"Except as herein otherwise provided, when a negotiable instrument has been dishonored by nonacceptance or nonpayment, notice of dishonor must be given to the drawer, and each indorser, and any drawer or indorser to whom such notice is not given is discharged."

Revisal, § 2259:

"Notice of dishonor may be waived either before the time of giving notice has arrived or after the omission to give due notice, and the waiver may be express or implied."

Revisal, § 2260:

"Where the waiver is embodied in the instrument itself it is binding upon all parties."

Revisal, § 2261:

"A waiver of protest, whether in the case of a foreign bill of exchange or other negotiable instrument, is deemed to be a waiver not only of a formal protest but also of a presentment and notice of dishonor."

Revisal, § 2270:

"A person secondarily liable on the instrument is discharged * * * by any agreement binding upon the holder to extend the time of payment or to postpone the holder's right to enforce the instrument, unless made with the assent of the party secondarily liable or unless the right of recourse against such party is expressly reserved."

It is well settled that a surety on a promissory note or bond is not entitled to notice of dishonor or nonpayment, but one who places his signature upon the back of a commercial paper without indication that he signed in any other capacity is deemed an indorser and is entitled to notice of dishonor. Houser v. Fayssoux, 168 N. C. 1, 83 S. E. 692; Bank v. Wilson, 168 N. C. 557, 84 S. E. 866. This notice of dishonor may be waived by the indorser before or after the maturity of the note by express words or by necessary implication. When so waived, notice of dishonor need not be given.

The facts in this case are that the principals to the note paid interest on the same to November 15, 1915, and that no notice of dishonor or nonpayment by the makers was given by plaintiff to the defendant, but that plaintiff, on December 9, 1914, placed said note for collection in the hands of its attorney, who then at once notified the makers and the defendant, S. H. Johnson, that it had not been paid, and demanded payment of all of them; that said defendant, S. H. Johnson, at once called on said attorney, and brought with him Mr. Richardson, who was considering taking up the same with the collateral, and said Richardson took the note and collateral to examine it, and later returned it and declined to take it

It is contended by the plaintiff that notice of dishonor was waived by the indorser by the express words of the instrument, and that, having consented to such indefinite extensions of payment as the principals to the note and the plaintiff should agree upon, the indorser is not entitled to notice of nonpayment.

The defendant contends that he consented to the extensions of time granted the principals, and consequently he was bound by such waiver up to November 15, 1915. At that time the extension ended, the note matured, and the defendant indorser, was then entitled to notice of nonpayment and dishonor.

The authorities seem to hold that, where the indorser consents in advance of maturity to extensions of the time of payment of the note, he thereby waives his right to receive notice of dishonor and presentment for payment. Worley v. Johnson, 33 L. R. A. 641, notes.

In Daniel on Neg. Inst. (6th Ed. by Calvert) § 1106, it is said:

"Where the indorser agrees to an extension of time of payment, it waives demand, protest, or notice."

In Cady v. Bradshaw, 116 N. T. 191, 22 N. E. 371, 5 L. R. A. 557, it is held that, where the indorser consented that time of payment be extended a year, he in effect waived notice of dishonor and demand for payment—citing Parsons on Notes and Bills, 587, and many...