First Nat. Bank v. Eureka Lumber Co.
| Decision Date | 25 October 1898 |
| Citation | 31 S.E. 348,123 N.C. 24 |
| Parties | FIRST NAT. BANK OF WASHINGTON v. EUREKA LUMBER CO. |
| Court | North Carolina Supreme Court |
Appeal from superior court, Beaufort county; Norwood, Judge.
Action by the First National Bank of Washington against the Eureka Lumber Company. From a judgment for plaintiff, defendant appeals. Reversed.
The confession of judgment by the maker of a note in favor of the holder thereof does not discharge sureties or indorsers who are not parties thereto.
W. B Rodman, for appellant.
Charles F. Warren, for appellee.
The plaintiff alleges in its complaint that the defendant company indorsed and guarantied to the plaintiff the payment of the notes sued upon,--the notes having been executed by the Washington Planing Mills to the defendant; and the counsel of the plaintiff, in the conduct of the trial, and in his argument here, treated the writing on the back of the notes as an indorsement, and not as a guaranty. The defendants, in their answer, denied that they were either guarantors or indorsers of the notes, and averred that they simply sold the notes to the plaintiff. On the trial, however, the president of the defendant company, as a witness for the defendants testified, in substance, that the defendants had an agreement with the plaintiff by which these notes were to be discounted by the plaintiff bank upon their indorsement by the defendants and others, and that in pursuance of that agreement the notes were indorsed by the defendants, and discounted by the plaintiff. So we will take it as an intended indorsement, and not as a guaranty; thereby eliminating from the discussion the conflicting testimony of the witness as to the nature of the words on the back of the notes, and as to the time when they were placed there. But the defendants insist that the indorsement was not made according to the requirements of the by-laws of defendant company, and therefore created no liability against them. If it be conceded that the by-laws were not strictly followed in reference to the indorsement, yet it appeared by the testimony of the defendants' witnesses that the money for which the notes were discounted was entered to the credit of the defendants in the plaintiff's bank, and was drawn out by the defendants for their uses and purposes. The defendants will not be allowed, under such conditions, to deny that they made the indorsements.
The defendants further insist that, even if there was an indorsement by them of the notes, this action cannot be maintained, because they say that no notice of any demand upon the makers of the notes was given to the defendants before the commencement of this action. There is nothing in that contention. No such notice was necessary. The indorsement was upon a plain promissory note, and rendered the defendants liable as sureties; and no demand on the maker, or notice to the defendants of such demand, was necessary previous to the bringing of this action. Code, § 50.
Another contention of the defendants was that as the maker of the note (the Washington Planing Mills) had, before the commencement of this suit, confessed a judgment to the plaintiff for the amount of the notes, the notes had been on that account merged in the judgment; and they asked his honor to instruct the jury that the notes were merged in the judgment, that they had ceased to exist for any purpose, and that the plaintiff could not maintain any action on them against the defendants. His honor was right in refusing to give the instruction. Between the parties to an action wherein a judgment is rendered, the judgment is a merger, and the note or instrument sued upon is extinguished; but, as to sureties or indorsers who are not parties to the judgment there is no merger or extinguishment of the note or instrument. Code, § 186; Hix v. Davis, 68 N.C. 231.
The defendants requested the court (No. 3) to instruct the jury "that it being admitted...
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