First State Bank of Laramie v. Rock Creek Producers Oil Company

• Citation: 34 Wyo. 405,244 P. 372
• Decision Date: 30 March 1926
• Docket Number: 1243
• Parties: FIRST STATE BANK OF LARAMIE v. ROCK CREEK PRODUCERS OIL COMPANY. [*]
• Court: United States State Supreme Court of Wyoming

244 P. 372

34 Wyo. 405

FIRST STATE BANK OF LARAMIE v. ROCK CREEK PRODUCERS OIL COMPANY. ^[*]

No. 1243

Supreme Court of Wyoming

March 30, 1926

APPEAL from District Court, Albany County; VOLNEY J. TIDBALL, Judge.

Action by the First State Bank of Laramie against the Rock Creek Producers Oil Company and others. From a judgment for plaintiff against Rock Creek Producers Oil Company, plaintiff appeals.

Affirmed.

F. E Anderson, for appellant.

The action was upon notes of the Rock Creek Producers Oil Company, which were indorsed by the defendants; the trial court held that the indorsing defendants were liable as such under the law but that the evidence was insufficient to show notice of non-payment and dishonor, as required by law; said indorsers were accommodation indorsers; 4048 C. S. Sub. Div 3; Luckenbach v. McDonald, 164 F. 296; and as such were not entitled to notice; Verser v. Refining Co., 313 P. 863; Westinghouse Co. v. Hodge, (Mo.) 167 S.W. 1186; Oscar Waechter was President of the Oil Company and had actual notice of dishonor when the notes were presented to him for payment; Westinghouse Co. v. Hodge Supra; Hefferon, another indorser, was also active in the control of the company's affairs and notice to him would have been useless; defendants had given checks for more than $ 6,000.00 and Waechter, Hefferon and Sullivan agreed to sign notes personally to get the checks paid; they were President, Secretary and Treasurer, respectively, of the corporation defendant. This case falls under subdivisions 2 and 3 of 4048 C. S., and notice of dishonor was unnecessary.

A. W. McCollough, for respondents, Waechter and Hefferon.

The petition charged these defendants as joint makers, which was denied; defendants also denied notice of non-payment of any note due plaintiff indorsed by defendants; the case is here upon the correctness of the ruling below, that defendant indorsers were discharged from liability for failure of the bank to give notice of dishonor, demand and non-payment; the evidence shows that the checks had been cashed prior to the giving of the notes; that the indorsers did not receive notice of non-payment is conceded; the rights and liabilities of indorsers are clearly defined by the Negotiable Instruments Law; 3950, 4004, 4008; 4013, 4022, 4033, 4035, 4036, C. S.; it is contended that defendants were accommodation indorsers and not entitled to notice of non-payment; or if not accommodation indorsers, they were officers of the corporation; the cases cited by appellant do not seem to sustain its position; Section 4048, Sub. Div. 2, does not apply because no presentment was made; Case v. McKinnis, (Ore.) 213 P. 429; Bank v. Buckel, (Ky.) 156 S.W. 856; Noland v. Co., (Tenn.) 195 S.W. 581; Crane v. Downs, (Kan.) 196 P. 600; Grandison v. Robertson, 231 F. 785; there is no presumption that a member of the firm, a stockholder, or officer of a corporation, who indorses its negotiable notes at the time they were made, was benefited thereby and without proof to that effect, they will only be held as indorsers, relieved of liability in the absence of notice of dishonor; Tucker v. Mueller, (Ill.) 122 N.E. 847; Bennet v. Kistler, 163 NYS, 555; Case v. McKinnis, Supra; Maynard Trust Co. v. Furbush, (Mass.) 137 N.E. 270; Bank v. Katterjohn, (Ky.) 125 S.W. 1071; Bank v. Clark, (Kan.) 208 P. 549; the fact that the indorsers were directors or officers of a corporate maker, does not excuse lack of notice and strict proof is required to show a waiver of presentment and dishonor; Keiser v. Co., (Calif.) 191 P. 552; Phipps v. Harding, 70 F. 468; Marshall v. Sonneman, (Pa.) 64 A. 874; the entire question is fully discussed in Bank v. Bach, (Ore.) 193 P. 1041; Auto Co. v. Winters, (Mo.) 210 S.W. 1; Rockfield v. Bank, (Ohio) 83 N.E. 392; failure of notice of dishonor discharges the indorser; Long v. Gwin, (Ala.) 66 So. 88; Gresham v. Bank, (Miss.) 95 So. 65; Hall v. Crane, (Mass.) 100 N.E. 554.

C. V. Garnett, for respondent, Sullivan.

It is conceded that the provisions of 4022 and 4035 C. S. are not complied with and that no notice of dishonor was given the indorsers; it is not shown that Sullivan is either a stockholder or an officer of the corporation; respondents are accommodation indorsers and notice of dishonor was necessary; 3962, 4022, 4036, 4037 C. S.; Maynard v. Furbush, 137 N.E. 270; Gresham v. Bank, (Miss.) 95 So. 65; Verser v. Oil Co., (Okla.) 213 P. 863; Bank v. Clark, (Kan.) 208 P. 549; 8 C. J. 252 and cases cited; 3 R. C. L. 1120; where corporate officers indorse a note, the proceeds of which are received by the corporation, the note is not made for the accommodation of the individuals; cases cited, supra; in order to excuse notice to them, it must be proven that they are the persons to whom presentment must be made; Nolan v. Wilcox, (Tenn.) 195 S.W. 581, and cases cited, supra.

BLUME, Justice. POTTER, C. J. and KIMBALL, J., concur.

OPINION

BLUME, Justice.

This is an action brought by the First State Bank of Laramie, a banking corporation, against the Rock Creek Producers Oil Company, a corporation, Oscar Waechter, John Hefferon and J. R. Sullivan, defendants, to recover $ 8504.46, upon two promissory notes. The case was tried to the court without the intervention of a jury. Judgment was rendered in favor of plaintiff, for the amount claimed, against the Rock Creek Producers Oil Company, but relief was denied as to the other defendants. From this judgment of the court, so refusing to enter judgment against Waechter, Hefferon and Sullivan, the plaintiff has appealed. The parties will hereinafter be referred to in the same manner as in the court below.

The suit was brought upon two promissory notes, one for $ 1,000, dated May 24, 1920, due three months after date, and the other for $ 6,359.69, dated July 17, 1920, payable on demand. Both notes were given to the First State Bank of Laramie, were payable at its banking house and were signed on behalf of the Rock Creek Producers Oil Company by Oscar Waechter, president, and John Hefferon, treasurer. Both notes were endorsed on the back thereof by the defendants, Oscar Waechter, John Hefferon and J. R. Sullivan. The last named note was given in payment of checks issued on April 14, 1920, June 5, 1920 and June 8, 1920. The defendant Waechter was president and the defendant Hefferon secretary and treasurer of the Rock Creek Producers Oil Company. It is conceded that no notice of dishonor of the notes was given to the endorsers aforesaid, as required by section 4022, W. C. S. 1920, and the case was dismissed against them for that reason.

1. The question is raised as to whether or not the defendants Waechter, Hefferon and Sullivan were endorsers. Section 3997, W. C. S. 1920, provides that:

"A person placing his signature upon an instrument, otherwise than as maker, drawer or acceptor, is deemed to be an endorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity."

The parties just mentioned placed their signature upon the back of the notes, without any special indication as to the capacity in which they would be bound. We have, accordingly, no doubt that they were endorsers and as such entitled to notice of dishonor, as provided by section 4022, supra.

2. Counsel for plaintiff call our attention to section 4048, W. C. S. 1920, which provides, among other things, that notice of dishonor is not required to be given to an endorser "where the instrument was made or accepted for his accommodation," and the claim is made that the notes in question were made for the accommodation of the endorsers in the case at bar. The testimony, however, shows that the notes were made by and for the benefit of the Rock Creek Producers Oil Company, and that the endorsers received no benefit from the note, except only as other stockholders of the company were benefitted. All of the money represented by the notes was used by the oil company. It is clear that, under these circumstances, the notes in the case at bar cannot be said to have been made for the accommodation of the endorsers. First National Bank v. Bach, 98 Ore. 332, 193 P. 1041; Louisville First Nat. Bank v. Bickel, 143 Ky. 754, 137 S.W. 790; Case v. McKinnis, 107 Ore. 223, 213 P. 422, and many cases there cited. Counsel for plaintiff call our attention to the case of Luckenbach v. McDonald, 164 F. 296. That case, however, was reversed by the Circuit Court of Appeals of the third circuit, as appears in 170 F. 434.

3. It is further claimed that notice of dishonor was unnecessary because Waechter was the president and Hefferon the secretary and treasurer of the oil company. The claim is based on the provision of section 4048, supra, which states that notice of dishonor is not required to be given an endorser "where the endorser is the person to whom the instrument is presented for payment." The defendant Sullivan was not shown to be in any way connected with the oil company and hence no reason has, in any event, been shown to excuse want of notice to him. Further, it is the general rule that an officer or a stockholder of a corporation, who endorses a negotiable instrument of the corporation, as in the case at bar, cannot be held liable thereon in the absence of notice to him of dishonor. Maltass v. Siddle, 6 C. B. N. S 494, 95 E.C.L. 494, 141 Eng. Rep. 549; Phipps v. Harding, 70 F. 468, 30 L.R.A. 513; McDonald v. Luckenbach, 170 F. 434; Grandison v. Robertson, 231 F. 785; Winter v. Coxe, 41 Ala. 207; Louisville First Nat. Bank v. Bickel, 154 Ky. 11, 156 S.W. 856; Field v. Newspaper Co., 21 La. Ann. 24, 99 Am. Dec. 699; Keiser v. Dredging Co., 48 Cal.App. 38, 191 P. 552; Houser v. Fayssoux, 168 N.C. 1, 83 S.E. 692, Ann. Cas. 1917B 835; Verser v. Sterling Oil & Refining Co., 89...