Houston v. Lawhead
| Decision Date | 03 December 1935 |
| Docket Number | (CC 529) |
| Citation | 116 W.Va. 652 |
| Court | West Virginia Supreme Court |
| Parties | T. F. Houston v. C. E. Lawhead, Receiver |
1. Bills and Notes
Under the Negotiable Instrument Law, Code 1931, 46-5-6, a person negotiating a note by an indorsement without recourse, nevertheless engages that the note is valid.
2. Bills and Notes
The warranties imposed by law on the assignor of a note are ordinarily omitted from an indorsement, "according to the custom of merchants and for convenience of commerce." Such an indorsement on the note is "but a shorthand expression of the contract," and is regarded as if it contained in extenso the said warranties.
3. Bills and Notes
An action for the recovery of money paid for a note, under a warranty imposed by law, is an action on a written contract and may be maintained in the statutory notice of motion for judgment.
4. Limitation of Actions
The statute of limitations applicable to an action on a warranty imposed by law upon a written indorsement is ten years. Point 3 of the syllabus in Bank v. Spates, 41 W. Va. 27, 23 S. E. 861 () is disapproved.
Certified from Circuit Court, Marshall County.
Action by notice of motion for judgment by T. F. Houston against C. E. Lawhead, receiver of the Bank of Cameron. A demurrer to the notice was overruled and the ruling certified for review.
Affirmed.
John P. Arbenz, for plaintiff.
John C. Hopkins, for defendant.
This action involves the liability of one who assigns a note without recourse. The plaintiff is the assignee of the note and the Bank of Cameron is the assignor. The plaintiff apprised the receiver of the Bank by a notice in writing that a motion for judgment on the note against him would be made in the circuit court of Marshall County. A demurrer to the notice was overruled and its sufficiency certified here.
The notice alleges that for value received the Bank of Cameron assigned to the plaintiff in November, 1927, without recourse, a demand note of Aleppo Township in the State of Pennsylvania, dated July 30, 1927, and payable to and at the Bank; that the note was executed by three named individuals, signing as supervisors of the Township; that during 1930 the plaintiff made several fruitless demands of payment at the Bank; that afterwards he sued the Township on the note in the common pleas court of Greene County, Pennsylvania, where he was denied judgment (in July, 1934), on the ground that the note was not executed in conformity with the constitution and the laws of Pennsylvania and was invalid; and that he then demanded payment of the note of the receiver of the Bank, which was refused.
The demurrer itself lists a number of points against the notice, but demurrant's brief relies upon only "three principal points," which for the purpose of this opinion are discussed under two, as follows:
1. The demurrant contends that the Bank is not liable on the note because the assignment was made without recourse, and if not for that reason, because the plaintiff has not exhausted his remedies for recovery against the Township.
The Negotiable Instrument Law, Code 1931, 46-5-6, provides that a person negotiating a note by a qualified indorsement, nevertheless warrants "That the instrument is genuine and in all respects what it purports to be." This warranty engages that the instrument assigned is valid. Institute v. Siers, 68 W. Va. 125, 127-8, 69 S. E. 468; Annotation, Ann. Cases 1912A, 924; Daniel on Neg. Lists. (7th Ed.), sec. 743; 8 C. J., subject Bills and Notes, see. 584. A note transferred without recourse does not exempt the transferor from liability on the warranties imposed by the Negotiable Instrument Law. Lutz v. Matheny, 208 111. App. 40; Daniel, supra, page 772. The note herein, according to the judgment of a Pennsylvania court of competent jurisdiction, was not a valid note of Aleppo Township, which, under the allegations of the notice, the note purported to be. Consequently the plaintiff could rescind and recover the purchase price paid for the note. 55 C. J., subject Sales, sec. 1065.
The demurrant raises the two questions, (a) whether or not the note is made by the Township or by the three individuals who signed as supervisors of the Township, and (b) the ultimate right of the holder of the note to recover of the Township in assumpsit for money had and received under such decisions as Ohlinger v. Township, 312 Pa. 289, 167 A. 882, 90 A. L. R. 1227.
(a) The law of Pennsylvania seemingly requires no special formality in the execution of the note of a township (see Pennsylvania Statutes, sec. 6470, and Georges Township v. Trust Co., 293 Pa. 364, point 23 syl., 143 A. 10). Since the notice alleges the instant note to be that of Aleppo Township, and no Pennsylvania authority is cited by demurrant showing that a township does not sign a note in the manner this note is allegedly signed, it will be treated (on demurrer) as that of the Township, (b) The Bank did not warrant that sometime in some way plaintiff would obtain his money from the Township. On the contrary, by the words "without recourse" the Bank declined to underwrite payment by the Township. Daniel, supra, page 771. It is illogical that an obligation specifically repudiated by the Bank should control another obligation specifically imposed on it by law. Hence, plaintiff's right to maintain this proceeding depends not at all upon his ultimate failure to collect from the Township.
2. The demurrant further contends that if he is liable on the note, assumpsit and not notice of motion for judgment is the proper remedy. He relies on such cases as Schaffner v. Supply Co., 80 W. Va. 111, 92 S. E. 580, and Hoge v. Ward, 109 W. Va. 515, 155 S. E. 644. Those cases do not hold that assumpsit is an exclusive remedy when damages for the breach of a warranty are waived, but merely that assumpsit is a proper remedy. Whether a warranty is express or implied, it is incidental to a contract and is itself essentially contractual. 55 C. J., subject Sales, sees. 668 and 671; 24 R. C. L., idem, sec. 425. "An implied warranty is an implied contract, '' said Judge Maxwell, speaking for the court in Hoge v. Ward, supra, page 522. Here, the demand is not for whatever damages plaintiff may have suffered because the note was invalid, but solely for the purchase price of the note under the contract of warranty, a money demand pure and simple. Code 1931, 56-2-6, provides: "Any person entitled to recover money by action on any contract may, on motion before any court which would have jurisdiction in an action obtain judgment for such money after not less than twenty days notice, ''...
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Mountain State Water Co. v. Town Of Kingwood, (CC 604)
...on contract. Lambert v. Morton, 111 W. Va. 25, 160 S. E. 223; White v. Conley, 108 W. Va. 658, 662, 152 S. E. 527; Houston v. Lawhead, 116 W. Va. 652, 182 S. E. 780, 782. So, at the outset, it becomes most pertinent to determine whether the notice in question sufficiently sets out a contrac......
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Mountain State Water Co. v. Town of Kingwood
... ... Lambert v ... Morton, 111 W.Va. 25, 160 S.E. 223; White v ... Conley, 108 W.Va. 658, 662, 152 S.E. 527; Houston v ... Lawhead, 116 W.Va. 652, 182 S.E. 780, 782. So, at the ... outset, it becomes most pertinent to determine whether the ... notice in question ... ...
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State Ex Rel. Boone Nat'l Bank Of Madison v. Manns.
...questions whether the declaration shows liability on the part of the defendant Pelfrey under the principle announced in Houston v. Lawhead, 116 W. Va. 652, 182 S. E. 780, and whether there is a misjoinder of parties defendant under the rule laid down in State ex rel. Shenandoah Valley Natio......
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State ex rel. Boone Nat. Bank of Madison v. Manns
...questions whether the declaration shows liability on the part of the defendant Pelfrey under the principle announced in Houston v. Lawhead, 116 W.Va. 652, 182 S.E. 780, whether there is a misjoinder of parties defendant under the rule laid down in State ex rel. Shenandoah Valley National Ba......