Hunt v. Standart

• Decision Date: 27 November 1860
• Citation: 15 Ind. 33
• Parties: Hunt and Others v. Standart and Others
• Court: Indiana Supreme Court

15 Ind. 33

Hunt and Others v. Standart and Others

Supreme Court of Indiana

November 27, 1860

APPEAL from the Marion Circuit Court.

The judgment as to Wolf and Hill, the indorsers, is reversed with costs made against them; and as to the other defendants it is affirmed, with costs.

N. B Taylor for appellants.

OPINION

Worden, J.

Suit by Standart and others as indorsees, against a part of the appellants as makers, and against the others as indorsers, of a promissory note, set out as follows, viz: "$ 2,000. Indianapolis, March, 23, 1858.

Two months after date we promise to pay to the order of M. Wolf, at the Mercantile Bank, N. Y., two thousand dollars, value received, without any relief whatever from valuation or appraisement laws.

(Signed,) Hunt & Andersons.

(Indorsed,) M. Wolf. John F. Hill."

Pleadings were filed, issues formed, and the cause tried by the Court; resulting in a finding and judgment for the plaintiffs against all the defendants for the amount of the note, and interest.

The note, it appears, was made and indorsed in Indiana; and the question is raised upon the pleadings and otherwise, by Wolf and Hill, the indorsers, whether their liability as such, is to be determined by the law of Indiana, where their indorsement was made, or by the law of New York, where the note was payable. If by the law of New York, the judgment is right, as the proper steps seem to have been taken to hold the indorsers liable according to that law; such notes being there governed by the law merchant: but if, on the other hand, the law of Indiana is to determine the liability of the indorsers, they can not be held liable upon the facts shown; "due diligence" not having been used to collect the note of the makers, as required by our law, and no excuse appearing for the want of such diligence. In this State, promissory notes payable in a bank in this State, only, are placed upon the footing of bills of exchange, and governed by the law merchant.

We suppose it to be clear, that the liability of an indorser of a note, payable generally, without any place of payment being specified, is to be determined by the law of the State, or place, where the indorsement is made. Yeatman v. Cullen, 5 Blackf. 240; Edwards on Bills, &c., 186. But the question, whether this be the case in relation to a note made payable in another State than that in which it is indorsed, requires some further examination.

In the case of a note made in one State and payable in another, it is clear, by all the authorities, that the maker will be held liable according to the law of the place where it is payable; as that is the place where his contract is to be performed, and he is presumed to have contracted with reference to the law of that place. Cox & Dick v. The United States, 6 Peters 172; Story on Prom. Notes, § 165. It does not follow, however, because the contract of the maker would be governed by the law of the place of payment, that the contract of the indorser would be governed by the same law. The maker binds himself to pay at the place named in the note for payment, and there his contract is to be performed. The indorser promises, upon certain conditions, which are not expressed in the contract of indorsement, but which are implied by law, that he will pay the note; but not that he will pay it at the place named in the note for payment. His promise is general, for the payment of the note upon the implied conditions; and such general promise, not specially to be performed elsewhere, is governed by the lex loci contractus, which must determine the conditions upon which he is to be held liable.

The authorities establishing the proposition, that the contract of indorsement in such case, is governed by the law of the place where made, and not by that of the place where the note is payable, are clear, and to our minds, satisfactory. Some of them will be noted. In Aymer v. Sheldon, 12 Wend. 439, a bill of exchange was drawn at St. Pierre, Martinique, on a person at Bordeaux, in France, and indorsed by the payees, at the city of New York. It was held, that the contract of indorsement was governed by the law of New York, where the indorsement was made, and not by that of France, where the bill was payable.

The same doctrine was held in the case of Allen v. The Merchant's Bank, &c., 22 Wend. 215, 239. Again, in Everett v. Vendryes, 19 N.Y. (Ct. Ap.) 436, a bill had been drawn in New Granada, payable in New York, to one Jimenes, who had indorsed it in New Granada. The suit was by the holder against the drawer. The Court say, that the indorsement "is considered to be a separate contract, and the obligations of the parties to it are to be determined according to the law of the country where it was made; so that if this was a question between indorser and indorsee, we should have to resort to the laws of New Granada, to determine what obligations Jimenes assumed by indorsing the bill to the plaintiff."

In Holbrook v. Vibbard, 2 Scam. 465, a note was made in New York, payable in Chicago, and indorsed by the payees in New York. It was held that the liability of the indorsers must be determined by the law of New York, and not by that of Illinois. In Lowry's adm'r v. The Western Bank of Georgia, 7 Ala. N. S. 120, a note was made payable at the Western Bank of Georgia, and indorsed in Alabama. The contract of indorsement was held to be governed by the law of Alabama, and not that of Georgia. The Court say, "every indorser of a bill drawn in this State upon another, or upon a foreign country, enters into the contract with a view to the negotiation and payment of the bill there; but this does not, in any manner, bring his indorsement within the influence of the laws which are local to the place where the bill is payable." In Dundas v. Bowler, 3 McLean 397, the same doctrine as maintained. There the Court quote with approbation, the following passage from Story's Conflict of Laws. "A bill of exchange was drawn in Massachusetts on England, and indorsed in New York; and again it was indorsed by the first indorsee in Pennsylvania, and by the second in Maryland. The bill was dishonored, and a question was made for what amount of damages the respective indorsers were liable. In Massachusetts, the damages on a protested foreign bill were ten per cent.; in New York, twenty, and in Maryland, fifteen; and it was held that each indorser was liable under the law of the place where the indorsement was made. Each indorsement was considered a new contract, governed by the lex loci; and each indorser bound himself to pay, should the bill be dishonored, the damages given by that law."

There are many other cases scattered through the books, to the same effect, but it is unnecessary to collect them here. There seems to be no distinction recognized, in respect to the liability of the indorser or a note or bill, between those payable in, and those payable out of the State or country where they are indorsed; and we think no distinction exists in principle. Here we might, and probably should, drop this branch of the case, were it not that there is a decision in our own reports, holding a contrary doctrine. The case alluded to is Shanklin v. Cooper, 8 Blackf 41. There, a promissory note, payable in New York, had been indorsed in Indiana, as in the case at bar; and a question arose whether the contract of indorsement was governed by the law of New York, or by that of Indiana, as in the case at bar. The Court say in that case, "We consider the indorsement to be a contract which must be governed by the law of the place where the note is payable, without regard to the place where the indorsement was actually made. The maker, of the note before us, bound himself to pay it in New York, to the payee or order, and the payee, by the indorsement, directed him to pay it at the same place, to the indorsee. The indorser is, indeed, the drawer of a bill of exchange, in which the maker of the note is the acceptor, and the indorsee the payee; and it is payable where the note is payable. The indorsement in the present case, therefore, if made in this State, stands on the same ground with a bill of exchange drawn here, and payable in New York; and there can be no doubt but that the contract of the drawer of such bill would be governed by the law of New York." This reasoning, with great deference to the learning and ability of the distinguished Judge who delivered the opinion in that case, seems quite unsatisfactory and inconclusive. The proposition thus advanced, that the indorser of a note, "is, indeed, the drawer of a bill of exchange," is quite in harmony with the authorities, and commends itself to our judgment; but the position is useless in the argument, indeed it is suicidal, unless the proposition last advanced can be maintained, viz.: that the contract of the drawer of such bill would be governed by the law of New York. If this proposition can not be maintained, but if, on the contrary, the contract of the drawer of a bill, is governed by the law...