Mackintosh v. Gibbs

• Decision Date: 30 November 1909
• Citation: 74 A. 708,79 N.J.L. 40
• Parties: MACKINTOSH v. GIBBS et al.
• Court: New Jersey Supreme Court

74 A. 708

79 N.J.L. 40

MACKINTOSH

v. GIBBS et al.

Supreme Court of New Jersey.

Nov. 30, 1909.

(Syllabus by the Court.)

Error to Court of Common Pleas, Monmouth County.

Action by James H. Mackintosh, executor of Sarah F. Mackintosh, deceased, against Ella J. Gibbs and another. Judgment for defendants, and plaintiff brings error. Reversed.

Argued February term, 1909, before the CHIEF JUSTICE, and SWAYZE, and PARKER, J.T.

Patterson & Rhome, for plaintiff in error.

John T. Temple, for defendants in error.

SWAYZE, J. This was an action brought against the indorsers of a promissory note of which the following is a copy:

"3,500.00 San Diego, Cal. October 7th, 1901.

"Two years after date, without grace, for value received, I promise to pay to the order of Ella J. Gibbs, at the First National Bank of San Diego, thirty-five hundred dollars, with interest at the rate of 5 per cent. per annum from October 7th, until paid, interest payable semiannually; and if not so paid to be compounded with and bear the same rate of interest as the principal; and should the interest not be paid when due, then the whole sum of principal and interest shall become immediately due and payable at the option of the holder of this note. Principal and interest payable in gold coin of the United States. Should suit be commenced, or an attorney employed to enforce the payment of this note, I agree to pay an additional sum of 6 per cent. on principal and accrued interest as attorney's fees in such suit.

"Robert F. Hibson.

"[Int. Rev. Stamp.] "Witness:

"Foster M. Voorhees. "H. E. Nelles."

The note was secured by a mortgage of even date on California lands. In 1902 Mrs. Gibbs assigned the note and mortgage to her husband, Coleman A. Gibbs, the other defendant, in California, for the purpose of enabling him to effect the sale thereof. On May 10, 1903, the two defendants assigned the note and mortgage to Sarah F. Mackintosh, the plaintiff's testatrix, and indorsed the note in blank and delivered the note and mortgage to her In Asbury Park, N. J. On October 7, 1903, the note was presented for payment at the bank where payable and payment refused. On the following clay payment was again demanded and refused, and the note protested and notice of the protest and demand mailed to each defendant. In 1905 the mortgage was foreclosed in California by the administrator with the will annexed of Sarah F. Mackintosh, to which suit the present defendants were not made parties. There was a deficiency judgment in the foreclosure, and the final account of the administrator with the will annexed was allowed by the California court October 12, 1906, and a decree of distribution made, directing the administrator to distribute the decedent's estate to the plaintiff herein, James H. Mackintosh. In the assignment of the mortgage from the defendants to the plaintiff's testatrix, it was stated that the time of payment of the mortgage had been extended two years from the date when due, but no notice of this extension was made on the note. The trial judge found as a fact that by the Civil Code of California there can be but one action for the recovery of any debt or the enforcement of any right secured by a mortgage upon real estate in California. He conceived that the plaintiff was barred of any recovery by reason of this provision of the California Code. In his opinion he intimated, also, that the plaintiff was not entitled to recover because he brought this suit in a representative capacity, while under the decree of distribution he was individually the owner of the note and mortgage. He found the facts specially, and did not find generally for the defendants, and it is the judgment on his finding which is presented for review by proper exceptions taken to his refusal to find in accordance with the requests of the plaintiff that the plaintiff was not obliged, in order to recover in this state, to have made the defendants parties to the foreclosure suit in California, and that the plaintiff had a legal right to maintain the suit and recover against the defendants on the ground that their indorsement of the note and the delivery of the same to the plaintiff's intestate in New Jersey constituted an independent valid contract between the defendants and the plaintiff's intestate, and the defendants could be held liable in this state upon the same without regard to the mortgage or foreclosure proceedings, and that the provisions of the California Code referred to did not apply to or bar this suit nor apply to the note or indorsements in question.

We think the trial judge fell into error through a failure to consider the exact character of the contract sued upon. That contract was evidenced by the signing of the names of the defendants upon the note at the time of the transfer in this state. Whether or not they intended to become liable for the payment of the note is a matter of no consequence, as their legal liability is determined, not by their intent, but by the effect which the law attributes to their act. That effect is to be determined by the law of New Jersey. The cases are collected in 7 Cyc. 836. It is sufficient to refer particularly to what was said by Chief Justice Marshall in Slacum v. Pomery, 6 Cranch, 221, 3 L. Ed. 205, and by the same distinguished court in the later case of Musson v. Lake, 4 How. 262, 278, 11 L. Ed. 967. The same rule has been adopted in this state. In Brownell v. Freese, 35 N. J. Law, 285, 10 Am. Rep. 289, Justice Van Syckel, in dealing with a bill of exchange, said: "The drawer is liable according to the law of the place where the bill is drawn, and each successive indorser is liable according to the law of the place where he indorses; every indorsement being treated as a new and substantive contract." The same doctrine was approved by the Court of Errors and Appeals in Oliphant v. Vannest, 58 N. J. Law, 162, 33 Atl. 382. Since the contract of the defendants was an independent contract, its validity and effect is to be determined, not only by the law of this state, where it was made, but by that law at the time when it was made. It is unnecessary to determine whether such a note was...