McAdam v. Grand Forks Mercantile Company, a Corporation

• Decision Date: 15 March 1913
• Court: North Dakota Supreme Court

140 N.W. 725

24 N.D. 645

MCADAM v. GRAND FORKS MERCANTILE COMPANY, a Corporation

Supreme Court of North Dakota

March 15, 1913

Appeal from a judgment of the District Court for Grand Forks County Templeton, J.

Affirmed.

Bangs Cooley, & Hamilton, for respondent.

The statute makes no distinction between an indorser before maturity and one after maturity. His rights and liabilities are the same in both cases. A. B. Farguhar Co. v Higham, 16 N.D. 106, 112 N.W. 557; Dan. Neg. Inst. 666; Rev. Codes 1905, Sec. 6368; Rev. Codes 1905, Sec. 6544; Leavitt v. Putnam, 3 N.Y. 494, 53 Am. Dec. 322; Beebe v. Brooks, 12 Cal. 309; Beer v Clifton, 98 Cal. 323, 20 L.R.A. 580, 35 Am. St. Rep. 172, 33 P. 204; Graul v. Strutzel, 53 Iowa 712, 36 Am. Rep. 250, 6 N.W. 119; German-American Bank v. Atwater, 165 N.Y. 36, 58 N.E. 763; Colt v. Barnard, 18 Pick. 260, 29 Am. Dec. 584; Patterson v. Todd, 18 Pa. 426, 57 Am. Dec. 622; Bassenhorst v. Wilby, 45 Ohio St. 333, 13 N.E. 75.

The defendant was entitled to notice of dishonor, demand for payment, etc. Merchants' Nat. Bank v. Bentel, 15 Cal.App. 170, 113 P. 708; Picklar v. Harlan, 75 Mo. 678.

The death of the maker does not excuse the making of demand. (Sec. 76); Leavitt v. Putnam, 3 N.Y. 494, 53 Am. Dec. 322; Beer v. Clifton, 98 Cal. 323, 20 L. R.A. 580, 35 Am. St. Rep. 172, 33 P. 204; Beebe v. Brooks, 12 Cal. 309; Scott v. First Nat. Bank, 71 Ind. 445; Code 1899, Neg. Inst. Law, Sec. 7; Lank v. Morrison, 44 Kan. 594, 24 P. 1106.

The plaintiff has not declared as upon a reissue note, but has sued defendant as an indorser. Koons v. McWhinney, 30 Ind. 74.

The defendant is a remote vendee only. There is no privity of contract between the last vendee and a remote vendor. Bordwell v. Collie, 45 N.Y. 494; Nelson v. Armour Packing Co. 76 Ark. 352, 90 S.W. 288, 6 Ann. Cas. 237; Smith v. Williams, 117 Ga. 782, 97 Am. St. Rep. 220, 45 S.E. 394; Thisler v. Keith, 7 Kan.App. 363, 52 P. 619; Asher Lumber Co. v. Cornett, 22 Ky. L. Rep. 569, 56 L.R.A. 672, 58 S.W. 438; Prater v. Campbell, 110 Ky. 23, 60 S.W. 918; Pemberton v. Dean, 88 Minn. 60, 60 L.R.A. 311, 97 Am. St. Rep. 503, 92 N.W. 478; Watson v. Chesire, 18 Iowa 202, 87 Am. Dec. 382.

The note was past due when it was purchased by the plaintiff. Morey v. Wakefield, 41 Vt. 24, 98 Am. Dec. 562; Vinton v. King, 4 Allen, 562; Paine v. Central Vermont R. Co. 14 F. 269; Bull v. First Nat. Bank, 14 F. 612; Camp v. Scott, 14 Vt. 387; Losee v. Dunkin, 7 Johns. 70, 5 Am. Dec. 245; Herrick v. Woolverton, 41 N.Y. 581, 1 Am. Rep. 461; LaDue v. First Nat. Bank, 31 Minn. 33, 16 N.W. 426; Thompson v. Hale, 6 Pick. 259; Carlton v. Bailey, 27 N.H. 230; American Bank v. Jenness, 2 Met. 288.

Plaintiff is not a purchaser in good faith--nor a holder in due course. Knowlton v. Schultz, 6 N.D. 417, 71 N.W. 550; McNamara v. Jose, 28 Wash. 461, 68 P. 903; Proctor v. Cole, 104 Ind. 373, 3 N.E. 106, 4 N.E. 303; Williams v. Huntington, 68 Md. 590, 6 Am. St. Rep. 477, 13 A. 336; Watkins v. Goessler, 65 Minn. 118, 67 N.W. 796; Smith v. Jansen, 12 Neb. 125, 41 Am. Rep. 761, 10 N.W. 537; Oppenheimer v. Farmers' & M. Bank, 97 Tenn. 19, 33 L.R.A. 767, 56 Am. St. Rep. 778, 36 S.W. 705; Dunn v. National Bank, 15 S.D. 454, 90 N.W. 1045.

Plaintiff could, in any event, recover no more than the amount he paid. Oppenheimer v. Farmers' & M. Bank, 97 Tenn. 19, 33 L.R.A. 767, 56 Am. St. Rep. 778, 36 S.W. 705; Coye v. Palmer, 16 Cal. 158; Dunn v. National Bank, 15 S.D. 454, 90 N.W. 1045; Harrington v. Butte & B. Min. Co. 19 Mont. 411, 48 P. 758; Dresser v. Missouri & O. R. & Constr. Co. 93 U.S. 92, 23 L.Ed. 815.

Geo. A. Bangs and Geo. R. Robbins, for appellant.

The obligation of an indorser of a promissory note after maturity, is no different than an indorsement before maturity, except as to the time the instrument becomes due. 7 Cyc. 826; 1 Dan. Neg. Inst. § 724a; Patterson v. Todd, 18 Pa. 426, 57 Am. Dec. 622; Bassenhorst v. Wilby, 45 Ohio St. 333, 13 N.E. 75; Scott v. First Nat. Bank, 71 Ind. 445; Leavitt v. Putnam, 3 N.Y. 494, 53 Am. Dec. 322; French v. Jarvis, 29 Cann. 347.

The difference between an indorsement before note is due, and one while it is running to maturity, relates only to the time of payment. Leavitt v. Putnam, 3 N.Y. 494, 53 Am. Dec. 322.

The subsequent indorsement of a note overdue is equivalent to drawing a new bill payable at sight, or within a reasonable time. 1 Dan. Neg. Inst. § 669; 7 Cyc. 822, 973, 1071; 2 Randolph, Com. Paper, § 671; Patterson v. Todd, 18 Pa. 426, 57 Am. Dec. 622; Bassenhorst v. Wilby, 45 Ohio St. 333, 13 N.E. 75; Coleman v. Dunlap, 18 S.C. 595; Swartz v. Redfield, 13 Kan. 550; Lank v. Morrison, 44 Kan. 594, 24 P. 1106; Broun v. Hull, 33 Gratt. 29; Brown v. Davies, 3 T. R. 80; Light v. Kingsbury, 50 Mo. 331; Maddox v. Duncan, 143 Mo. 613, 41 L.R.A. 581, 65 Am. St. Rep. 678, 45 S.W. 688.

Where a party indorses a bill or note after maturity, he is in effect a drawer of a new bill. 7 Cyc. 1071; Maddox v. Duncan, 143 Mo. 613, 41 L.R.A. 581, 65 Am. St. Rep. 678, 45 S.W. 688; Dan. Neg. Inst. § 669; 2 Dan. Neg. Inst. § 1242; 2 Randolph, Com. Paper, § 683, p. 1090; Callow v. Lawrence, 3 Maule & S. 95, 15 Revised Rep. 423; Mabry v. Matheny, 10 Smedes & M. 323, 48 Am. Dec. 753; Guild v. Eager, 17 Mass. 615; Havens v. Huntington, 1 Cow. 387.

Defendant cannot escape liability upon its uncanceled indorsement. 7 Cyc. 826; 2 Dan. Neg. Inst. §§ 1238, 1242; 3 Randolph, Com. Paper, § 1434; Coleman v. Dunlap, 18 S.C. 595; Mabry v. Matheny, 10 Smedes & M. 323, 48 Am. Dec. 753.

The indorsement of a note which is past due, where the indorser knows the note is paid, or that the maker is dead, or that the instrument has been dishonored, makes the indorser liable to all subsequent parties, as the maker of a new note. Picklar v. Harlan, 75 Mo. 678; Scott v. First Nat. Bank, 71 Ind. 445; St. John v. Roberts, 31 N.Y. 441, 88 Am. Dec. 287; Montgomery & E. R. Co. v. Trebles, 44 Ala. 255; Ward v. Allen, 2 Met. 53, 35 Am. Dec. 387; Brook v. Vannest, 58 N.J.L. 162, 33 A. 382; Guild v. Eager, 17 Mass. 615; Moore v. First Nat. Bank, 38 Colo. 336, 10 L.R.A.(N.S.) 260, 120 Am. St. Rep. 120, 88 P. 385, 12 Ann. Cas. 268.

In such case, no presentment or demand for payment, or notice of dishonor, is necessary. 2 Dan. Neg. Inst. § 1113; 7 Cyc. 962, 1072; Coleman v. Dunlap, 18 S.C. 591; Picklar v. Harlan, 75 Mo. 678; Williams v. Mathews, 3 Cow. 252; St. John v. Roberts, 31 N.Y. 441, 88 Am. Dec. 287; Montgomery & E. R. Co. v. Trebles, 44 Ala. 255; Copp v. M'Dugall, 9 Mass. 1; Furgerson v. Staples, 82 Me. 159, 17 Am. St. Rep. 470, 19 A. 158; Davis v. Francisco, 11 Mo. 572, 49 Am. Dec. 98; Burrill v. Smith, 7 Pick. 291.

An indorser cannot show, as against a subsequent holder without notice, that he is not liable under his indorsement. 8 Cyc. 262-268; Thompson v. McKee, 5 Dak. 172, 37 N.W. 567.

All implied warranties attach to due sale of a note, regardless of the manner of transfer. 7 Cyc. 830, et seq.; 1 Dan. Neg. Inst. §§ 670, 730, 736; 2 Randolph, Com. Paper, §§ 720, 757; Note in 10 L.R.A.(N.S.) 542; Ogden, Neg. Inst. pp. 92, 93, 108; Joyce, Defences to Com. Paper, § 348; Sutherland, Damages, p. 1546; Ticonic Bank v. Smiley, 27 Me. 225, 46 Am. Dec. 593; Challiss v. McCrum, 22 Kan. 157, 31 Am. Rep. 181; Mays v. Callison, 6 Leigh, 230; Carroll v. Nodine, 41 Ore. 415, 93 Am. St. Rep. 743, 69 P. 51; Hannum v. Richardson, 48 Vt. 508, 21 Am. Rep. 152; Watson v. Chesire, 18 Iowa 202, 87 Am. Dec. 382; Broaddus Institute v. Siers, 68 W.Va. 125, 69 S.E. 468, Ann. Cas. 1912 A 920; Palmer v. Courtney, 32 Neb. 781, 49 N.W. 754; Delaware Bank v. Jarvis, 20 N.Y. 227; Brown v. Montgomery, 20 N.Y. 287, 75 Am. Dec. 404; Drennan v. Bunn, 124 Ill. 175, 7 Am. St. Rep. 365, 16 N.E. 100; Daskam v. Ullman, 74 Wis. 474, 43 N.W. 321; Ware v. McCormack, 96 Ky. 139, 28 S.W. 157, 959; Myer v. Richards, 163 U.S. 385, 411, 41 L.Ed. 199, 209, 16 S.Ct. 1148; Thrall v. Newell, 19 Vt. 203, 47 Am. Dec. 682; Seeley v. Reed, 28 F. 167; Earnest v. Barrett, 6 Ind.App. 371, 33 N.E. 635; Furgerson v. Staples, 82 Me. 159, 17 Am. St. Rep. 470, 19 A. 158; 2 Dan. Neg. Inst. § 1113; Burrill v. Smith, 7 Pick. 291; St. John v. Roberts, 31 N.Y. 441, 88 Am. Dec. 287.

OPINION

BRUCE, J.

On June 14, 1904, W. Crawford & Son executed and delivered to the defendant, Grand Forks Mercantile Company their promissory note for $ 600, payable on demand, said note being given in part payment of an open account for goods sold and delivered. On June 21, 1904, the note was indorsed by the defendant, "Demand, notice of nonpayment, and protest waived. (Signed) Grand Forks Mercantile Company, by W. A. Curry," and delivered to the First National Bank of Grand Forks, which bank thereupon gave to the defendant credit upon its books for the amount of said note. Afterwards, and on the 5th day of February, 1904, by a written agreement made with a large number of their creditors, including the defendant Mercantile Company, the said W. Crawford & Son conveyed to one E. A. Young all of their partnership assets in trust for the benefit of such creditors, with power of sale in such trustee, said trust agreement containing the provision that "if there shall not be sufficient assets to pay the just debts of the respective creditors, then the parties of the first part, William Crawford and William H. Crawford, shall be forever dismissed, discharged, and freed from further liability on their respective accounts." In said agreement each of said creditors also expressly agreed to "forego all suits, actions, or proceedings of any kind whatever for the collection or enforcing of our several demands, and to accept payment thereof as in the annexed trust deed provided." On October 14, 1904, the defendant mercantile company paid to the First National Bank the...