McMillan v. Montgomery
| Decision Date | 08 March 1927 |
| Citation | 121 Or. 28,253 P. 879 |
| Parties | MCMILLAN v. MONTGOMERY ET AL. |
| Court | Oregon Supreme Court |
Department 1.
Appeal from Circuit Court, Multnomah County; J. M. Batchelder Judge.
Action by William I. McMillan against C. E. Montgomery, Loretta Montgomery, and another. Judgment for plaintiff, and named defendants appeal. Reversed and remanded, with directions.
Walter G. Hayes, of Portland (A. E. Clark and Walter G. Hayes, both of Portland, on the brief), for appellants.
O. W Eastham, of Portland (P. C. Kibbe, of Tenino, and Reeder & Eastham, of Portland, on the brief), for respondent.
This is an action on a negotiable promissory note, executed by the defendant Jones on December 26, 1921, and payable one year after date without grace to the order of defendants C. E. Montgomery and Loretta Montgomery. By its terms the note was made payable at Portland, Or., but no particular place within the city was specified as the place of payment. The note was negotiated before maturity by the Montgomerys, who transferred it to plaintiff by indorsement and delivery. Plaintiff purchased the note in good faith and for value, and is now the holder thereof in due course. He delivered the note before maturity to the Canadian Bank of Commerce, a banking corporation of Portland, Or., for collection, and that bank had it in its custody for that purpose at the time of its maturity. All of the defendants at said time were residents of the city of Portland. There is no waiver of any kind embodied in the note, and in transferring the note the Montgomerys, as payees, indorsed their names on the back thereof in blank. The note was executed in payment of the purchase price of property, and not for the accommodation of the Montgomerys. Plaintiff brought this action against the maker and both indorsers, alleging in his complaint that on the 26th day of December, 1922, the date when the note matured, the note was presented to the maker for payment and payment thereof demanded and refused and notice of dishonor given to each of said indorsers. These facts were denied by the answer. The cause was tried in the circuit court without the intervention of a jury, and by its findings the court found that the note was presented to Jones for payment and that payment thereof was refused and notice of dishonor given to the Montgomerys, and, although there was no allegation in the pleadings of any waiver by the indorsers of their right to notice before liability could attach as to them, the court found that the Montgomerys had waived the right to notice, and, based upon said findings, entered a judgment against all of the defendants for the amount of the note, and from this judgment the Montgomerys, who will be hereinafter referred to as the indorsers, have appealed.
The indorsers contend that the whole evidence shows that the note was never presented to the maker for payment and that no notice of dishonor was ever given to the indorsers or either of them, and that by reason thereof they are discharged from any liability upon the note. Before considering this contention, it is necessary to consider and dispose of the court's finding upon the question of waiver. The only evidence, and all of the evidence which it is claimed was the basis of the court's finding of waiver by the indorsers, is the contents of the following letter, written by the attorney of the indorsers to the wife of the plaintiff:
The evidence shows that the bank, after failing to make collection of the note, returned it to plaintiff in March, 1923, and that, immediately following its receipt, plaintiff's wife wrote a letter to Jones in respect to the overdue note, and upon receiving a reply from him, then wrote to the indorsers and that the letter in question was written to her in response to her letter.
Section 7901, Or. L., which is a part of the Negotiable Instrument Act, provides that, "notice of dishonor may be waived, either before the time of giving notice has arrived or after the omission to give due notice, and the waiver may be express or implied."
The letter referred to contains no express agreement that, in the absence of notice to them, the indorsers will pay the note in question or are to be liable for its payment, nor does it contain any statement that the indorsers have waived or intend to waive plaintiff's failure to give notice of the dishonor of the note, and hence does not constitute an express waiver within the meaning of the statute. In 27 R. C. L. p. 909, the rule applicable to an implied waiver is stated as follows:
There is nothing contained in this letter which in any way could have misled the plaintiff, to his prejudice, or which could have led him to believe that the indorsers intended or consented to any waiver of any right upon their part. The letter does not even refer to a waiver or in any way recognize any obligation or duty upon the part of the indorsers to pay the note, nor does it in any way refer to any liability upon their part. Hence, the letter is not evidence in any sense of an implied waiver.
For another reason this finding cannot be sustained. As stated, the complaint expressly alleges the fact of presentment, nonpayment, and notice of dishonor, and plaintiff brought this action to enforce the alleged liability of the indorsers which would exist if those facts were true, and no allegation of the waiver was contained in the pleadings. Whatever may be the rule in other jurisdictions, it is well settled in this state that a plaintiff cannot plead performance of a condition precedent and recover under proof of a waiver of such performance. Long Creek Building Ass'n v. State Insurance Co., 29 Or. 569, 46 P. 366. That the above rule is applicable in the instant case is established by Robinson v. Holmes, 57 Or. 5, 109 P. 755; First National Bank v. Bach, 98 Or. 332, 339, 193 P. 1041; Case v. McKinnis, 107 Or. 223, 244, 213 P. 422, 429 (32 A. L. R. 167).
In the last case cited this court, speaking through Mr. Justice Harris, said:
"The holder in order to recover from an indorser must by a proper pleading allege and by sufficient evidence prove that he presented the instrument for payment and gave notice of dishonor at the time and place prescribed by the statute; or if delayed he must allege and prove sufficient excuse for the delay; or if presentment is not made or notice is not given because of a waiver, the holder ought to allege and prove such waiver."
It is the duty of the court when trying law actions without the aid of a jury to make findings of fact covering every material issue in the case, but it is not within the province of the court to go outside of the issues made by the pleadings and to inquire concerning facts not in issue and base its judgment on a finding of facts not in issue.
We find no evidence to sustain the finding that notice of dishonor was given to the indorsers. They both resided in the city of Portland, and, from a notation in lead pencil on the back of the note, their address was known to the bank. They both testified positively that they received no notice by mail or otherwise. The only evidence which in any way tended to dispute their testimony was that of Robert John Beatty, who testified that he was an accountant at the Canadian Bank of Commerce, and was in charge of and responsible for the records of the bank; that he had examined the records pertaining to the note in question; that the records show that the note was received by the bank for collection on June 16, 1922; that on December 26, 1922, the bank wrote a letter to Jones, retaining a copy thereof, which stated:
He further testified as follows:
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