Miller v. Del Rio Min. & Mill. Co., Ltd.
| Decision Date | 05 November 1913 |
| Citation | 25 Idaho 83,136 P. 448 |
| Parties | CURTIS J. MILLER, Respondent, v. DEL RIO MINING & MILLING CO., LTD., a Corporation, BANK OF NEZ PERCE and T. M. MOCKLER, Respondents, and B. J. MCRAE and J. A. SCHULTZ, Appellants |
| Court | Idaho Supreme Court |
PROMISSORY NOTE-PAYABLE ON DEMAND-LIABILITY OF INDORSER-CONSIDERATION-FINDINGS OF FACT-INSUFFICIENCY OF EVIDENCE TO SUPPORT-PAYMENT OF NOTE-REISSUANCE.
1. Held, under the facts of this case that the promissory note for $812 was not given at the request of the defendants McRae and Schultz and one Mockler and was not given for their benefit or their accommodation.
2. Where a promissory note is paid by one of the indorsers and thereupon delivered to the person paying the same, and treated by the bank as canceled and paid, the indorser who pays such note is not authorized to reissue the same without the consent of the other parties thereto.
3. Held, under the facts of this case that T. W. Smith, the person to whom said note was reissued, took the same without recourse on the indorsers of said note.
4. When a promissory note is payable on demand under the provisions of sec. 3528, Rev. Codes, it becomes due and is payable within a reasonable time after its execution.
5. The plaintiff having purchased said promissory note on May 4 1911, nearly four years after the same was executed, it being payable on demand, he took it subject to all defenses which the original maker of the note would have.
6. The Bank of Nez Perce owned said note. Schultz was an indorser thereon and paid it. There was no contract for the sale of said note between the bank and Schultz, the transaction being simply a payment of the note.
7. The payment of the note is the discharge of the debt; the purchase of the note is a contract of purchase and sale.
APPEAL from the District Court of the Second Judicial District for Idaho County. Hon. Edgar C. Steele, Judge.
Action to recover on promissory notes and foreclosure of mortgage. Personal judgment rendered against the appellants. Reversed.
Judgment against McRae and Schultz reversed and cause remanded with instructions. Judgment affirmed as to the Bank of Nez Perce and the Del Rio Mining & Milling Co. Costs awarded to the appellants.
F. E Fogg, for Appellants.
To enlarge the liability of an indorser from that implied by law from the position of his signature on a note to that of cosurety would require an express contract. (Sec. 3474, subd 6, Rev. Codes; Chapman v. Pendleton, 26 R. I. 573, 59 A. 928.)
This court would be unwarranted in finding that any time in excess of the year after its issue provided by our former statute, which established the usage of this state and former territory for over a quarter of a century, was a reasonable time. (Meritt v. Jackson, 181 Mass. 69, 62 N.E. 987.)
An analysis of American cases will show that practically none of the older cases hold that a delay of one year without extraordinary circumstances to excuse was reasonable. (Keyes v. Fenstermaker, 24 Cal. 329; Sice v. Cunningham, 1 Cow. 397; Camp v. Scott, 14 Vt. 387; Field v. Nickerson, 13 Mass. 131; Turner v. Benjamin, 74 Wis. 355, 17 Am. St. 168, 43 N.W. 149, 5 L. R. A. 533; Merritt v. Todd, 23 N.Y. 28, 80 Am. Dec. 243; Parker v. Stroud, 98 N.Y. 379, 50 Am. Rep. 685.)
The doctrine of continuing security logically should be applied while such demand note remains in the hands of the original payee, but has no application after such note has been transferred. (1 Daniel, Neg. Instruments, 5th ed., sec. 610; Bassenhorst v. Wilby, 45 Ohio St. 339, 13 N.E. 78.)
The later decisions, and particularly those applicable under our negotiable instruments law, support the contention that under the facts shown in this record it follows as a matter of law that an unreasonable length of time had elapsed after the issue of the note sued upon before its presentation and notice of dishonor, and that a like unreasonable time had elapsed after its original issuance and indorsement by appellants and before its reissue or sale to Smith, the immediate assignor of the plaintiff. (Kerby v. Wade, 101 Ark. 543, 142 S.W. 1121; Becker v. Horowitz, 114 N.Y.S. 161.) McRae indorsed for the purpose of transfer of title without consideration and was one of the payees named in the note. Such indorsement was regular and carries with it only the contract and warranty of indorsement expressed by the statute. (Bank of Jamaica v. Jefferson, 92 Tenn. 537, 36 Am. St. 100, 22 S.W. 211; Sibley v. American Nat. Bank, 97 Ga. 126, 25 S.E. 470.)
G. W. Tannahill and S. O. Tannahill, for Cross-appellant.
Payment was demanded within a reasonable time, considering the nature of the instrument and the facts of the particular case. (Sec. 3650, Rev. Codes; 7 Cyc. 975; Durnell v. Sowden, 5 Utah 216, 14 P. 334; 1 Daniel on Neg. Instruments, secs. 606-608; Mochado v. Fernandez, 74 Cal. 362, 16 P. 19; 1 Parsons on Notes and Bills, 375.)
Under the facts of the case, the Bank of Nez Perce and appellants McRae and Schultz may properly be considered to have waived their right to presentment of the notes. (Bessenger v. Wenzel, 161 Mich. 61, 125 N.W. 750; Garthwaite v. Bank of Tulare, 134 Cal. 237, 66 P. 326.)
It may further very properly be held that the Bank of Nez Perce waived demand and presentment for payment by taking security. (
As to the $ 812 note, McRae and Schultz were not entitled to demand, protest or notice of nonpayment, being themselves accommodated parties. (Bank of Jamaica v. Jefferson, 92 Tenn. 537, 36 Am. St. 100, 22 S.W. 211; 2 Daniel on Neg. Instruments, 5th ed., secs. 995b, 1085.)
"Where one who indorses a note is in fact a principal in the transaction, he is not entitled to notice of nonpayment." (Furth v. Baxter, 24 Wash. 608, 64 P. 798.)
The paper was reissued, sold and delivered without any limitation or restriction on the bank's indorsement, and full faith and credit was entitled to be given to it, as it appeared upon the instrument, and Smith so relied upon it. The bank now seeks to escape liability for its own neglect. (Moore v. First Nat. Bank, 38 Colo. 336, 120 Am. St. 120, 88 P. 385, 10 L. R. A., N. S., 260, 12 Ann. Cas. 268; St. John v. Roberts, 31 N.Y. 441, 88 Am. Dec. 287; Scott v. First National Bank, 71 Ind. 445; Selover, Neg. Instruments, pp. 66, 67; French v. Jarvis, 29 Conn. 347.)
Accommodation indorsers, who have under their own control and management all the assets and business of their principal, and whose duty it is to see that funds are provided and the debt paid, are not entitled to notice of the dishonor of his promissory note which they have indorsed. (Hull v. Myers, 90 Ga. 674, 16 S.E. 653.)
E. O'Neill, for Respondent, Bank of Nez Perce.
The notes were paid and thereby disposed of for all purposes prior to their reissue by J. A. Schultz in delivering the same to T. W. Smith, or there was a sale of the notes, and payment means discharge.
Schultz, as an indorsee of the note of $ 812 dated July 1, 1907, had the right to protect his own indorsement by payment of the note. Such payment extinguishes the note as to the payee and indorsers upon the note; a right to contribution between indorsers only would remain. (Gordon v. Wansey, 21 Cal. 77; Yule v. Bishop, 133 Cal. 579, 65 P. 1094; James v. Yaeger, 86 Cal. 187, 24 P. 1005; Wright v. Mix, 76 Cal. 465, 468, 18 P. 645; Stevens v. Hannan, 88 Mich. 14, 49 N.W. 874; Fitch v. Hammer, 17 Colo. 595, 31 P. 336; Moran v. Abbey, 63 Cal. 56; Binford v. Adams, 104 Ind. 41, 3 N.E. 753.)
If the notes were afterward assigned by the instrument designated as an assignment, it would be subject to the previous payment of the notes. The written assignment is of no validity, because an instrument of conveyance without a grantee named in it is a nullity. (1 Devlin on Deeds, 1st ed., sec. 189.)
This instrument could not be given by insertion of a grantee's name (Smith) by Miller, long after Miller ceased to be an official of the Bank of Nez Perce. (Ellis v. Bashor, 17 Idaho 259, 105 P. 214.)
This is a separate appeal taken by the defendants McRae and Schultz from a judgment entered on a promissory note against them and from the order of the court overruling their motion for a new trial.
The action was brought to foreclose a mortgage upon unpatented mining claims, executed by the Del Rio Mining & Milling Co. a corporation, securing two promissory notes, one for $ 812 dated July 1, 1907, payable on demand to the defendants B. J. McRae and J. A. Schultz and one T. M. Mockler, now deceased. The other promissory note was for $ 700, dated July 3, 1907, payable on demand to the Bank of Nez Perce. The said first-mentioned note was transferred by indorsement to the Bank of Nez Perce by McRae, Schultz and Mockler on or about July 1, 1907, the date of the note. On October 12, 1907, the Bank of Nez Perce, as owner of said notes, procured from the said Del Rio Mining Co. the execution of a mortgage on the company's mining claims, which mortgage is sought to be foreclosed in this action. Both of said notes were expressly made payable at the Bank of Nez Perce. The mortgage was at the request of the bank executed in favor of its assistant cashier, P. J. Miller. There is no contention that...
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