Roberts v. Chappell

• Decision Date: 30 December 1939
• Citation: 26 N.E.2d 930,63 Ohio App. 397
• Parties: ROBERTS v. CHAPPELL.
• Court: Ohio Court of Appeals

26 N.E.2d 930

63 Ohio App. 397

ROBERTS v. CHAPPELL.

Court of Appeals of Ohio, Fourth District, Athens.

December 30, 1939

Syllabus by the Court.

1. The failure of an endorsee before maturity of a promissory note to present his claim to the administrator of the estate of a deceased maker thereof bars the claim against the estate by operation of law, but does not relieve the payee-endorser from liability as an endorser on the note.

2. The provision of Section 8225, General Code, that a person secondarily liable on an instrument is discharged 'by the discharge of a prior party' does not apply to a discharge by operation of law.

Woolley & Rowland, of Athens, for appellant.

John F. Newcomb and Elmer E. Jacobs, both of Athens, for appellee.

McCURDY Judge.

This appeal on questions of law is directed to the judgment of the Court of Common Pleas in sustaining the demurrer of the plaintiff to the second defense contained in the defendant's answer to the plaintiff's amended petition.

The plaintiff is seeking to recover a judgment in the sum of $237, with interest, against the defendant on a promissory note which the defendant as payee endorsed to the plaintiff. This amended petition contains the allegation that on January 28, 1926, George Dailey, Audrey Dailey and Lewis Dailey executed and delivered the note set forth in the amended petition to the defendant. The note was due and payable one year after date. Prior to maturity the defendant payee endorsed and delivered the note to the plaintiff. Payment of the note was demanded from all of the makers at maturity but same was not paid and the defendant was given due notice of demand and nonpayment.

To this amended petition the defendant filed his answer consisting of two defenses. In his first defense the defendant admitted the execution and ednorsement of the promissory note as set forth in the amended petition and denied every remaining allegation contained in the amended petition. In his second defense the defendant incorporated the allegations of his first defense and then alleged that Lewis Dailey, one of the makers, died on the 18th day of November, 1930, at which time he was solvent and that the assets of his estate were sufficient to pay all debts of the estate, including the amount due on the promissory note in question; that the estate was duly administered and all claims paid in full and the administration closed; that had the note been presented to the administratrix for payment it would have been a valid debt and the administratrix would have been obliged to pay the same; that the plaintiff in failing to present the note for payment to the administratrix permitted the liability imposed upon Lewis Dailey and the liability imposed upon the estate of Lewis Dailey to be and become discharged in law and that thereby the defendant as an endorser on said note whose liability was secondary to that of the makers, became discharged from payment.

The sole question for our determination is whether the allegations set forth in the second defense in the defendant's answer constitute a defense relieving the defendant from liability as an endorser of the note. It is the contention of the defendant in this court that the situation thus presented falls squarely within the third provision of Section 8225, General Code, which in this regard reads: 'A person secondarily liable on the instrument is discharged: * * * 3. By the discharge of a prior party.'

Failure on the part of the Plaintiff to present his claim within the statutory period against the estate of the deceased maker of the note resulted in a discharge in favor of the estate of the maker by operation of law. The general rule of construction seems to be that the discharge of a prior party here referred to is a discharge by some act or neglect of the creditor and does not contemplate a discharge effected by the operation of law.

'A discharge of prior parties such as will discharge persons secondarily liable is a discharge by some act or neglect of the creditor, not by operation of law.' 10 Corpus Juris Secundum, Bills and Notes, p. 1020, § 470. See, also, 8 Corpus Juris, 617, § 856; Highleyman v. McDowell Motor Car Co., 202 Mo.App. 221, 216 S.W. 52; Everding & Farrell v. Toft, 82 Or. 1, 150 P. 757, 160 P. 1160; Romero v. Hopewell, 28 N.M. 259, 210 P. 231; Finance Corp. of New England v. Parker, 251 Mass. 372, 146 N.E. 696.

This rule of construction under the Negotiable Instruments Act, as was stated in the Romero case, supra, contemplates some affirmative act on the part of the holder of the note which operated to discharge the person primarily liable and does not contemplate a discharge by passive conduct on the holder's part. We find this interpretation to be in complete accord with the Ohio law relating to suretyship.

'By the great weight of authority, the mere failure of a creditor to present his claim against the estate of a deceased principal will not release the surety, even though the claim against the estate may be barred by reason of such omission. And, of course, the liability of the surviving surety is not discharged by mere delay on the part of the creditor to prosecute his suit against the estate of the principal within the time prescribed by statute, although the original undertaking of the parties was joint, especially if the deceased principal was insolvent.' 38 Ohio Jurisprudence 544, Section 157. See, also, 21 Ruling Case Law, 1039, Section 84; Dye v. Dye, 21 Ohio St. 86, 8 Am.Rep. 40; Moore, Adm'r, v. Gray, 26 Ohio St. 525; Camp v. Bostwick, 20 Ohio St. 337, 5 Am.Rep. 669...