Scott v. Smith
| Decision Date | 26 April 1922 |
| Citation | 35 Idaho 388,206 P. 812 |
| Parties | A. R. SCOTT, Appellant, v. F. B. SMITH, Respondent |
| Court | Idaho Supreme Court |
PROMISSORY NOTE-INDORSER'S WAIVER OF NOTICE-INDORSER'S LIABILITY SEVERAL-NONJOINDER OF MAKER AND INDORSER-EFFECT OF JUDGMENT-SUBROGATION OF INDORSER.
1. Where presentment for payment is waived in a promissory note the indorser is not entitled to notice of nonpayment.
2. The liability of an indorser upon a promissory note is several and under the provisions of C. S., sec. 6650, the note not having been paid when due, the holder may bring action against the maker without joining the indorser as a party defendant.
3. A judgment in favor of a holder by indorsement of a promissory note against the maker, without actual satisfaction thereof is no extinguishment of liability as between such holder and an indorser not jointly liable with the original maker.
4. The indorser of a promissory note, upon paying a judgment recovered against himself by the indorsee, is entitled to be subrogated in equity to all the rights of the indorsee against the maker.
APPEAL from the District Court of the Seventh Judicial District, for Canyon County. Hon. Ed. L. Bryan, Judge.
Action by indorsee against indorser of promissory note. Judgment for defendant. Reversed and remanded.
Reversed and remanded. Costs awarded to appellant.
Oppenheim & Lampert and Jay M. Parrish, for Appellant.
Where presentment for payment is waived in a note, the indorser is not entitled to notice of nonpayment. (Furth v. Baxter, 24 Wash. 608, 64 P. 798; Phillips v. Dippa, 93 Iowa 35, 57 Am. St. 254, 61 N.W. 216.)
Where the indorsee of a note sues the makers thereon without joining the indorser as a defendant, as he may do under Civil Code, sec. 13, there is no authority for making such indorser a party at the instance of the defendant. (Cooper v. German Nat. Bank of Denver, 9 Colo. App. 169, 47 P. 1041.)
Recovery of a judgment against the makers of a promissory note does not discharge the indorser unless the judgment is satisfied. (23 Cyc. 1210; 8 Corp. Juris, sec. 862, p. 621; Petri v. Manny, 99 Wash. 601, 170 P. 127, 1 A. L. R. 1595, note at page 1625; Hitchcock v. Frackelton, 116 Mich. 487, 74 N.W. 720; Melander v. Western Natl. Bank, 21 Cal.App. 462, 132 P. 265.)
A. L. Anderson, for Respondent.
Appellant by his election of remedies permitted both causes of action and all rights of action on each to become merged in the one indivisible judgment. (23 Cyc. 1108.)
All the peculiar qualities of both claims became merged in that judgment and the question of the liability of respondent as indorser on said note was conclusively settled by the judgment so entered. (23 Cyc. 1215.)
"While the holder of a note may enforce collection from either the maker or indorser, or both, he must take care not to impair the remedy of the indorser against the maker, for, to the extent that he destroys the indorser's claim against the maker, he releases his claim against the indorser." (Shutts v. Fingar, 100 N.Y. 539, 53 Am. Rep. 231, 3 N.E. 588; Pitts v. Congdon, 2 N.Y. 352, 51 Am. Dec. 299; Brown v. Williams, 4 Wend. (N. Y.) 360; Joyce, Defenses to Commercial Paper, sec. 702, p. 856.)
The appellant by bringing one action on the two debts against Zollers in Colorado, and the Zollers permitting a judgment by default against them to be entered, consummated a novation in respect to both debts, without the approval of respondent, and thereby released him from liability as indorser on the note. (Frost v. Harbert, 20 Idaho 336, 118 P. 1095, 38 L. R. A., N. S., 875; Spies v. National City Bank, 174 N.Y. 222, 66 N.E. 736, 61 L. R. A. 193; affirming 74 N.Y.S. 64, 68 A.D. 70.)
This is an action against an indorser upon a promissory note.
From the record it appears that on May 27, 1915, Jacob Zoller and Eva Zoller made, executed and delivered to respondent at Berthoud, Colorado, their certain promissory note for $ 250, bearing interest at eight per cent and due one year after date; that about July 23, 1915, appellant purchased the note from respondent and the latter indorsed and delivered the same to him, and he has since been the owner and holder thereof; that on May 27, 1916, the note was duly presented and demand made for payment, which was refused. It is alleged in the complaint and denied in the answer that respondent was duly notified of the nonpayment of the note. It further appears that on October 16, 1917, appellant brought an action in Larimer county, Colorado, against the Zollers to recover not only upon the note here involved but also for $ 100 for certain professional services rendered them, in which judgment was rendered in favor of appellant on November 17, 1917, for $ 445.14 and costs, no part of which has ever been paid.
This cause was tried to the court without a jury. From a judgment in favor of respondent, this appeal is taken.
While appellant makes several assignments of error, there are but two questions presented which we deem important.
First, was respondent entitled to notice of the nonpayment of the note? The note, inter alia, provides that "Presentment for payment and notice of dishonor for nonpayment, also protest and notice of protest are hereby expressly waived by all parties to this note." Under this waiver, it is clear that notice of nonpayment to respondent was not required.
"One who, in blank, indorses a note is bound by a waiver of presentation, protest and notice of nonpayment contained in the body of the note."
Second, does a judgment upon a promissory note against the makers thereof, which includes an item for personal services rendered the makers of said instrument by the owner and holder thereof, bar an action by such owner and holder against an indorser of the note so long as no part of the judgment against the makers is paid?
C. S., sec. 6650, which is substantially the same as Rev. Stats. (Colo.) 1908, Code Civ. Proc., sec. 13, provides that: "Persons severally liable upon the same obligation or instrument, including the parties to bills of exchange and promissory notes and sureties on the same or separate instruments, may all or any of them be included in the same action, at the option of the plaintiff."
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