Union National Bank of New Orleans v. Grant
| Decision Date | 02 December 1895 |
| Docket Number | 11,900 |
| Citation | 48 La.Ann. 18,18 So. 705 |
| Court | Louisiana Supreme Court |
| Parties | UNION NATIONAL BANK OF NEW ORLEANS v. J. G. GRANT |
Argued November 23, 1895
Rehearing Refused January 6, 1896.
APPEAL from the Civil District Court for the Parish of Orleans Ellis, J.
Carleton Hunt, for Plaintiff, Appellant.
W. S Parkerson, for Defendant, Appellee.
Carleton Hunt, on application for rehearing.
This suit seeks to make a defendant liable as endorser on notes. The defence is that the plaintiff has discharged the maker of the notes. From the judgment in favor of defendant plaintiff appeals.
The notes were to the order of the makers, by them endorsed, and defendant's name is on the back of the notes following the payee's endorsement. In that condition the notes were acquired by the plaintiff from the makers. When the notes matured defendant, at plaintiff's request, waived demand, protest and notice. The makers applied for the benefit of the insolvent laws, making the surrender of their property. At the meeting of their creditors plaintiff, as holder of the notes, voted in favor of a discharge of the insolvents.
It is strenuously contended that defendant is to be viewed as an endorser in the commercial sense. Prima facie, that is his position, enforced, it is claimed, by his waiver of demand, protest and notice. If an endorser, it is argued that his waiver deprives him of any defence, based on the discharge of the maker of the notes. We are not aware that this effect has ever been attributed by our courts to a mere waiver of demand, notice and protest, unless the case of the Union Bank vs. Lee, 33 An. 303, is to be accepted as such authority. In that case the endorser pleaded he had been discharged because the plaintiff had permitted prescription to accrue in favor of the maker, thus preventing any recourse of the endorser, if made to pay. The defence failed. The court seems to have attached importance to the fact that the endorser had paid interest on the note. The payment was before any prescription had accrued, and it is not easy to see the bearing of that payment on the defence of the after-acquired prescription in favor of the maker, of which the endorser sought to avail. The court in that case also relied on Story and Daniel, to support the conclusion of the effect of the waiver. The texts cited affirm the waiver as dispensing with the preliminary steps of the holder to fix the liability of the endorser, but do not touch the effect of the discharge of the maker by the endorser. Story on Notes, Secs. 271, 273; 2 Daniel, Sec. 1090. The endorser's liability is conditional, based on demand, protest and notice. If these are waived, he becomes, unconditionally liable, and in this sense, after such waiver, he becomes, as is affirmed by the authorities cited by plaintiff, the unconditional debtor. Story, Sec. 198. But though liable in this sense, the endorser is still entitled to his defence, arising from the subsequent discharge of the maker. Story, Secs. 423, 424. We can not perceive on principle or authority that a mere waiver of protest, notice or demand deprives the endorser, when sued, of the defence that by the act of the plaintiff he is stripped of all recourse against the maker of the note, nor, in our view, does plaintiff's argument on this branch of the case find support in the passage cited from Parsons on Contracts. These waivers are frequent. Even as applied to demand, protest and notice, the waivers are strictly construed; in some cases it having been held that waiver of on of these requisites did not waive others. "Agreements of this sort are always construed strictly, and not extended beyond the fair import of the term; thus a waiver of notice shall be no excuse for want of due presentment." Story, Sec. 272. We can find no basis, therefore, to extend the waiver in this case so as to relinquish a defence not at all connected with the subjects of the waiver.
It is in evidence the notes were endorsed by defendant for the accommodation of the maker known to the bank. That testimony puts the defendant in the position of a surety. In our view the capacity of defendant on the notes is not material. If an endorser, in the commercial sense, he is discharged, if, by an act of the holder, the maker is released, and if a surety he is entitled to the same defence. Civil Code, Article 3061.
This brings us to the consideration of the discharge pleaded based on the vote of plaintiff at the meeting of creditors. The plaintiff contends that the discharge was only of the person of the debtor, but did not discharge the obligation. In support of this argument, the plaintiff relies on the text-books and an array of authorities based on the bankruptcy legislation of the United States and the English statutes of bankruptcy. The passage from Story epitomizes the law, the subject of these authorities. He observes the discharge of the joint maker or endorser, under an insolvent or bankrupt act, will not operate to discharge any other party to the note from liability, but operates as a bar or discharge of the insolvent personally. The reason is, it is the act of the law. Story, Sec. 428. The text is fully sustained in the cases cited by plaintiff...
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