229 Pa. 627 | Pa. | 1911
Opinion by
This appeal is by the executors of the will of William H.
It appears from the record that in 1903 and 1904, William H. Alldred, the decedent, was a stockholder and director in the Tri-State Mining & Manufacturing Company, a corporation organized under the laws of New Jersey, and engaged in mining operations in Tazewell and Russell counties, Virginia. On or about June 17, 1903, Mrs. E. E. Lusk loaned the sum of $2,000 to the company; and on or about June 20, 1903, loaned to it the further sum of $500. As security for these loans the company executed its demand notes to the order of Mrs. Lusk, for the respective amounts loaned. The transaction was managed by B. E. Tinstman, who was the son-in-law of Mrs. Lusk, and held a general power of attorney from-her to manage her business, including the investment and reinvestment of her money. Tinstman was also treasurer of the Tri-State Mining & Manufacturing Company. He testified that he represented the company in the transaction and that the notes were not delivered to Mrs. Lusk until after the signatures of Alldred and the other directors had been placed on them. At the annual meeting of the company, January 11, 1904, the notes were indorsed by Alldred and by five other directors of the company. These directors consented to indorse the paper of the company in order to raise money for its benefit, and it was further agreed that they were to be ‘indemnified by a deed of trust to be given by the company. They did indorse a number of notes, including three to the order of Mrs. Lusk, two of which are the basis of the claim in this case. On May 10, 1904, the company executed and delivered a deed of trust to W. P. Keil of Pittsburg, for certain real and personal property therein described, which in fact included all the assets of the corporation. The deed recited that it was in trust, and for no other
At the final hearing upon this claim, the court below, sitting in banc, held that under the facts shown, the indorsers had by their own action, become principals, and were therefore bound as such by their indorsements; and that although there was no proof of demand for payment having been made upon the company, the maker of the notes, or notice of dishonor given, yet under the circumstances, this was not necessary. We agree with the court below, that the indorsers should not now be permitted to rely upon the fact of nonpresentment, and the lack of notice of dishonor; for the reason that the indorsers were indemnified against loss by the deed of trust which they provided should be given to them by the company. Having accepted this security, and taken from the company all its assets, they put themselves in the place of the makers of the notes. Notice to them of nonpayment was not therefore necessary for their protection. In Kramer v. Sandford, 4 W. & S. 328, Chief Justice Gibson said, "An indorser is entitled to notice whenever it is necessary to protect him; for he is not presumed to have waived it to his detriment. It is useless to him, where he has taken a general assignment of the maker’s effects, and thus obtained, beforehand, all the advantage that his own or the indorsee’s vigilance could give him; and
In Patton v. McFarlane, 3 P. & W. 419, it is pointed out (p. 425) that a demand upon the drawer and notice of nonpayment, to the indorser of a negotiable note “may be proved by showing that the indorser, before the note became payable, accepted from the drawer an assignment of his estate, for the purpose, inter alia, of indemnifying him against his indorsement; which in fact is neither a demand, nor yet notice of nonpayment; but in law has the same effect, as it renders.demand and notice unnecessary.”
In the form in which the notes are drawn, Mrs. Lusk is the payee, and would therefore of necessity be the first indorser. Prior to the Act of May 16, 1901, P. L. 194, known as the Negotiable Instruments Law, the indorsements of the directors would have been held irregular,
The assignments of error are overruled, and the decree of the orphans’ court is affirmed.