Bank of Luverne v. Sharp

44 So. 871 | Ala. | 1907

ANDERSON, J.

-While there is considerable conflict and confusion among tbe cases, as well as tbe textbooks, as to tbe liability of tbe indorser of a nonnegotiable note, we are disposed to follow tbe line of decisions holding that tbe indorser of a note not negotiable is liable to tbe indorsee-to tbe same extent as tbe indorser of a negotiable note (Byles on Bills, 146, and note; Jones v. Fades, 4 Mass. 245; Sanger v. Stimpson, 8 Mass. 260); tbe only distinction being, not as to extent of liability, but as to tbe action of the indorsee to fasten tbe liability after default by tbe maker. In case of negotiable notes, there must be protest and notice, if not waived, and in case of nonnegotiable notes, when tbe indorsee seeks to recover against tbe indorser, be must aver and prove tbe exercise of tbe diligence required by tbe statute to first collect from tbe maker and a failure to do so or an excuse for not doing so. — Ryland v. Bates, 4 Ala. 344. In. fact, our statutes upon this subject seem to Lave been enacted upon tbe theory that tbe extent of tbe liability of tbe indorser of a nonnegotiable note is tbe same as that of tbe indorser of one that is negotiable, and prescribes tbe steps to be taken in order to fasten tbe liability as to tbe former, because not subject to protest and notice, in case of default by tbe maker.

Section 892 of tbe Code of 1896 provides for tbe bringing of suits in order to charge tbe indorser or assignor of a nonnegotiable note; section 893 provides for a waiver of suit against tbe maker by the written consent of the indorser or assignor; and section 894 provides excuses for a failure to sue the maker before attempting to collect from the indorser. In the case at ban the complaint does not aver a compliance with section 892, or a waiver under section 893, but avers an excuse under the terms of subdivision 5 of section 894, and which reads as follows “When any defense, except a set-off to the merits of such contract or writing, exists which would prevent a judgment for all or any portion of the sum due or the value of the thing payable by such contract or writing.” The defendant in the lower court demurred to the complaint upon the idea that, inasmuch as ic showed upon its face that the maker could not be held liable because of a failure of consideration, he (the indorser) is not liable, and therefore fails to state a cause of action against him. We do not understand that the effect of the indorsement, which was made before maturity, merely rendered the indorser liable to a purchaser for value in the event the maker had no defense to the note. The indorsement Avas, in effect, a guaranty to a purchaser for value before maturity of the payment of the note if not made out of the maker, and was in no sense subject to all defenses that could be made by the maker against the collection of same. The note purported to be for a valuable consideration; and the indorsement cannot be held to be without consideration and of no effect, because of a subsequent failure of the payee to deliver the thing, the price for which the note Avas given.

We are not unmindful of the distinction as to the maker’s right to defend as to negotiable and nonnegotiable instruments; but we are dealing Avith indorsers, and not makers. The trial court erred in sustaining the demurrers of the defendant to the complaint, and the judgment is reversed, and the cause remanded.

Reversed and remanded.

Tyson, C. J., and Simpson and Denson, JJ., concur.