3 Denio 16 | N.Y. Sup. Ct. | 1846
The endorsement of a note, in contemplation of law, amounts to a contract on the part of the endorser to the effect, among other things, that when duly presented, if it is not paid by the maker, he, the endorser, will, upon due and reasonable notice given him of the dishonor, pay the same to the holder. (Story on Prom. Notes, § 135.) In this case the plaintiffs, endorsees of the note upon which the action is brought, omitted both to present the note for payment at maturity, and to give notice to the defendant of its non-payment; but relied for a recovery upon the waiver of both, alleged to be contained in the defendant’s letter, which was given in evidence.
Upon this, two questions have been made: first, whether it is
1. The reason why a demand of payment and notice of nonpayment of a promissory note are required in order to charge the endorser is, that he is in the nature of .a surety only, his undertaking not being absolute but conditional. He is to pay only in the event of a demand made on the maker at the time when the note becomes due, and of a refusal or neglect on his part, and due notice. This rule being introduced for the benefit of the endorser, he may waive the necessity of such demand and notice in accordance with the maxim, that any one may, at his pleasure, renounce the benefit of a stipulation or other right, introduced entirely in his own favor. (2 Inst. 183; 10 Rep. 101; 1 Selw. N. P. 10th ed. 358 ; Story on Prom. Notes, § 271.) In the case of Leffingwell v. White, (1 John. Cas. 99,) the action was on a promissory note, against the endorser. Before it became due the defendant stated to the holder, that the maker had absconded, and that, being secured, he would give a new note, and requested time. The court said the defendant had admitted his responsibility, treated the note as his own, and negotiated for further time for payment, by which conduct he had waived the necessity of any demand or notice. When the agreement or waiver is prior to the maturity of the note, it dispenses with a due presentment; and it would operate as a fraud upon the holder, if the objection of want of presentment were available afterwards; since he may have omitted the steps which he would otherwise have taken in consequence of the defendant’s agreement. In such a case it makes no difference whether the agreement were for a valuable consideration or not, since, if it were not held obligatory, it would be a manifest detriment to the holder occasioned by the fraud or breach of faith of the endorser. (Story on Bills, § 371, 373; Story on Prom. Notes, § 271.)
2. It is insisted that there is no evidence of a waiver, either
It is true, as a general remark, that agreements of this sort are to be construed strictly and not extended beyond the fair import of the terms used. It is also true that a demand of payment and notice of non-payment of a promissory note are not only distinct and different acts from that of protest, but that by the general law merchant strictly, no protest is required to be made upon the dishonor of any promissory note; but the use of a protest is exclusively confined to foreign bills of exchange. (Story on Prom. Notes, § 272; Backus v. Shipherd, 11 Wend. 629; Burke v. McKay, 2 Howard’s Rep. 66; Young v. Bryan, 6 Wheat. Rep. 146; The Union Bank v. Hyde, id. 572.)
In the case of Backus v. Shipherd, the plaintiff claimed to recover, in the court below, against the defendant, as the endorser of a note, and relied upon a stipulation written over the defendant’s endorsement as a waiver of presentment and of notice. It was to the effect that if the plaintiff should not be able to collect the note of the maker by due course of law, the defendant would consider himself responsible for the same -without requiring notice of non-payment. There was also a count on the instrument as a guaranty. On the trial, the judge instructed the jury that the defendant was not liable as endorser for the want of a demand of payment, nor on the guaranty, because the plaintiff had not used due diligence in prosecuting the maker. The defendant had judgment, which this court reversed on error. In giving the opinion of the court, Nelson, J. said: “ The first question raised in this case, I believe, has not been decided by this court; but as a general proposition, we have no hesitation in saying that a stipulation by the endorser of a note to waive notice of demand upon the maker, does not, according to the law merchant, dispense with the demand itself. They are dis
It is a maxim that a liberal construction shall be put upon written instruments, so as to uphold them, if possible, and carry into effect the intention of the parties; and it is essential to consider the subject matter of the agreement, in affixing a meaning to its terms. (Parkhurst v. Smith, Willes' Rep. 332.) It is said in Gunnison v. Bancroft. (11 Verm. Rep. 493,) that the language used by a party to a contract must be construed as he expected
The question returns, what is the true construction of the defendant’s letter ? The counsel for the defendant contends, in effect, that no legal meaning can be attached to it; that, as the act requested to be omitted was inapplicable to the note in question, and unnecessary to charge the defendant as endorser, the defendant’s promise to waive that act was idle and unmeaning. He insists that the acts which were necessary to be performed by the plaintiffs, to charge the defendant, were to make demand of payment, and if refused or neglected, to give notice to the defendant of non-payment, and not to protest the note. Let it be admitted that the words used were doubtful or equivocal ; the first thing we ought to inquire into is, what was the intention of the defendant and the understanding of the plaintiffs ? For if these were identical and referred to some distinct, definite matter, we ought, if possible, to put such a construction on the language as will best answer the end which both parties had in view, and reject any construction which would tend to overturn and disappoint their intention. Too much regard ought not to be had to the usual or technical signification of Words or sentences, where it is clear the result would be to frustrate the design of the parties. In order, therefore, to see what construction should be put upon this letter, let us inquire what were the defendant’s motives that led him to write it, and the object which he intended to effect. The maker, some ten days before the maturity of the note, had become insolvent, and made an assignment of his property, by which a large amount of assets had been devoted to the payment of his debts. The defendant, for his liability as endorser of this note, and for an indebtedness of more than $3000 besides, had, with his assent, been in effect preferred to all others. The maturity of the note
Again; I think the taking and accepting the security by the defendant under the assignment made by the maker for his liability as endorser of this note, connected with the circumstances and the acts of the defendant under it, may be deemed a waiver of presentment and notice, within the principles sanctioned by several cases. (Mechanics’ Bank of N. Y. v. Griswold, 7 Wend. 165; Spencer v. Harvey, 17 id. 489 ; Bond v. Farnham, 5 Mass. R. 171.)
But the plaintiff in error further insists that the paper subscribed by the plaintiffs and others, bearing date February 8th, 1840, was a valid release and discharge of the maker, and consequently extinguished the liability of the defendant as endorser. This stipulation recited and referred to the assignment made by the maker a few days before, and the two instruments must be read together to ascertain the intention of the parties. The maker of the note had assigned his property in trust, after defraying, the expenses, for the payment of his creditors according to a certain order of preference. In the class to be first paid the defendant was named as a creditor for a sum of $10,000, which was stated to be “ for endorsement;” for a further sum also for endorsement, and still an additional amount for the balance of account; and the plaintiffs were mentioned in this list as creditors for $1000 only. They were likewise put down in the second class as creditors to the amount of $2000. The paper signed by the plaintiffs and other creditors was manifestly intended to include nothing more than the claims or debts, thus enumerated in the assignment as due and owing from T. B. Coddington to the several persons and firms who signed the stipulation. It is evident from what had transpired between
The same answer disposes of the argument that the instrument referred to was a valid extension of the time of payment of the balance of the note after crediting what might be realized on the assignment. The balance of the plaintiffs’ demand, for the payment of which they were to wait seven years, did not include the amount due on the note, but referred solely to the other demands which, in the schedule annexed to the assignment, were set down as owing to them.
I think there was no error in the judgment of the court below.
Judgment affirmed.