Cooke v. Pomeroy

65 Conn. 466 | Conn. | 1895

Baldwin, J.

When the defendant signed one of the notes in suit and indorsed the other, she did so knowing that they represented the amount unpaid upon the original subscriptions to certain shares of stock in the Continental Life Insurance Co. Part of that stock she then owned herself, and upon it she subsequently received dividends. The corporation retained the notes, without making any demand upon them, for thirteen years, and until it became insolvent. During this time they constituted part of its assets, and must have been returned as such in its annual statements to the insurance commissioner. General Statutes, Revision of 1875, p. 304, Art. III. They were in form negotiable promissory notes, payable upon a contingency which was under the control of the holder. Protection Ins. Co. v. Bill, 31 Conn., 534. That contingency was the making of a proper demand upon the maker, and no action could lie upon the notes until thirty days thereafter.

Where a note is payable on demand, no demand is necessary before suit; but if payable a certain time after demand, no right of action can arise until a demand and the subsequent lapse of the time specified. Thorpe v. Booth, Ry. & M., 388; Holmes v. Kerrison, 2 Taun., 323; Taylor v. Witman, 3 Grant’s Cas. (Pa.), 138, 139. Until demand and refusal of payment, such a note cannot ordinarily be considered dishonored, as regards either maker or indorser. General Statutes, § 1859, applies only to notes payable on demand, and upon which, therefore, suit can be brought as soon as they are given.

There are authorities which hold that in the case of a note payable at the expiration of a certain time after demand, the statute of limitations begins to run against it upon the expiration of that time after the day when a demand ought in reason to have been made ; and that a demand ought in reason to be made within the period allowed by the statute for suing on notes which are payable on the day of their date. Palmer v. Palmer, 36 Mich., 487, 24 Amer. Rep., 605. If such be the law in any case, it must rest on the presumed intention of the parties to the contract at the time of its execution. The circumstances under which these notes were given exclude any such presumption. They were taken in part payment of shares of the capital stock, which before had been payable at such times as the directors might determine. After the acceptance of the notes, the same sums as before were payable to the company by the same persons, but on terms more favorable to them, since payment could not be compelled until thirty days after a demand. It is •obvious that this arrangement was made for the benefit of the shareholders. In substance, they prolonged their term of credit by procuring a surety for their obligations, in the shape of an indorser of,their notes given for the amount due. As no interest began to run until the principal should become payable, it was manifestly for their benefit that the notes should lie without demand as long as the circumstances of the company would permit.

The defendant’s contract as indorser of the note of another shareholder was entered into as a means of securing these advantages to him; and her own note secured them for herself. The indorser of an ordinary note payable on demand was presumed by the common law to anticipate a demand upon the maker within a reasonable time, and, if' none were thus made, could not be held. But this was simply a question of the intent of the parties, to be determined both from the face of the contract and any proper extrinsic evidence. Lockwood v. Crawford, 18 Conn., 361, 372. Not only do the form of the notes in suit and the attending circumstances, to which reference has already been made, indicate no expectation, of a demand, and no occasion for one in the interest of the indorsers, but over each indorsement there was written when it was given, “Notice of protest waived.” The legal effect of this was to release the companjq so far as each indorser was concerned, from any obligation to make demand or give notice. City Savings Bank v. Hopson, 53 Conn., 453. A demand remained necessary only to fix the time when the note would become payable. It is not and could not be claimed that the plaintiffs did not make due demand and give due notice, within a reasonable time after their appointment.

There is no error in the judgment appealed from.

In this opinion the other judges concurred.