98 N.Y.S. 445 | N.Y. App. Div. | 1906
The' plaintiff seeks in the alternative to recover upon the defendant’s alleged indorsement ‘ of two promissory notes of which the following are respectively copies:
“ $20,000.00-100. Finir months after date for value received I promise to pay to the order of B. F. Tracy, M. S. Driggs, T. F. Goodrich and Mrs. H. M. Gridley at the First National Bank, Brooklyn, N. Y., Twenty Thousand Dollars ($20,000.00).
“New York, Jem. 6th, 1902. C. M._COBTJBN.”
Indorsed : “ Fay First Nat’l Bank Brooklyn, or Order.
“ For renewal only. Mrs. H. M. Gridley
“Thos. F. Goodrich
“B. F. Tracy
“Marshall S. Driggs.”
*400 “20,000.00-100 ' New York, May 6, 1902.
“ Four months after date I promise to pay to the order of C. M. Coburn, Marshall S. Driggs, Thos. F. Goodrich, Mrs. Helen M.
Gridley á’nd Benj. F'. Tracy----¡— --—
Twenty Thousand 00-000--Dollars
at the First National Bank, Brooklyn, N. T.
“Value Received, ' ' ' ' O. M. COBURN,
“ No. Due Sept. 6.”
Indorsed on the back:
‘“ Pay First Nat’l Bank Brooklyn, or order.
“ O. M. Coburn.
“ For renewal.
“ Helen M¿ Gridley
“ Tno. F. Goodrich
“B. F. Tracy
“Marshall S. Driggs.
“no a-c”
N,o notice of dishonor of the note maturing May sixth is claimed to have been given the defendant, but on or about April twenty-ninth she indorsed a note, of which the following is a copy :
“20,000.00 ' New .York, May.6^ 1902.
“ Four months after date I promise to pay to the order of Cornelius Van Cott, Marshall S. Driggs, Thos. F. Goodrich, Mrs. Helen M, Gridley and Benj. F. Tracy jointly, twenty thousand 00-100 'dollars at First National Bank, Brooklyn, N. V..
“Value received C. M. COBURN.”
(Indorsed) “ For renewal,
“ Mrs. Helen M. Gridley,”
and caused it to be mailed to the maker;' this note was thereafter altered without, the knowledge, consent or authority of the defendant, by substituting the name óf the maker “ Coburn ” in the place of the name of the .payee “ Cornelius Van Cott” and- by erasing the word “ jointly/’ and as thus altered, without "the indorsement .of said Van Cott, was delivered by the maker to the plaintiff on the thirteenth day of May ; the transaction of said date is described by the president of the plaintiff as follows: “.When the note of May 6, 1902, was received by the First National Bank it gave a check
The indorsement of all the payees was necessary to give good title to the transferee. (Neg. Inst. Law [Laws of 1897, chap. 612], § 71; Allen v. Corn Exchange Bank, 87 App. Div. 335, and cases cited.) The defendant, therefore, made the transfer of the note ' indorsed by her dependent upon the indorsement of said Tan Cott and the other payees. She may have been unwilling to indorse a renewal note, except upon the condition that there should be an additional indorser in the person of said Van Cott; at any rate she imposed such condition, and there are no facts that warrant the inference that the maker had authority to so alter the note as to render compliance with such condition unnecessary, and the claim that such authority was given the maker by section 33 of the Negotiable Instruments Law (as amd. by Laws of 1898, chap. 336) is so obviously unsound as to merit no discussion. There certainly was no implied warranty on the defendant’s part extending to the changed condition of the note after it parted her possession. But it is claimed that the warranty provided by section 116 of the Negotiable Instruments Law applies to the condition of the note when discounted by the plaintiff, and not simply to its condition when it left the defendant’s hands. If this is the effect of the statute, it should be indicated by unmistakable language. The statute provides that “ every indorser who indorses without qualifica
But it is urged that the .first note was never paid, and that by indorsing the renewal note the defendant waived demand and notice of dishonor of the first. Of course the mere giving of a renewal note does not operate as a payment, but the Court of Appeals has declared that the question is one of intention. (Matter of Utica Nat. Brewing Co., 154 N. Y. 268.) The transaction upon its face was a discount of the second note and a payment of the first with the proceeds, and the plaintiff’s officer so characterized it. The cancellation of the second note by the maker upon its surrender to him must certainly be regarded, as having been made with the consent of the plaintiff. It was produced upon the trial in its canceled condition. At least, if the plaintiff claimed such cancellation to have been unintentional, by mistake, or without authority, the burden was upon it to establish such fact. (Neg. Inst. Law, § 204.) Section 200 of the Negotiable Instruments Law provides, by subdivision 5, that a negotiable instrument is discharged “When the principal debtor becomes, the holder of the instrument at or after maturity in his own right,” and it was the rule at common law that, in the absence of fraud or mistake alleged and proven, a cancellation and surrender of an obligation by the obligee to the obligor operates as a release and discharge of liability thereon. (Larkin v. Hardenbrook, 90 N. Y. 333; Kent v. Reynolds, 8 Hun, 559 ; cited with approval in Jaffray v. Davis, 124 N. Y. 164, 170 ; Schwartzman v. Post, 94 App. Div. 474.) The respondent urges, on the authority of Leary v. Miller (61 N. Y. 488), that the note of January sixth was not discharged unless the note of May sixth was a good note; but this begs the question, for the note of May sixth was a good note as to all of the parties except the appellant. The plaintiff has already received the sum of $15,000. -upon it from the other indorsers, who, so far as appears indorsed after the altera
But in any event the failure of the plaintiff to notify the appellant o.f the dishonor of the note of January sixth relieved her from liability thereon. Her contract was 'to pay the note in case of its dishonor by the maker upon presentmént when due and notice thereof to- her.' Prior to the negotiable Instruments Law the decisions in this State were to the éffect that demand and notice were: unnecessary where the indorser was himself the principal debtor, , where he had taken a general assignment of the maker’s property, where the indorser had expressly or by implication waived demand and notice, and where the failure to make demand and give notice to the indorser could not possibly operate to his injury. (Mechanics’ Bank of N. Y. v. Griswold, 7 Wend, 166; Commercial Bank of Albany v. Hughes, 17 id. 94; Sheldon v. Horton, 43 N. Y. 93 ; Ross v. Hurd, 71 id. 14; Cady v. Bradshaw, 116 id. 128; National Hudson River Bank v. Reynolds, 57 Hun, 307; Smith v. Miller, 52 N. Y. 545.) Waiver, however, will not be implied from doubtful or equivocal acts or language (Ross v. Hurd, and Cady v. Bradshaw, supra), and injury will be presumed until it is made to . appear that no damage could have resulted (Commercial Bank of Albany v. Hughes, and Smith v. Miller, supra), and where excuse for non-presentment, and failure to give notice is relied upon, the facts furnishing such excuse must be alleged and proved. (Clift v. Rodger, 25 Hun, 39.) The only excuse .for non-presentment and failure to give notice of dishonor alleged is that the. appellant waived presentment and notice of dishonor. It is unnecessary, therefore, to consider the point made by the. appellant that the. effect of the negotiable Instruments Law is to' eliminate all- excuses except those expressly enumerated- in the statute. The plaintiff
The argument thus far has proceeded upon the theory that the appellant did know that the note was not to be paid, but in my judgment the proof fails to establish this proposition. It seems to me .that the only consent to be implied from her act of indorsement was a consent that if Cornelius Van Cott, Thomas F. Goodrich, B. F. Tracy and Marshall S. Driggs indorsed the note it should be used to renew the note maturing May sixth. She did not know that all would indorse, and as it turned out, one of them did not, and it seems to me, therefore, that even had her act been communicated to the plaintiff, it would not have been excused from making demand and giving notice of dishonor upon the maturity of the note of January sixth, except a new note, indorsed in the manner stipulated by the appellant, were presented. This being so, I am wholly unable to comprehend upon what principle an absolute waiver can be implied from an equivocal act not communicated to the plaintiff. It is necessary in commercial transactions that the rules of liability of parties to negotiable paper should be fixed and certain. It is better .that such rules be arbitrary than that they lack precision and certainty. The plaintiff cannot be permitted to succeed upon the proof in this case without introducing a rule fatal to the accuracy with which the liability of indorsers may be determined.
I recommend that the judgment be reversed and a new trial granted, costs to abide the event.
Woodward, Jenks and Hooker, JJ., concurred; Hirschberg, P. J., concurred in result.
Judgment reversed and new trial granted, costs to abide the event.