368 A.2d 613 | Conn. Super. Ct. | 1976
In the complaint the plaintiff alleged that "[b]y a note dated October 23, 1974, Progressive Management Corp. promised to pay to the plaintiff on demand the sum of $9,805.25 plus interest and costs of collection including a reasonable attorney's fee in the event of default." In paragraph two of the complaint the plaintiff further alleged that "[t]he defendants, George B. Clarke, Robert P. Williams and Elder Young, endorsed said note as follows: `Presentment for payment and notice of nonpayment are hereby waived. Further each endorser consents without notice or further assent (a) to the terms and conditions of this note or any renewal or extension thereof, (b) to the exchange or surrender of the collateral, and (c) to extension of time for payment, or change of interest rate, of this note or of the collateral, and as endorser agrees that upon or after any default in the maker's liability or maker's agreement, holder may exercise, with respect to endorser's personal property at any time in the possession or control of holder in any capacity, the same rights of application to maker's liability and of addition to collateral under the within and foregoing notes as holder thereunder has with respect to maker's personal property.'" In paragraph three of the complaint, the plaintiff alleged that "[s]aid note is in default and there is presently due the sum of $9,805.25 plus interest from November 25, 1974 at the rate of twelve and 3/4 (
The defendants demurred to the complaint on the ground that the "quoted language in Paragraph 2 . . . does not constitute a guarantee or obligation to pay said promissory note." The defendants also demurred to the prayer for relief on the ground *181 that the "plaintiff is not entitled to such relief (money damages and attorney's fees) for the reason that the plaintiff's rights set forth in the quoted language appearing in Paragraph 2 apply only to personal property or collateral of the defendants and not with respect to any personal liability for payment of the promissory note or money damages."
Problems arising from surety arrangements are as old as recorded history.1 "Broadly defined, a surety is a party to a contract who agrees to pay the obligation of another under some circumstances." Peters, "Suretyship Under Article 3 of the Uniform Commercial Code," 77 Yale L.J. 833, 836.2
"`The term surety is very often used in the broad sense as including both technical surety and guarantor,i.e., all obligations in which the promisor is answering for a loan or extension of credit from the creditor to the principal debtor.'" Id., n. 15; see Restatement, Security § 82 (the Restatement uses guaranty as a synonym for suretyship). "More than that of any other party to commercial paper, the endorser's liability is like that of a surety." 2 Hart Willier, Commercial Paper Under the U.C.C., Bender's Uniform Commercial Code Service, § 8.01; see American National Bank of Powell v.Foodbasket,
The endorser's liability, of course, is conditioned on certain formal procedures, such as due presentment and proper notice. See General Statutes §
The endorsements on the reverse side of the note in this case provide that "[p]resentment for payment and notice of nonpayment are hereby waived." Such an endorsement automatically operates as a waiver. The endorsers of the note in question have the major attributes of suretyship. They have endorsed the instrument "without clear indication of capacity or intention. Any such signatory automatically becomes an indorser by virtue of Section [42a-3-402]; and any such indorser makes the engagement of Section [42a-3-414]. . . ." Peters, op. cit., 837. An endorser is bound by the waiver which he endorses. Billingsley v. Kelly,
The court does not agree with the defendants' contention that "the quoted language in Paragraph 2 [of the complaint] . . . is ambiguous"; therefore, *183
the court does not deem it necessary to consider the cases cited in the defendants' brief as relevant to the issues raised on demurrer. If, as the defendants contend, the "language appearing in Paragraph 2 [applies] only to personal property or collateral . . . and not with respect to any personal liability . . . ," the court refers counsel to the article by Peters, op. cit., 848 (Parol Evidence). See also General Statutes §
For the reasons stated herein the demurrer must be and is overruled.