71 S.E. 23 | N.C. | 1911
On 25 April, 1907, the plaintiff sold to the defendant W. B. Lassiter a tract of land for $2,000, and accepted in part payment two notes *39 under seal. One of these notes was for $300, and executed 29 December, 1902, payable six months from date to S. H. Carter, and the other was for $200, and executed 17 August, 1903, payable on demand to said Carter.
The name of S. H. Carter was written on the back of each of said notes on 25 August, 1906, and the name of the defendant was written on the back of each of said notes on 25 April, 1907, the day he bought the land from the plaintiff. The following payments (48) were made on the first note: $25, 8 January, 1905, and $100, 18 January, 1906, and on the second note $25, 10 November, 1904.
The defendant resisted a recovery upon the ground that no notice of dishonor was given him, and because the plaintiff had not prosecuted with diligence his claim against the makers of the notes. The judge presiding held that the defendant was not entitled to notice, and that he was bound absolutely on his endorsement. The defendant excepted and appealed. After stating the case: The paper-writings in controversy are non-negotiable under the Negotiable Instrument Law, because they are not payable "to the order of a specified person or to bearer." (Revisal, sec. 2151.)
This is the construction placed upon this section by Mr. Mordecai in his treatise on the Negotiable Instrument Law, and it is strengthened by reference to sections 2158, 2276 and 2334 of the Revisal. They were not made negotiable by endorsement under section 2159 of the Revisal, providing that an instrument is payable to bearer (5) "when the only or last endorsement is an endorsement in blank."
The term "endorsement" is frequently used to describe the act of writing on the back of a paper, without reference to the character of the paper, but strictly it applies only to negotiable instruments, and as said in Norton on Bills, page 106: "It has its origin in and is confined to negotiable instruments."
It is in this sense it is used in Revisal, sec. 2159. If a broader meaning is adopted and it applies to any non-negotiable instrument, it must apply to all, as there is no qualification in the language used.
These two sections (2151 and 2159), in the exact language contained in our statute, were construed by the Supreme Court of Kentucky inWettlaufer v. Baxter,
Nor are they negotiable by endorsement under sections 41 and 50 of the Code (1883), as construed in Spence v. Tapscott,
The rights of the parties must, therefore, be determined at common law, which is in force, and the writings, being under seal, are bonds at common law and non-negotiable. Respass v. Latham,
Originally, promises to pay, whether under seal or not, were not assignable nor negotiable, the reason given being that the contract created a strictly personal obligation between the creditor and the debtor, and that to permit assignment or negotiation would encourage litigation.
As trade advanced and mercantile transactions became enlarged, it was found that this rule eliminated one of the principal elements of value, and a custom gradually prevailed among the merchants of negotiating bills of exchange and promissory notes. A dispute, however, arose between the merchants and the law courts as to whether a note was within the custom of the merchants, and Lord Holt held in Clark v. Martin, 1 Salk., 129, it was not. As a result, the Statute of Anne was passed, which made notes assignable and endorsable, and soon thereafter *42 it was held that non-negotiable notes, although not mentioned, were embraced in the statutes. Norton on Bills, 6; Birchell v. Sloarch, 2 Ld. Ray., 1545; Smith v. Kendall, 6 Term, 123. It was also held that notice of dishonor need not be given to the endorser of a non-negotiable paper. Byles on Bills, 447.
In this country there is much difference of opinion as to the effect of the endorsement in blank of a non-negotiable paper.
In Richards v. Warring, 1 Keyes, 582 (N. Y.), the Court, speaking of this question, says: "When a party writes his name on the back of a note not negotiable, as there is no contract of endorsement, the courts endeavor to prevent the utter failure of the contract by giving it effect in some other way, as by allowing the holder to overwrite the endorser's name with the real contract implied by law, or recover against him as a maker or guarantor of the note."
In Sweeter v. French,
Billingham v. Bryan,
The reason is stronger for holding the endorser liable, and for dispensing with notice to him, and diligence as against the maker, when the note is past due and already dishonored at the time of the endorsement. Under such circumstances, the endorser is held to be a grantor of payment of the paper endorsed, and not entitled to notice of dishonor, and he is not discharged from liability by failure of the endorsee to proceed promptly against the maker. Love v. Levillion,
As said in Byles on Bills, the endorsee is presumed to have acted on the credit of the endorser. *43
In Lilly v. Baker,
The question of the liability of an endorser of a non-negotiable instrument did not arise in Sutton v. Owens,
In the case under consideration, payments had been made on the notes prior to the endorsement, indicating that the holder had been endeavoring to collect, and at the time of the endorsement the defendant received a present consideration for the notes, and they had been long since dishonored. Why should he be notified of facts of which he had full knowledge?
We conclude that no error was committed on the trial, and this conclusion can work no hardship on endorsers, as it is provided in section 2846 of the Revisal that a surety or an endorser on any note, bill, bond or other written obligation, except those laid in trust or as collateral, may notify, in writing, the payee or holder, requiring him to bring suit and to use all reasonable diligence to collect, and if the payee or holder fails to bring action within thirty days, the surety or endorser giving the notice is discharged. This affords ample protection to the endorser.
No error.
Cited: Newland v. Moore,