pass to plaintiff, and that no cause of action had accrued on the guaranty at the time of the assignment. Held: Error. As the note and guaranty are to be construed together, and as the note is not personal and special, but general and negotiable, the guaranty is also to be regarded as general and will therefore pass by assignment."

5. DEFENSES AVAILABLE TO GUARANTOR.

PUTNAM v. SCHUYLER.

4 HUN (N. Y. SUP. CT.) 166. 1875.

LEARNED, P. J.:

Mrs. Henriques, in her lifetime, made two notes to Dr. Allen, the plaintiff's testator. After her death the defendant guaranteed them, by writing under each, as follows:

For value received I hereby guarantee the payment of the above note.

L. W. SCHUYLER.

On the trial the defendant offered to prove that Dr. Allen was the medical attendant of Mrs. Henriques; was in the habit of advising her as to financial and other matters; that she reposed confidence in him in relation to her affairs; together with certain other matters tending to show that the notes were obtained by fraud, and that they were without consideration. The evidence was objected to on the ground that, by executing the guarantee, the defendant had admitted the notes, and was estopped; that the defense of fraud was personal to Mrs. Henriques and her representatives; that the defendant could not impeach the settlement between maker and payee. The evidence was excluded, and the defendant excepted.

I assume, from the manner in which the case is presented, that it was not really claimed on the trial that these matters would not have been competent in behalf of the representatives of Mrs. Henriques. Their exclusion was on the ground that they were not competent in behalf of the guarantor. On this subject, of the right of a guarantor to set up defences which would undoubtedly be valid in favor of the principal, there is an apparent conflict. But a little discrimination. will show that the conflict is only apparent.

First. There is a class of cases in which the owner of a note or bond has assigned it, with a guaranty. In these, it has been held. that the guarantor could not show that the instrument was invalid. It would be unjust to permit him to assign an invalid instrument; to

For the distinction between special (non-assignable) and general (assignable) guaranties, see Evansville Nat. Bank v. Kaufman, 93 N. Y. 273; Sawyer v. Hopgood, 13 N. Y. St. Rep. 711. - H

guaranty its payment or collection; to receive the value, and then, when sued on his guaranty, to assert that the original instrument was invalid. He is estopped. (Remsen v. Graves, 41 N. Y. 475; Zabriskie v. C. C. and C. R. R. Co., 23 How. [U. S.] 399.) The case of Mann v. Eckford's Executors (15 Wend. 502), is of this character. The Life and Fire Company, of which Eckford was president, assigned to the Western Insurance Company a bond and mortgage. Eckford guarantied the bond and mortgage, and the money paid for it, expressing the amount. The defendants, his executors, were not allowed to set up usury in the bond and mortgage, against the plaintiff, the receiver of the insurance company.

Second. The guarantor is held liable in those cases in which the debt is justly owing, although, from some defect or incapacity, the principal is not liable in an action. Thus, where the makers of a note were married women, incapable (then) of making a note, the accommodation indorser was still held liable. (Erwin v. Downs. 15 N. Y., 576; see Kimball v. Newell, 7 Hill, 116.) The guarantor of a lease is liable, although only one of the two lessees executed the lease. (McLaughlin v. McGovern, 34 Barb. 208.) In that case, Judge Bacon speaks of this class of cases, mentioning, among others, the guaranty of goods sold to an infant. So the guarantor of a note purporting to be made by two, where the signature of one is unauthorized, is liable. (Sterns v. Marks, 35 Barb. 565.) In all these cases the debt is justly owing to the plaintiff; and through no fault of his, he is unable to recover against the principal, or one of the principals. Third. A guarantor cannot set up, by way of set-off, a claim distinct from that on which he is sued. The right of set-off (that is, as distinguished from a defense arising upon the claim itself) belongs only to the principal debtor, and can be used only at his option. Such is the doctrine of Gillespie v. Torrance (25 N. Y. 306), and this is all which that case decides on this point. By indirection, however, it implies that a defense to the claim (as distinguished from a set-off), is available to the guarantor. To the same effect is Lewis v. McMillen (41 Barb. 420).

1

Fourth. But there are still other cases which are not embraced within either of these preceding classes; cases where the plaintiff is the original party to the contract, and therefore has not received it by assignment from the guarantor; where the proposed defense is not the incompetency of the principal to contract; and where it arises

1 A guarantor is not discharged merely because the principal has a good personal defense, as coverture, infancy or insanity. Davis v. Statts, 43 Ind. 103; Browning v. Carson, 163 Mass. 261; Wiggin's Appeal, 100 Pa. St. 155; Lee v. Yandell, 69 Tex. 34. But a failure of consideration in such a case, as between the principal and plaintiff, discharges the surety. Baker v. Kennett, 54 Mo. 82. — H.

out of the contract itself, and not by way of set-off. In these the guarantor has been permitted to make the defense.

He has thus, as to the original contract, been allowed to set up usury (Morse v. Hovey, 9 Paige, 197; Parshall v. Lamoreaux, 37 Barb. 189); duress of his principal (Osborn v. Robbins, 36 N. Y., 365; Strong v. Grannis, 26 Barb. 122); partial failure of consideration (Sawyer v. Chambers, 43 Barb. 622). And I find no case which intimates that when a person has obtained an obligation from a principal by fraud, he can wipe out the fraud by obtaining a surety to the obligation. Assuming that, in justice and equity, the obligee, by reason of fraudulent acts on his part, has either no claim, or a less claim, against the principal, I see no reason why he should stand in a better position against the guarantor.

The distinction which has been pointed out, viz., that inability on the part of the principal to contract is no defense to the guarantor, while fraud in the contract is, may be found in the civil law. This says that personal defenses do not pass to others, but that defenses, inherent in the thing, such as, among others, fraud and duress, are available to sureties. (Dig., 44, 1, de exceptionibus, c. 7, § 1; Cod. 2, 24 [23] de fidejuss, 2.) “If, in the principal obligation, there is any essential vice which may annul it, as if it has been contracted by force, if it is contrary to law, or to good manners, if it be founded only on a fraud, or on some error which may suffice to annul it; in all these cases the obligation of the surety is likewise annulled." (Strahan's Domat, bk. 3, tit. 4, § 5, art. 2; id., bk. 3, tit. 4, § 1, art. 10.)

The defendant offered to prove acts of the plaintiff's testator, tending to show that he obtained the notes improperly from the maker; that he took advantage of her confidence in him, and that she did not owe him. If these facts be true, he ought neither to recover of her representatives on the notes, nor of the defendant on her guaranties. The judgment should be reversed, and a new trial ordered, costs to abide the event.

Present LEARNED, P. J., BOARDMAN and JAMES, JJ.

Judgment reversed, and a new trial ordered, costs to abide the event. 2

2 Accord: Bryant v. Crosby, 36 Me. 562 (fraud); Swift v. Beers, 3 Denio (N. Y.) 70 (illegality); Griffith v. Sitgreaves, 90 Pa. St. 161 (duress). For an enumeration of the circumstances which will discharge a surety, see Neg. Inst. L., § 201.-H.

ARTICLE VII.

DUTIES OF HOLDER: PRESENTMENT FOR PAYMENT.

I. Necessity of presentment.

§ 130

1. NOT TO CHARGE ACCEPTOR OR MAKER.

HARRISBURG TRUST CO. v. SHUFELDT.

78 FEDERAL REPORTER, 292. — 1897.

[Circuit Court, Dist. Washington, N. D.]

HANFORD, DISTRICT JUDGE. This is an action to recover a balance due after deducting partial payments upon a negotiable promissory note, made payable on demand. The defendant has demurred to the complaint, his contention being that the same is insufficient, for failure to allege a demand prior to the commencement of the action. There is a rule of long standing, and supported by the weight of authority in this country, that the commencement of an action is itself a demand, and that failure to request payment, prior to the commencement of the action, affords no ground of defense. (Bank v. Fox, Fed. Cas. No. 2683; 5 Am. and Eng. Enc. Law, 528246 [2d ed. v. 4, p. 351.]).

1

It is insisted, however, that the courts and the text-books in this country have fallen into error by following early decisions, which were controlled by peculiar facts, and which are insufficient of themselves to establish a general rule upon the subject: It is unwise to depart from business customs and practices which have been sanctioned by repeated decisions of courts, and acquiesced in for a considerable time, and which may fairly be supposed to have been contemplated by the parties at the time of making their contract. This contract must be construed as one having been made subject to the rule above stated, and the maker of the note is, by the terms of his contract, liable without any demand, prior to the commencement of an action.

Demurrer overruled.3

1" To say that the suit is the demand is to repeat an unmeaning phrase as thus used, which no number of repetitions can make sensible. A demand note is due forthwith, and hence can be sued without demand." Wheeler v. War ner. 47 N. Y. 519, holding that the statute of limitations begins to run from the date of the note.- H.

2 See 2 Ames' Cases on Bills and Notes, p. 61, note 2.- H.

But a certificate of deposit is not due until demand is made and the certificate returned or tendered. Shute v. Pacific Nat. Bank. 136 Mass. 487; Smiley v. Fry, 100 N. Y. 262; McGough v. Jamison, 107 Pa. St. 336. Contra:

8130

MONTGOMERY v. ELLIOTT.

6 ALABAMA, 701. - 1844.

This action was commenced before a justice of the peace, by the defendant in error, on two notes, for twenty dollars each, in the following form:

The Real Estate Bank, No. 52, of Caledonia, Mississippi, promise to pay John Elliott, or bearer, twenty dollars, on demand, at their banking house, Caledonia, Mississippi. - May 8, 1838.

R. DOWDLE, Cashier.

W. G. WRIGHT, President.

Judgment being rendered for the defendant, the plaintiff appealed to the circuit court, where judgment was rendered for the plaintiff.

The defendant moved the court to charge, that the plaintiff, to entitle himself to a recovery, must prove a demand at the banking house of the company which the court refused, and he excepted.

The assignments of error present for revision rejection of the testimony and the charge of the court.

ORMOND, J. The question, whether a demand was necessary before suit, is one of considerable difficulty. Upon this subject, a great contrariety of opinion formerly prevailed in England, as to the necessity of averring and proving a demand as a precedent condition to the right to recover, when the instrument was made payable on its face at a particular time and place, or where it was accepted, payable at a particular place, which was finally settled on appeal to the House of Lords, that such demand was necessary in the case of Rowe v. Young (2 Brod. & Bing. 180).*

In the United States a different doctrine has generally prevailed, it being considered matter of defense, and therefore, not necessary to be proved by the plaintiff. (Wallace v. McConnell, 13 Peters, 133. See

Curren v. Witter, 68 Wis. 16; Lynch v. Goldsmith, 64 Ga. 42; Hunt v. Divine, 37 Ill. 137; Tripp v. Curtenius, 36 Mich. 494. There is also a conflict as to whether bank notes must be presented for payment before suit brought. 3 Am. & Eng. Enc. Law (2d ed.) p. 778. — H.

[On the conflict of authority upon the question whether a demand is necessary to mature a certificate of deposit, and, if necessary, when the demand must be made, see the note to Elliott v. Capital City State Bank, 128 Iowa, 275, in 1 L. N. S. 1130.-C.]

4 This was changed by Onslow's Act (1 & 2 Geo. IV., c. 78) which, as construed, renders presentment unnecessary to charge the acceptor of a bill, drawn payable at a particular place and accepted generally, or drawn generally and accepted payable at a particular place; though not if accepted payable at a particular place only. Selby v. Eden, 3 Bing. 611. See Bills of Exchange Act, § 52, and Neg. Inst. L., § 228. The same rule applies to a promissory note. See Bills of Exchange Act, § 87, subsec. (1); Price v. Mitchell, 4 Camp. 200; Exon v. Russell, 4 M. & S. 507.-H.