mand and notice are waived; on the ground that the indorser has, by his own act, obtained all the benefit which the law of demand and notice confers, and that therefore there is no reason for the requirement of these conditions. (o) It seems to be clear,

.....

(0) In Bond v. Farnham, 5 Mass. 170, Parsons, C. J. said: "We do not mean to be understood that, when an indorser receives security to meet particular indorsements, it is to be concluded that he waives a demand or notice as to any other indorsements. But we are of opinion that, if he will apply to the maker, and, representing himself liable for the payment of any particular indorsements, receives a security to incet them, he shall not afterwards insist on a fruitless demand upon the maker, or on a useless notice to himself, to avoid payment of demands which, on receiving security, he has undertaken to pay." This can only be considered as a dictum with reference to the point now under consideration, and it does not appear clearly what the language really means. In Mead v. Small, 2 Greenl. 207, the head note is as follows: "If the indorser of a note has protected himself from eventual loss by taking collateral security of the maker, it is a waiver of his legal right to require proof of demand on the maker, and notice to himself." Mellen, C. J. said: "It appears the maker was destitute of all personal property liable to attachment; that the defendant received and held a mortgage of the maker's real property, sufficient to secure the payment of said note; and which was made for that express purpose. These facts present a stronger case in favor of the plaintiff than those in Bond v. Farnham, 5 Mass. 170. There the property pledged was not a sufficient indemnity to the indorser, but it was all which the maker had. Here it is proved to be sufficient. . . . But if the indorser has protected himself from eventual loss by his own act in taking security from the maker, such conduct must be considered as a waiver of the legal right to require proof of demand and notice. And we are of opinion, accordingly, that the facts before us clearly show such a waiver in the present case." But by the facts of the case it appears that, when the defendant transferred the note to the party who transferred it to the plaintiff, it was agreed that the maker should not be sued, not having any personal property liable to attachment; and that if the latter could not pay, the note should be returned to the defendant, who held the mortgage. These facts may, as will be shown hereafter, have an important bearing on the case. In Marshall v. Mitchell, 35 Maine, 221, Welles, J. said: "If the indorser has security in his own hands fully equal to his liability, he can suffer no loss by the want of demand and notice; therefore he has been held liable, in such case, without proof of those facts. And if the security is taken before the maturity of the note, it cannot be material whether it was before or after its negotiation. In either case it furnishes an indemnity." This is also a dictum. There is also a dictum of Hosmer, C. J., Prentiss v. Danielson, 5 Conn. 175, that, "If an indorser receives security to meet a particular indorsement, he waives a demand and notice in respect of that indorsement, but not as to any other." In Durham v. Price, 5 Yerg. 300, there had been laches in making demand and giving notice. There was evidence that the indorser was fully indemnified, and also promised to pay after maturity. The judge instructed the jury, if the defendant had full indemnity, or promised to pay after maturity, with full knowledge of all the facts, to find for the plaintiff. A verdict for the plaintiff was sustained. In Barrett v. Charleston Bank, 2 McMullan, 191, a bond and mortgage was assigned by the maker tɔ a third party, in trust, to secure the defendant as indorser, if the maker should fail to pay the note. The notice was insufficient because it was deposited in the post-office, the indorser and holder both living in the same place. The indorser was held Evan J.

however, that no court would hold such reception of indemnity to be a waiver, unless it is sufficient to entirely protect the indorser, and on this point, according to many authorities, lies the distinction between securing all the maker's effects, and an

thought that the cases cited supra did not depend upon the fact that the whole of the maker's estate was assigned, but that the ground for these decisions was, that the indorser was secured. In Stephenson v. Primrose, 8 Port. Ala. 155, the point seems to be decided. But Collier, C. J. said that there might be exceptions. See also Holman v. Whiting, 19 Ala. 703, but in that case the assignment, which was of a judgment, was made to the defendant's attorney, and there was no evidence that the defendant either assented to or knew of it; and he was discharged on account of no demand being made, or notice given. In Watt v. Mitchell. 6 How. Miss. 131, the demand was made a day too late, but notice was given on the day of maturity. The defendant was indemnified by a mortgage, and was held on that ground. Evidence was offered by him to prove that the mortgage, when foreclosed, was insufficient to cover the liability, but it was held inadmissible. It also appeared that the defendant had, prior to foreclosure, released a part of the mortgaged property. The court said: We are of opinion that this evidence was properly ruled out. The question is, whether an indorser, who obtains indemnity for his indorsement from his principal, does not thereby dispense with notice of demand and refusal to pay. We think he does, and especially under the circumstances of this case. Here the indorsers obtained a formal mortgage of a very large amount of property, and had the same recorded, as an indemnity against their several undertakings and liabilities; and that they actually, of their own accord, released to their principal a large portion of the mortgaged estate, without any agency or consent of the holder of this note; and if the property remaining in their hands proved insufficient to indemnify them, it was their own fault, and not binding on the holder of the paper." In Walker v. Walker, 2 Eng. Ark. 542, the second indorser of a bill had received ample indemnity from the first indorser. The judge charged the jury, if they believed that the indemnity was then taken, and was at that time sufficient, to find for the plaintiff, although he had received no notice, notwithstanding the indemnity afterwards became doubtful as a means of security. The instructions were held correct. Oldham, J. said, after referring to the rule with respect to indemnity: "It is contended by the plaintiffs in error that this rule extends only to cases where there are but three parties, the drawer, indorser, and payee, and the indorser takes from the drawer an assignment for the express purpose of paying the bill, and thereby making a demand on the drawer fruitless, and becoming himself the real debtor.' We have taken some pains to look into the reported cases to see if this position is correct. We find that many of the cases do not go further, because the facts involved in them did not require a more extensive application of the rule." After citing several cases, the judge continued: "These cases fully establish the principle that, if the indorser take a sufficient security from the maker to indemnify him against his indorsement, it will dispense with proof of demand and notice of non-payment. But it is insisted that the security in this case vas from the first to the second indorser. The same relation exists between them as between the drawer and the first indorser, and the reason of the rule applics as readily to one case as the other. And in this view we are sustained by Judge Story, who, after stag the general rule as between the drawer and the indorser, continues: 'It fol'ows a fortiori that, if, by prior arrangements between any of the parties, the necessity of notice has been expressly or impliedly dispensed with, as between these parties, no notice need be given.' One of the defendants below received notes as an indemnity to him

assignment sufficient to cover a particular indorsement; the former circumstance rendering it immaterial whether sufficient security is taken, while the adequacy of the security is essential, to make the latter a valid waiver.(p)

against his indorsement. The amount was amply sufficient to cover his liability; and it was proven that the makers of those notes, at the time of maturity of the bill, were good for the amount. We are consequently of opinion that the facts proven dispense with the necessity of proof of demand and notice as to that defendant, and that the instructions of the court below on that point were correct." The language used in this case is somewhat obscure, on account of confounding the words " maker" and "drawer." In Kyle v. Green, 14 Ohio, 495, the defendant received the note of a third person, as a part of the consideration for a tract of land which the former agreed to convey on payment of the note. 'The defendant had signed a title-bond, but retained the title in his own hands. The vendee was the first indorser. He had indorsed it to the plaintiff, who offered no evidence of demand and notice, on the trial. The defendant made a demand on the maker twenty days after maturity. The judge charged the jury that the indemnity absolved the plaintiff from the obligation of making demand and giving notice. Held correct. Read, J. said: "But the defendant insists that the bond is no indemnity, because the first indorser is discharged from the payment of the note, as he was not notified of demand and non-payment of the maker, and therefore that he cannot collect it from the first indorser; and that a court of equity would compel him to execute a deed to the first indorser, upon the ground that the plaintiff and himself had so conducted themselves respecting the note as to make it their own, and a payment to that extent by the first indorser. If this be the fact, it is the fault of the defendant. It was the duty of the defendant to see that the liability of the first indorser was fixed by notice of demand and non-payment, if it were necessary. If it were not done, the defendant cannot complain of the plaintiff. If the defendant has so conducted respecting the note as to lose the amount, the fault and the loss are his. Whether he has or not, we do not decide in this case. But if he has not, the land is an indemnity, and the court did not err in their charge to the jury." By the case of Hall v. Green, 14 Ohio, 497, it will be seen that the defendant was obliged to convey the land to the first indorser. In Develing v. Ferris, 18 Ohio, 170, the defendant had sold certain lands to the maker, and took his note in part payment therefor, but still retained the title as security until the note should be paid. He subsequently indorsed the note to the plaintiff, and on being called upon for payment, admitted that he was secured. The defendant was held without proof of demand and notice, Hitchcock, C. J. taking it for granted that demand was not made at the right time. Eccleston, J., Lewis v. Kramer, 3 Md. 265, 291. (p) Maine Bank v. Smith, 18 Maine, 99, where the defendant had taken a mortgage, but it appeared that he had derived no benefit from it; Marshall v. Mitchell, 34 id. 227, where the defendant had taken a mortgage, but the plaintiff failed, because he did not prove it to be sufficient indemnity; Brunson v. Napier, 1 Yerg. 199. See Lewis v. Kramer, 3 Md. 265, 291. See Spencer v. Harvey, 17 Wend. 489, where Nelson, C J. said: "Notice was supposed to have been dispensed with, on the ground that the indorser had taken indemnity of the makers, by means of a judgment, upon which execution has been issued; but it is extremely uncertain if anything will be realized out of the property. The security is already in litigation in chancery. The mere precaution, by an indorser, of taking security from his principal, has never been adjudged to operate as a dispensation of a regular demand and notice. It is no doubt a common occurrence, yet such effect has never been imputed to it. There must be

This doctrine, however, although supported by the opinions of such distinguished jurists as Mr. Justice Story (q) and Chancellor Kent,(r) we think is erroneous, and not supported by the weight of authority, or by the best considered cases. Where a party takes security, although it may be ample, the fair and proper construction is, in our opinion, that he takes it to secure his liability as indorser. Now his liability as indorser depends upon the fact of due demand and notice; and hence the agreement by the indorser's receiving the security may be regarded as to the effect that, if he is properly charged, he will employ the security to pay off the note; and if he is not properly charged, that he will return it to the maker, or to the party from whom he received it. (s)

something more, such as taking into his possession the funds or property of the principal, sufficient for the purpose of meeting the payment of the note; or he must have an assignment of all the property, real and personal, of the makers for that purpose. The notice is dispensed with when funds are received, upon the ground that the object for which it is required to be given, namely, to enable the indorser to obtain indemnity from his principal, has already been attained. Partial or doubtful security falls short of this, and leaves the reason of the rule requiring notice in full force." See Bruce v. Lytle, 13 Barb. 163; May v. Boisseau, 8 Leigh, 164; Warder v. Tucker, 7 Mass. 449, Burrows v. Hannegan, 1 McLean, 309.

(4) Story on Prom. Notes, § 357; Story on Bills, § 374.

(r) 3 Kent, Com. 113.

(s) This seems to have been the principle upon which Creamer v. Perry, 17 Pick. 332, where the assignment was made to trustees was decided. The plaintiff was nonsuited, on account of laches in demand and notice, although the defendant had taken an assignment. See the facts and remarks of Shaw, C. J., cited supra, p. 566, note j. In Woodman v. Eastman, 10 N. H. 359, the defendant had taken a mortgage from the maker to secure the note in suit and another. Held no waiver of demand and notice. Parker, C. J. said: "An indorser of a note who holds a mortgage for its security, unless there is, at the time of the indorsement or afterwards, some other evidence of waiver, seems to have the same right to be exonerated by the neglect of the holder as any other indorser. In such case, if there was but one note secured by the mortgage, the indorsee would either be entitled to the benefit of the mortgage, upon the ground that it passed as an incident; or the mortgage would be destroyed by the transfer of the note, and the holder would have a right to attach the land. If there were other lands secured by the mortgage, and retained by the mortgagee, it might be different; but that could not change the nature of the case. If by the indorsement the note was so separated from the mortgage that the latter was no longer a security, the indorsee might attach the equity of redemption. In either case, there would be nothing to show that it was within the contemplation of the parties that the right to require demand and notice should be waived, and of course nothing to show even an implied agreement to that effect." It will be observed, however, that there was evidence in this case that the mortgage had been transferred to the plaintiff, and that the defendant afterwards got possession of it improperly. In Holland v. Turner, 10 Conn. 308, the indorser held the goods, for which the note was given, as security. He was discharged on account

It is also very difficult to see why the mere fact of taking in

of laches in giving notice. Bissell, J, said: "We have shown what was the nature and character of the defendant's undertaking; that it was a conditional and not an ab solute engagement. We have seen upon what conditions he might be held answerable; and that, in the event of his being compelled to pay the note, he would have a right of recourse to the maker. He has taken security to indemnify himself against that undertaking. Can it then be seriously contended that the fact of taking such security is to change entirely the character of the undertaking? To convert it from a conditional to an absolute one? When the defendant indorsed the note, he was entitled, in his character of indorser, to notice. Is there any reason why his subsequently having taken a security should deprive him of a right to which he was entitled when the indorsement was made? From the fact that no notice was given, he would have a right to presume that the note was paid by the maker, and might thus be induced to part with his security." See the remarks of Nelson, C. J., in Spencer v. Harvey, 17 Wend. 489, cited supru, p. 570, note p. So Ingraham, J., in Taylor v. French, 4 E D. Smith, 458, said: "Mere security for the indorsement affords no reason for dispensing with demand. On the contrary, it furnishes a stronger reason why the indorser, who holds security, should be informed of the non-payment. Without notice thereof, he might suppose it to have been paid, and in consequence of such neglect have parted with his security." In Seacord . Miller, 3 Kern. 55, the defendant had, six months before maturity, taken a mortgage of personal property of the maker. The demand and notice were premature, and the defendant was discharged. It did not appear whether the mortgage was sufficient indemnity, but the court did not lay much stress upon the fact. Gardiner, C. J. said: "The security given in this case was designed as an indemnity against a contingent liability. It did not change the nature of the original contract, or amount to a performance of a condition precedent upon which that liability depended. I do not perceive how, upon the principle upon which this case was decided (in the lower court, rendering judgment in favor of the plaintiff), an indorser could ever take an adequate security without converting a conditional into an absolute contract for the payment of the money mentioned in the note. Where the fund is deposited by the maker and accepted by the indorser for the purpose of paying the demand, the case may be different." The subject was very ably discussed in Kramer v. Sandford, 4 Watts & S. 328. In that case the plaintiffs failed to give notice. Five months before maturity the makers executed a judgment bond to the defendant in the penalty of $ 18,000, with a condition annexed, reciting that the defendant was an indorser for the makers to the amount of $9,000, and that they would indemnify and save him harmless from all his responsibility. A judgment had been entered on the bond, and a fieri facias issued and levied on personal property. The plaintiff's proved that the property was sufficient to secure payment of the judgment. The indorser was discharged. Gibson, C. J., after referring to the fact that an assignment of all the maker's estate constitutes a waiver, said: "But the supposed waiver of notice, in consideration of a chose in action given as a collateral security, contingent and inadequate to produce perfect safety, as every chose in action must be, stands on a less firm foundation. The ac ceptance of such a security is never thought to be a waiver by the parties themselves though it is frequently a motive for the act of indorsement. Collateral security is cumulative in its very essence; and it is never suffered to impair the obligation of the contract immediately between the parties. It may be accepted, though known to be inadequate at the time, the indorser relying for the rest on the maker's other means, and his own energy of pursuit, when warned of the necessity of exerting it; and it would be contrary to the understanding of the parties to make the acceptance of such