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demnity, which is an act entirely distinct from, and unconnected
a security a substitute for notice. There can be no presumptive waiver of notice where there has been no waiver of recourse to the maker; and the acceptance of a security is not such, unless it has been taken in satisfaction. Notice may be necessary to make the very security available on which the indorser is supposed to have relied, but which he may have reserved for the critical moment. A judgment bond, which was the secu. rity in this instance, is seldom entered up immediately; and the indorser ought to have notice when the time for action has arrived ; for by the delay of a day or an hour the golden opportunity may be lost. The banks often take such bonds, ostensibly for their own security, but to be entered at the request of the indorsers; yet no one ever thought that the indorsers were therefore not to have notice. The practice is very common. In this case there was no real estate to be bound, and an immature judgment would have been fruitless; but there was the more need of notice of dishonor to expedite an execution, when the time came, against the maker's personal property. He was an indorser of accommodation paper; and, as a surety is held to nothing which is not explicitly exacted by his contract, he is not presumed to have relinquished any of its priv ileges. This doctrine of waiver in consideration of a security has no footing in Westminster Hall; for the indorser in Corney o. Da Costa, (1 Esp. 302, supra, p. 561, note f;) which has been referred to as the germ of it, received effects from the drawer to tho amount of the note, and thus became the party to take it up. The property was put into his hands avowedly for that purpose, and he consequently took the place of the principal debtor. .... I grant that, where the security is money or effects, put into his hands to satisfy the debt, he changes place with the maker, and loses his original char. acter; he is no longer an indorser, and cannot claim the privileges of one.
But no judge has said that a chose in action transferred to meet, not the note at its maturity, but the contingency of the indorser's eventual liability, dispenses with notice to him; or that, as a collateral security, it is a waiver of his recourse to the maker. .... It would seem that Chancellor Kent's conclusion from these authorities, 3 Com. 113, that notice is not required where the indorser has protected himself by an assignment or collateral security, is not sustained by them, as a principle applicable to all cases in every variety of circumstances. The true criterion seems to be the obligation to take up the note. When that remains with the maker, it continues to be the duty of the indorsee to apprise the in. dorser of the maker's default; where it has devolved on the indorser himself, he needs no notice. Certainly a hond and warrant taken, to be held in reserve, cannot turn his contingent responsibility into an absolute one, and dispense with performance of the condition of demand and notice as part of the title." In Moore v. Cotheld, i Dev. 217, the defendant had sold a tract of land to the maker and taken the note of the latter, who also executed a deed of trust to secure the defendant for the payment of the note. Held no waiver of due demand. In Denny v Palmer, 5 Ired. 610, the makers had assigned to a third party as trustee property sufficient, it seems, to cover the liability of the defendant. The latter was discharged, because notice was sent to the wrong postoffice. In Dufour o. Morse, 9 La. 333, the notice was delivered to a person who was not shown to be authorized to receive it. The indorser took a mortgage of the maker as security, when he indorsed. He was discharged. Martin, J. said : " Here the indorser received nothing but a mortgage for his indemnification. He might well ex. pect that the duty and interest of the maker would prompt him to prevent the protest of the note. He knew that the only obligation he had incurred towards the holder of the note was to pay it in case the maker did not, and after being duly and legally notified of the failure and neglect of the maker to take it up. Towards the latter, the indorser incurred no obligation. The mortgage was a useless paper in the hands of
with, the note itself, should have the effect of changing the undertaking of the indorser from a conditional to an absolute one.(t)
The additional reason has been given, that notice may be essential to the indorser, in order that he may take the proper steps to render his security available, and a delay may often be as prejudicial in this respect as when no indemnity at all has been taken.(u) Stress has sometimes been laid on the particular kind of the security taken, such as choses in action and the like; (v) but we doubt whether this should make any difference in the law. The fact that the security is conveyed to a trustee, instead of directly to the indorser, has also been somewhat relied upon,(w) but there does not appear to be any good reason why this fact should change the character of the act.
The answer to the objection, that the whole object in requiring notice is attained as soon as the indorser is indemnified, is, in our opinion, that, whatever may have been its effect in the gradual formation of the law, the requirement of notice has at last settled down into a strict technical right, and an appeal to original reasons has become less frequent and less influential.
If, however, there is anything in the acts or words of the indorser, at the time the security is received, which, by fair construction, imply or show an agreement by him to consider
the defendants. The inchoate and conditional obligation which resulted from the indorsement never became perfect and absolute. The indorser, nor those who represent him in this case, have not suffered, nor can they now suffer any injury, for the indemni fication of which they could resort to the mortgage. The defendants are precisely in the same situation as they would be if no mortgage had been taken."
(1) Bissell, J., supra, p. 572, note s; Gardiner, C. J., id.
(0) Gibson, C. J., supru, p. 572, note s. In Dufour ». Morse, 9 La. 333, Martin, J. said : " It is contended, that, as the indorser was secured against any loss, there was no necessity of giving him any notice This may be the case where a creditor is secured against the effect of the indorsement by the receipt of a sum of money, other notes, bills, or property In such a case he may be viewed as having undertaken to apply the money he had received, or that which the notes, bills, or other property may afford him the means of obtaining, to the discharge of his conditional obligation. He may he viewed as an agent who has undertaken to pay, and therefore cannot be said to be disappointed if his principal, relying on the performance of the obligation of his friend, takes no further steps for the payment of the note.” In Bruce v. Lytle, 13 Barb. 163, 166, Hand, J. said : “But if the indemnity is only by way of lien, or by a counter bond, it seems to me there should be an express promise.”
(w) Ruffin, C. J., in Denny o. Palmer, 5 Ired. 610, 630.
himself the party primarily liable on the note, and directly responsible for its payment, the case is entirely different, and in this point of view only we think that taking the security operates as an extinguishment of his right to demand and notice. In other words, and in the language of Chief Justice Gibson, (2) “the true criterion seems to be the obligation to take up the note.” (y) We should be glad to see a peremptory rule established, that notice should always be given, unless the indorser is under an unconditional obligation to take up the note.
OF EXCUSES FOR NON-NOTICE, GROUNDED ON A WAIVER OF THE RIGHT
TO REQUIRE NOTICE.
The excuses for non-notice, grounded on a waiver - actual or constructive — by the party entitled to require notice, are so numerous, and rest on such a great variety of circumstances, that it is thought best to present them under different heads. These will be, 1. when the waiver is in writing on the note or bill; 2. when it is inferred from acts of the drawer or indorser ;
(x) Kramer v. Sandford, 4 Watts & S 328, 331, cited supra, p. 572, note s.
(y) This seems to have been one of the principles upon which Corney v. Da Costa, 1 Esp. 302, supra, p. 561, note f, was decided, as appears from the language of Buller, J., although it may have been that all the maker's property was assigned. Parke, B , in Carter o. Flower, 16 M. & W.743, 751, cited the case as authority for the remark that “ The cases in which the indorser has been held liable with notice have had some other material circumstances, as, for instance, that he had funds put into his hands by the drawer, out of which he was to pay the bill or note. Mead o. Small, 2 Greenl. 207, supra, p. 568, note o, may be sustained upon this ground. See the remarks of Parker, C. J., in Woodman o. Eastman, 10 N. H. 359 ; Gibson, C. J., Kramer v. Sandford, 4 Watts & S., 328, supra, p. 572, note s; Martin, J., Dufour v. Morse, 9 La. 333, supra, p. 574, note v; Hand, J., in Bruce v. Lytle, 13 Barb. 163, supra, p. 574, note v ; Martel v. Tureaud, 18 Mart. La. 118, where there was an assignment and a promise, and the indorser was held, without notice; Taylor v. French, + E. D. Smith, 458, where the indorser was held, al:hough the check was protested prematurely, he having on the day of protest told the holder that the drawer could not pay, having made an assignment, in which he, the indorser, was preferred. See Coddington o. Davis, 3 Denio, 16, infra, p. 578, note g. In Moon v. Haynie, 1 Hill, S. Car. 411, the plaintiff proved that, at or about the time the note fell due, the defendant, an indorser, sent him a message that he, the defendant, "had taken back from the maker the lanü for which the note was given, and that he had become paymaster for the amount to the plaintiff, but that he did not mean to pay it, as the property received for it was not as represented by the plaintiff.” No demand and notice were held necessary.
3. where the waiver occurs on the day of maturity; 4. where it occurs after maturity; 5. by whom the waiver is made ; 6. to whom the waiver is made; 7. of presumptive evidence in the question of waiver.
1. When the Waiver is in Writing on the Note or Bill.
Demand and notice may be waived by an indorser's writing over his signature the words, " I waive demand and notice," (a) or “ waiving demand and notice.” (6) Any other words, which by fair and reasonable construction imply an intent to waive demand and notice, will have this effect,(c) we think; although there is authority to the effect that such waivers are to be con. strued strictly.(d) There is conflicting authority on the point whether the words, “I waive protest,” on a note or an inland bill, constitute a waiver of both demand and notice, or not. It seems to have been held by high authority, that these words alone, on a promissory note, are so uncertain as not to imply a waiver of demand and notice, except in connection with other words and acts, from which such an intent can be inferred. (e)
(a) Woodman v. Thurston, 8 Cush. 157.
(6) Johnston v Searey, 4 Yerg. 182, where the indorser was held, although the plain. tiff neglected to sue for more than fifteen months after maturity, during which time the maker was solvent, but after which he had failed.
(c) Weston, J. said, in Fuller v. McDonald, 8 Greenl. 213 : “It is not necessary that a waiver should be direct and positive. It may result by implication from usage, or from any understanding between the parties, which is of a character to satisfy the mind that a waiver is intended.”
(d) Wall v. Bry, 1 La. Ann. 312; Bird v. Le Blanc, 6 La. Ann. 470, where Eustis, C. J. said: “It is not desirable, in a mercantile community, that the defaults to pay bills or notes when due should be kept secret. It enables insolvents to maintain a false credit. We have had cases before us in which the waivers of protest have been the means of misleading the public as to the real situation of parties, and proclucing great injury therehy; and this is a strong reason for holding to the old rule, and not encouraging waivers of protest by giving them a large construction."
(e) In Union Bank v. Hyde, 6 Wheat. 572, the writing, signed by the indorser, was in the following words : “I do request that hercafter any notes that may fall due in the Union Bank, on which I am. or may be, indorser, shall not be protested, as I will consider myself bound in the same manner as if the said notes had been, or should be, legally protested" This was held a waiver of demand and notice, both parties having had a course of dealing founded on that construction. Johnson, J said : “ Two constructions have been contended for, the one, literal, formal, and vernacular; the other, resting on the spirit and meaning, as a mercantile and bank transaction By some assumed analogy, or mistaken notions of law, this practice of protesting inland bills has now become very generally prevalent; and since the inundation of the country
These words have also been held to constitute a waiver of do.
with bank transactions, and the general resort to this mode of exposing the breaches of punctuality which occur upon notes, a solemnity, cogency, and legal effect have been given to such protests in public opinion which certainly has no foundation in the law merchant. The nullity of a protest on the legal obligations of the parties to an inland bill, is tested by the consideration that, independently of statutory provision, if any exists anywhere, or conventional understanding, the protest on an inland bill is no evidence in a court of justice of either of the incidents which convert the conditional undertaking of an indorser into an absolute assumption. The protest belongs altogether to foreign mercantile transactions, upon which, on the contrary, it is an indispensable incident to making the drawer of a bill or indorser of a note liable. On foreign bills, it is the evidence of demand, and an indispensable step towards the legal notice of non-payment, in consequence of which the undertaking of the drawer or indorser becomes absolute. Hence, as to foreign transactions, it is justly predicated of a protest, that it has a legal or binding effect. But the writing under consideration has a reference exclusively to inland bills, and as to them the protest has no legal or binding effect. The indorser became liable, only on a demand and notice, and of these facts the protest is no evidence. How, then, shall the waiver of the protest be adjudged a waiver of demand and notice, or, in effect, convert bis conditional into an absolute undertaking ? Had the defendant omitted one word from his undertaking, it would have been difficult to maintain an affirmative answer to this proposition. But what are wo to understand him to intend, when he says, “I will consider myself bound in the same manner as if said notes had been or should be legally protested'? Except as to foreign bills, a protest has no legal binding effect, and as to them it is evidence of demand, and incident to legal notice It either, then, had this meaning, or it had none.
This reasoning, it may be said, goes no farther than to a waiver of the demand ; but what effect is to be given to the word "bound”? It must be to pay the debt, or it means nothing. But to cast on the indorser of a foreign bill an obligation to take it up, protest alone is not sufficient; he is still entitled to a reasonable notice in addition to the technical notice communicated by the protest. To bind him to pay the debt, all these incidents were indispensable, and may therefore be well supposed to have been in contemplation of the parties when entering into this contract. It is not un worthy of remark, that the writing under consideration asks a boon of the plaintiff for which it tenders a consideration. It requests to be exempted from an expense, exposure, or mortification, on the one hand; and, on the other, what is tendered in return? The intended object, and conceived effect, of the protest, on the one hand, is to convert his undertaking into an unconditional assumption, and the natural return is to make his undertaking at once absolute, as the effectual means of obtaining the benefit solicited. If this course of reasoning should not be held conclusive, it would at least be sufficient to prove the language of the undertaking equivocal ; and that the sense in which the parties used the words in which they express themselves may fairly be sought in the practical exposition furnished by their own conduct, or the conventional use of language established by their own customs or received opinions. On this point, the evidence proves that, by the understanding of both parties, this writing did dispense with demand and refusal; that the company, on the one hand, discontinued their practice of putting the notes indorsed by the defendant in the usual course for rendering his assumption absolute, and the defendant, on the other, continued up to the last moment to acquiesce in this practice, by renewing his indorsements without ever requiring demand or notice. This was an unequivocal acquiescence in the sense given by the company to his undertaking, and he cannot be permitted to lie by and lull the company into a
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