Sice v. Cunningham , 1 Cow. 397 ( 1823 )

Woodworth, J.

It does not appear that the defendants had any knowledge of the negotiation, between the maker of the note and the plaintiff; nor the terms on which the money was loaned. Their liability depends on the question— lias the plaintiff, within a reasonable time, demanded payment of the maker, and given notice to the endorsers ? M'~ Cormick stated, to Mount, that they offered their own note, but the plaintiff would not take it without an endorser. This does not establish a liability. „ The offer to give a note-may have arisen from a belief that regular notice had been given. What was said in Miller v. Hinckly, (5 John. 385) is applicable here : “ It would be dangerous to fix an endorser, without notice, and perhaps without knowledge of the laches of the holder, upon such loose conversation with a third person.” If the demand and notice proved in this case, are not sufficient to charge the defendants, it is the same thing; as if no notice had been given. It is well settled, that if the. endorser, with full knowledge of the fact, makes a subsequent promise, it is a waiver, and. he is liable ; but it must be shown by the plaintiff, affirmatively and clearly, that the defendant knew, when he made the promise, that he had not received regular notice. An endorser may believe that due-, notice has been given, and under an ignorance of the facts, consider himself liable, when he is not. (Trimble v. Thorne, 16 John. 154. 12 John. 423. 8 John. 384.) In Agan v. M'Manus, (11 John. 180) the defendant made a similar offer to give his own note. It was there held, that such offer was qualified or conditional, and having been rejected by the-plaintiff, was not binding upon the defendant- The question to be decided is a question of law, arising on facts not. disputed. The charge was, therefore, incorrect, in submitting it to the jury. It was, indeed, a question of fact, whether the defendants were acquainted with the agreement between the maker of the note and the plaintiff, but there is no-evidence on this point. The whole transaction is perfectly consistent with entire ignorance on the part of the defendants. It was, therefore, manifestly incorrect, to submit such, a question to the jury, in the decision of which, if found fertile plaintiff, they must have substituted conjecture for proof.. In the view I have taken, it becomes an immaterial inquiry,, whether it was intended between the maker and plaintiff, that the money should not be demanded before the expiration of a year. The defendants, in the absence of knowledge, must be governed by the written contract, ¡Be-sides, there is a sound legal objection to this parol proof. The note is payable on demand. The effect of the understanding, between the plaintiff and maker, is to make it payable at a future period. In Thompson v. Ketcham, (8 John. 189) the note, on the face of it, was payable immediately. The Court held, that the time of payment is part of the contract. And if no time be expressed, the law adjudges that the money is payable immediately. When the operation of a contract is clearly settled, by general principles of law, it is taken to be the true sense of the contracting parties; and it is against established rules, to vary the operation of a writing, by parol proof, which goes to alter in a material degree its effect, by making it payable at some distant and undefined period. The question, then is, whether a demand was made and notice given within a reasonable time. There is no precise time at which such a note is to be deemed dishonoured. It must depend on the circumstances of the case, and the situation of the parties. In Losee v. Dunkin, (7 John. 70) the note was negotiated two months and a half after its date; and, in a suit by the holder, the maker was allowed to shew payment to the original payee. No particular circumstances Were disclosed. The question seems to have been decided on the facts, that the note was dated on the 16th January and the transfer made the 3d April. The note being dishonoured, at the time of the transfer, or over due, so as to allow the defendant the benefit of a set off, against the payee, necessarily proves, that a demand, made two and a half months after the date of the note, is not within a reasonable time, so as to charge the endorser. That there is nothing in the circumstances of the cause before us to exempt it from the operation of this rule, has already been shewn. The case of Sanford v. Mickles & Furman, (4 John. 224) decides nothing in favour of the plaintiff. It went on the ground, that several payments being endorsed on the note, before the transfer, and the last but a few days before, the plaintiff, when he took the note, had a right to claim the balance, after deducting the payments, which the defendant was not permitted to controvert, in as much as it might be presumed that all the gayment-s were entered on the note. This question was ably examined in Field v. Nickerson, (13 Mass. Rep. 131.) Í fully concur in the doctrine there laid down. The precise time id which a demand must be made, will depend on the facts of each particular case, ánd may vary according to the circumstances and situation of the parties. It was held, that eight months was an unreasonable time, and that a much shorter time would be sufficient to produce the same result 5 that the correct doctrine was, to consider a note payable on demand, like a bill payable at sight, which must be presented to the drawer as soon as can conveniently be done. It discountenances the doctrine, that the endorser is liable, if it appear, from the circumstances and situation of the parties, that more time has elapsed than, is reasonable and necessary for making a demand. The plaintiff here made no demand for upwards of five months, although all the parties lived near each other. The verdict must be set aside, and á new trial granted, with costs to abide the event.

Sutherland, J.

This case resolves itself into two points :

1. Whether the indorser of a promissory note, payable on demand, with interest, is discharged from his liability, where a demand of payment was hot made of the maker and notice of non-payment given to the indorser, until five months after the date of the note.

2. Admitting, that, ás a general rule, such delay would discharge the indorser—are the peculiar circumstances of this case such, as to exempt it from the operation of that rule ?'

It is a general rule, that a noté payable on demand, must be presented for payment; and if not paid, notice thereof given to the indorser, within a reasonable time, or he will be discharged. (Chitty on Bills, Story's ed. 197. Furman v. Haskin, 2 Caines' Rep. 369. Sanford v. Mickles & Furman, 4 John. Rep. 224. Field v. Nickerson, 13 Mass. Rep. 131.)

What is a reasonable time, when the facts are ascertained, is a question of law. (Tindall v. Brown, 1 Term Rep. 167, 2 Caines’ Rep. 369.)

Í am of opinion, that where a note, payable on demand, is made and negotiated in the ordinary way, without any agreement or understanding among the parties, as to the time when it is to be paid, in judgment of law, it ought to be considered as due, within the period of five months, and, consequently, if payment is not demanded of the maker within that time, the indorser will be discharged. It is to be presumed torn the fact, that payment may be immediately demanded upon such a note, that the indorser contemplated a short credit, when he put his name upon it, and that this was the condition upon which he agreed to he responsible. If a prolonged credit had been intended by the parties, he had a right to suppose that it would have been expressed upon the face ’’of the instrument—that the maker would not have given to the payee the power of immediately calling upon him for payment, if he had not expected soon to be called upon—that the payee would not have exacted such an authority, if it had not been his purpose soon to exercise it. Now, five months is, by no means, a short credit, upon negotiable paper. It is nearly double the ordinary bank credit, and the indorsers have a right to say that the condition upon which they agreed to be responsible has not been fulfilled, and that they are, therefore, discharged.

In Hendricks v. Judah, (1 John. 319,) the action was brought by the endorsee against the maker of a note, payable on demand. The suit was commenced within a year after the date of the note, but there was no evidence to show at what time it was indorsed to the plaintiff. The Court say, they will intend that it was endorsed soon after its date, and therefore before it was due, and on that ground, they refused to permit the defendant to set off a demand against the payee. This case, therefore, decides nothing in relation to the point before us.

In Furman v. Haskin, (2 Caine’s Rep. 369,) the note was endorsed 18 months after its date, which was held to be after it became due, and to subject it to all the equities between the original parties. In Losee v. Dunkin, the note was negotiated two months and a half'after date, which was considered out of time. But the Court say, “ the particular circumstances of the case are not before us ; and they might have been such as to justify the conclusion, that the note' was dishonoured when it was assigned.” From this ease it is to be inferred, that where the circumstances are not peculiar, two months and a half are not an unreasonable time to permit a note, payable on demand, to run. But the note in this case, run more than double that time.- (Vid. Field v. Nickerson, 13 Mass. Rep. 131.)

2.’ Are there,- then, any circumstances in this case, to take it Out of the operation of the general rule ? If knowledge had b'een brought home to the endorsers, of the agreement between the maker and the endorsee, that the note was to run until the sale of the mortgaged premises, when Kumbel was to have another thousand dollars, and give a new note,- at a year, for both sums, and their assent to it had been proved,- then undoubtedly they would have been precluded from availing themselves of this defence. But there is not a particle of evidence in the case, of such knowledge and assent on the part of the endorsers-. In Field v. Nickerson, it appeared that the defendant, when called upon to endorse the note, was informed by the makers that the note was not to be called for immediately. The Court held that this did not enlarge the time within which the demand ought to be made, or justify any negligence on the part of the plaintiff.

The offer of the defendants to give (heir own note for the one in question, having been rejected by the plaintiff, was no Waiver of the want of due notice ; nor was it binding upon the defendants. The cases of Crain v. Colwell, (8 John. 384,) and Agan v. M'Manus, (11 John. 180,) were precisely like the present upon this point, and the Court there say, that the offer being rejected, is no waiver, nor does it amount to a promise' to pay.

There was nothing in the specification of the particulars of the judgment confessed by Kumbel to the defendants, to authorize the conclusion that this note constituted a part, of the consideration. The items are all for money lent; nor does the date of any of them correspond with the date of the note. These jare all the circumstances in the case, from which it is to b,e inferred, either that the defendants knew and assented tp the original arrange? merit between the plaintiff and maker of the note, or that they waived the want of due notice, and subsequently promised to pay. Being clearly of opinion that no such inference can legally be drawn from them, I think the Judge erred in his charge to the jury upon this point, and that the verdict was against both law and evidence.

I am accordingly of opinion, that a new trial ought to he granted.

Savage, Ch. J. concurred.

New trial granted.

END OP AUGUST TEE]*.