New Haven Bank, National Banking Ass'n v. Jordan Co.

Shumway, J. The holder of the note is, on the pleadings, prima facie a holder in due course, and the indorsers, contesting their liability, in order to prevail must allege, and have the burden of proving, at least one of the following facts: that the note was not complete and regular on its face; that the plaintiff did not become the holder of the note before it was overdue; that the plaintiff did not take the note in good faith and for value; that the plaintiff, at the time the note was negotiated to it, had notice of some infirmity in the instrument or defect in the title of the person negotiating it. Negotiable Instruments Act, General Statutes, §4222. The defendants’ answer will be searched in vain to find any such allegation or its equivalent. The averment that the note in question was a renewal of a note for like amount, does not change the relation or liability of the parties in any particular. Indeed, the law knows no “renewed negotiable note,” though that term is often used to denote a transaction wherein a note is used to pay and discharge a prior note of like tenor, without the payment, it may be, of any money. But, even so, the holder of such a note is a holder in due course. The contract is a new and independent one, and does not differ from the one implied in law upon the initial note. The defendants have alleged that the plaintiff surrendered a note bearing date May 10th, 1916, made by the Jordan Company and indorsed by these other defendants with one B. M. Hibbard, that Hibbard’s indorsement was prior to that of the defendants O’Brien and Stone, and that the defendants indorsed the note in suit in the expectation *708 that the Hibbard estate would also become an indorser. The expectation on the part of the other indorsers, that some representative of the Hibbard estate would indorse the note, is not a sufficient defense to this action. That fact does not constitute any infirmity in the note, or defect in the title of the one negotiating it. A note'in the form of this one is negotiated when it is indorsed and delivered by any holder to the transferee, and it makes no difference, so far as the liability of such indorsers to a holder in due course is concerned, that the indorsers are accommodation parties. Even if such holder knows that one or all of the indorsers are accommodation indorsers, that does not change the indorser’s liability. So, also, mere knowledge or reasonable belief on the part of the holder of the note that the several indorsers expected other accommodation parties to indorse it, even if the expectation is not realized, cannot relieve the other indorsers of their obligation. The liability of the indorsers to the holder of the note is not affected by any agreement among the indorsers not appearing upon the note; therefore the right of co-sureties to a contribution, or the effect of the release of one surety upon the obligations of the others, has no application in the case now before the court, whatever may be the rights and liabilities of the indorsers as between themselves. There is no error. In this opinion the other judges concurred.