Furgerson v. Staples

Haskell, J. The defendant, upon payment of $3,000 to the municipal officers of the town of Stockton, received from them three town orders for $1000 each, dated November 17, 1877, payable to his own order, with interest annually, and already accepted by the treasurer of the town. On the 17th of January, 1879, the defendant indorsed one year’s interest upon each of the orders and indorsed and delivered the orders to the plaintiff for value, and in good faith, both parties believing them to be legal obligations of the town. [163] The orders have been held by this court as issued without authority from the town, and, therefore, of no binding validity upon it. The plaintiff sues in assumpsit to recover the consideration that he paid the defendant for the orders, as money had and received, and interest. Town orders, although not commercial paper to the extent that transfer to an innocent holder shuts out equitable defenses, may be negotiable in form, and become transferable under the same rules of law that would be applicable to commercial paper. Parsons v. Monmouth, 70 Maine, 262. The indorsement of a note is a new contract. The indorser engages that the note shall be paid according to its tenor; that is upon proper presentment, demand and notice; he engages that it is genuine and the legal obligation that it purports to be, and that he has title to it, and a right to indorse it. Sto. Pr. Notes, § 135. Dan. Neg. Ins. § 669; Bank v. Fearing, 16 Pick. 533; Bank v. Caverly, 7 Gray, 217. All engagements of the indorser, except payment, conditioned upon demand and notice, and possibly the validity of the note when it is voidable only, are absolute warranties and not dependent upon any condition whatever. If the note transferred by indorsement be a forgery, or absolutely void for any other reason, the indorser may be sued for the original consideration paid him, or he may be held as a party without demand and notice. Dan. Neg. Ins. §§ 669, 675, 1113. Par. N. & B. 444, Copp v. McDugall, 9 Mass. 1; Burrill v. Smith, 7 Pick. 291. The indorsement and transfer by the payee, of a dishonored promissory note, for value, must create all the engagements on the part of the indorser that an indorsement of the note before maturity would create, except as to demand and notice. To charge the indorser of a dishonored note, demand and notice are required within a reasonable time after the indorsement. The indorsement in such case is like the indorsement of the demand note of the maker of that date, or the drawing of a bill upon the maker of the note payable to the transferee. Greedy v. Hunt, 21 Maine, 455; Hunt v. Wadleigh, 26 Maine, 271; Sanborn v. Southard, 25 Maine, 409 ; Goodwin v. Davenport, 47 Maine, 112; 2 Par. N. & B. 13. [164] The plaintiff has elected to sue for the consideration that he paid the defendant for the worthless orders. The plaintiff has already recovered from the town by an action for money had and received, brought in the defendant’s name, the part of the money defendant loaned upon the order that went to the use of the town. This sum the plaintiff must deduct from the amount that he paid the defendant for the orders and have judgment for the balance and interest. Defendant defaulted. Damages to be assessed at nisi prius. Peters, C. J., Walton, Virgin, Emery and Foster, JJ., concurred.