Mechanics' Bank of N. Y. v. Griswold

By the Court, Nelson, J. The question presented upon the pleadings in this case is, whether an endorser of a promissory note, who, before the note falls due, takes an assignment; [168] of all the property and estate of the makers for the express' purpose meeting of his responsibilities, is entitled to the usual notice of non-payment. The undertaking of an endorser is to pay the note upon default of the maker, on the condition that it is demanded of the latter at maturity, and reasonable notice of refusal is given to him. The law presumes the maker the debtor, and the object of notice is to advise the endorser of his situation, that he is to be held responsible, so that he may take such steps as he thinks proper to indemnify himself against his liability? it is then his business to take up the note and obtain security from the maker. Upon the maxim, that when the reason for the rule of law does not exist, it ought not to be applied, it has frequently been decided, that in the cases where the non-payment by the maker and failure of notice to the endorser cannot possibly operate to the injury of the endorser, the omission will not discharge him. Thus, where the endorser is himself the debtor, as where the note is discounted for his accommodation, and the money raised upon it is received by him, and therefore he ultimately holden to pay it, it is obvious that the reason of the rule cannot apply. Agan v. McManus, 11 Johns. R. 180. French v. Bank of Columbia, 2 Peter’s Condensed R. 64. So, in the case of Leffingwell & Pierpoint v. White, I Johns. Cas. 99, where the endorser of a note before it came due, informed the holder that the maker had absconded, and that being secured for his responsiblity he would give a new' note, and requested time to pay, and before the negotiation closed the note fell due, it was held that the omission of demand and notice did not discharge the endorser, as they could have been of no valuable purpose to him. In Corney v. Dacosta, 1 Esp. R. 302, the endorserat the time of the endorsement, took effects of the maker into his hands equal to the amount of his liabilities, and Buller, J. held that he was not entitled to require demand and notice. He said “it was undoubtedly necessary that an endorser of a note should have notice of the default of the maker in payment, but that it was only the case where there were effects of the endorser in the maker’s hands, and where he might suffer from went of such notice; but where there were no effects, no no [169] tice was necessary.” He considered the endorser in that case the debtor. This was a nisi prius decision, but it was cited and approved of in Brown v. Maffey, 15 East 222, by Mr. Justice Bailey, who said it would have been a fraud in the endorser to call upon the maker of the note, because, before it became due, the maker had deposited effects in his hands to answer the amount of the endorsement, and therefore he had no right to complain of the want of notice. Bond v. Farnham, 5 Mass. R. 170, is a still stronger case, but strictly within the reason and principle of the above cases. In that case, before the note became due, the maker became insolvent, and the defendant having endorsed for him several notes besides the one in suit, he assigned to him for his security all his property, but which was not sufficient to secure him against all the notes he had endorsed exclusive to the plaintiff’s. No demand and notice was given, and Chief Justice Parsons decided the defendant had no right to insist upon either, under the circumstances of the case ; that the demand would be fruitless, as he had secured all the property the maker had. He says: “ Although once having effects, as he had a demand upon the maker, yet he has afterwards withdrawn from the maker all his property to enable himself to meet his own endorsements, and had not, when the note was payable, any remedy, (as against him,) unless, perhaps, the miserable one of seizing the body of a man worth nothing ; and that remedy he has never lost.” Barton v. Baker 1 Serg. & Rawle, 334, is a similer authority, in which the facts correspond substantially with the present case. See also 3 Kent’s Comm. 79. It is conceded that the mere insolvency of the maker, even at the time of endorsement, and that known to the endorser, Jackson v. Richards, 2 Caines, 343, Nicholson v. Gouthit, 2 H. Black. 609, would not be sufficient excuse for want of demand and notice. Though the law was once understood to be otherwise, De Bert v. Atkinson, 2 H. Black. 336, it was for a very technical reason, because the party was not an endorser in the common course ofbusiness, but it has very properly been overruled ; for it is certain the fact of insolvency in the maker, above all others, would seem to be a reason why the endorser should have immediate notice, to afford him an opportunity to [170] save something but of thó wreck of the éstate. But having anticipated that event, and taken into his possession the whole of the estate, expressly to meet his responsibilities, the endors- er has effectually secured every object which the law presumes would be the consequence of .notice of the default of the maker, and which therefore it has generally required. He cannot complain of injury from want of demand and notice. U pon the original undertaking of the defendant, then, as endorser, and the rules of law applicable thereto, and reasons therefor, I am of opinion that the plaintiffs are entitled to judgment upon the demurrer, with leave to the defendant to amend oh payment of costs.