Copp v. M'Dugall

The action being continued nisi, the opinion of the Court was delivered the next week at Portland by Sewall, J. The verdict, in this case, for the plaintiff, was taken by the consent of the parties, and is subject to the two questions which have been argued. The plaintiff’s demand is as endorsee of a promissory note against [12] his immediate endorser ; and whether the action is maintained upon either of the counts in the plaintiff’s declaration, is the first question ‘to be decided. The defendant’s endorsement is proved. It was a blank endorsement, in the common form, upon a negotiable note, made before the note became due; and a judgment has been rendered against the plaintiff, in an action sued by him as endorsee against the maker of the note; in which action, it may be understood, some defence was maintained upon a trial of the merits. But what the defence was, is not ascertained by any evidence competent between the parties'. It is averred, in one of the counts, that the action failed in consequence of a defence maintained by the promisor, that the note was given upon a usurious contract, and was therefore void even in the hand of an innocent endorsee. What evidence there was of the fact of usury in the consideration of this note, or that this was the defence which defeated the suit of the endorsee, or whether all this was admitted by the parties at the trial of the present action, does not appear. And as between these parties, the record of the judgment or of the "proceedings, in the former action between the present plaintiff and the maker of the note, is not evidence to charge the defendant in this action, by reason of any fact proved in the former trial, or admitted by those proceedings. The record is proof of the proceedings and judgment, and nothing more. * The report of the case at bar also states that the suit against Rounds, commenced some time after the note became due and payable, is the only demand proved by the holder of the note from the maker; and there is no regular evidence of any notice to the endorser of the dishonor of the note ; for the plaintiff’s declaration to his attorney is not admissible evidence of this fact. The case, thus far recited, is one, therefore, in which the plaintiff can have no right of action against the defendant upon his endorsement, independently of other circumstances; he having, while the holder of the note, neglected to demand it of the promisor, and to give seasonable notice of his refusal to pay it. The implied promise of the endorser, in the regular assignment of a negotiable note, is conditional; that the endorsee or holder of the note, when it becomes due, shall use due diligence to recover or demand it of the maker; and if he fails or refuses to pay, then that the endorser shall have notice of it, as soon as may be done afterwards; and a neglect of these implied stipulations discharges the endorser. If the plaintiff is entitled to recover in this case, it must be upon the. other circumstances proved. These circumstances are, that after the judgment obtained by [13] Rounds, the maker of the note, in the action against him, notice was given to the defendant; and that when informed of the event of the plaintiff’s suit against Rounds, and of the defence, and when questioned why he, did. not assist or furnish the plaintiff with evidence, the defendant answered that he had supposed that Rounds would not stand trial, (a) And the defendant then said he was ready to pay the amount of the note and interest, but was not liable by law to pay any costs. And we are all of opinion, that the defendant is justly charged by the verdict, as found upon this evidence. The defendant is liable by this confession and undertaking, because it amounts to a recognition of the illegality of the note, which he had endorsed ; (b) at least so far as the present * plaintiff is concerned ; and without further evidence, we may understand that the plaintiff failed of recovering the note against the promisor upon the ground of an illegal consideration, or some substantial defence, against the contract, which proved that the maker of the note was not liable upon it, when it was endorsed. The plaintiff became then entitled at least to the money he had paid the defendant upon a bargain and consideration which had failed on his part, the transfer of a note which was not what it purported to be, a good recoverable note against the promisor, (c) The case is analogous, as I conceive, to that of a bill of exchange, where the drawer is proved to have had no funds in the hands of [14] the drawee or acceptor, and to have suffered no prejudice as to the demand or remedy against him. (d) A negotiable promissory note, when endorsed, has, as a mercantile contract, every circumstance of a bill of exchange or drought accepted ; the endorser standing in the relation of the drawer, and the promisor being the acceptor. When the promise or acceptance is void, as it is in a case of usury between the drawer and acceptor, if he will resort to that defence against his promise, the contract becomes, as it respects the endorser, a drought accepted without funds, that is, in the case of a promissory note; and the endorser has no demand, which he can lawfully or effectually assign in the hands of the promisor; and it is at least evident that the endorser suffers no prejudice or loss by any delay of the endorsee, in demanding payment of the promisor, or in giving notice to the endorser. The other question to be decided is as to the amount of damages recoverable in this case, and more particularly whether the endorser is liable for the expenses of the action prosecuted by the plaintiff against Rounds, the promisor in the note. And we are all of opinion, upon this point, that the defendant is not liable in that respect, upon the evidence in this case. His concession goes only to the amount of the note and interest; but that, indeed, is * the extent to which the endorser of a promissory note is liable in any case, depending on the legal effect of his endorsement. The drawer or endorser of a foreign bill of exchange is liable, further, to the expenses of the protest, and the damages for re-exchange, or to a rate of damages established by usage, but not to the expenses of suits against other parties, or any remote and consequential damages, unless in virtue of some additional and express contract of indemnity. The plaintiff’s count upon a promise of guaranty and indemnity is not supported by any evidence stated to have been given at the trial. This is not the legal effect of an endorsement, which is only an implied conditional promise of the endorser to pay the amount of the note, and the damages incurred by the delay of payment, or regular interest, if not obtained of the promisor, the holder observing due diligence in the collection, and giving seasonable notice of the failure of the promisor. The holder has authority, as soon as the note is due, when payment is refused, to commence his action against the promisor and the endorser; and there never has been [15] an attempt to make the one accountable for the costs of the suit against the other, upon the contract proved by the note, (e) The decision on this point is consonant to the opinion of Lord Kenyon in the case of Winckworth vs. Mills, (4) which was indeed a stronger case than- this. There the promise of the endorser of an unpaid note to indemnify the holder, by which he was induced to incur the expenses of one or more actions against the other parties to the note, to enforce the payment against them, was holden void, as within the statute of frauds, because not in writing, although some part of the note had been recovered by those suits; and the endorser was holden to be liable only for the balance remaining unpaid. Judgment is to be entered upon the verdict for the amount of the note and interest. (f) Footnotes [(a)] [This does not appear in the report. — Ed.] [(b)] Z>) [It seems difficult to infer a recognition of the illegality of the note from the dec larations and acts of the defendant, even as stated by the learned judge. The defendant, in effect, only said that he did not furnish evidence to establish the validity of the note, because he did not expect that it would be disputed. His promise to pay, however, might have been considered as a waiver of a previous demand on the maker, and notice to himself, or, more properly, as evidence that such demand had been duly made, and such notice duly given. And perhaps the decision in favor of the plaintiff might have been better supported upon this ground, than by embarrassing the case with the illegal consideration of the note.— Vaughan vs. Fuller, 2 Str. 1246. — Lundie vs. Robertson, 7 East, 236, and Haddock vs. Bury, cited in note.— Taylor vs. Jones, 2 Camp. 105.— Hodge vs. Fillis, 3 Camp. 463.— Gibbon vs. Coggan, 2 Camp. 188.— Greenuay and Others vs. Hindley, 4 Camp. 52.— Wood vs. Brown, 1 Stark. 217. — Potter vs. Rayworth, 13 East, 417.— Stevens vs. Lynch, 12 East, 38.— Thomson on Bills, 565, and cases there cited. — Bayley, 187. — Hopkins vs. Liswell, 12 Mass. Rep. 52, and see 3 Johns. Rep. 6. —16 Johns. 152. — 2 Mason, 241. — 4 Dall. 109. — 2 N. H. R. 340. — 2 Nott & M'Cord, 479. — 6 Munf. 487. At least, if we are to understand by the statement in the report that no demand was made, &c., and no notice, <5fc., only that there was no evidence of demand and notice; and so it seems to have been understood by the Court. — Ed.] [(c)] [It is no objection, in an action against an endorser, that the bill or note was drawn upon a gaming, usurious, or other illegal consideration ; (Bayley, 369, Edwards vs. Dick, 4 Barnew. & Ald. 212. — Bowyer vs. Bampton, 2 Str. 1155.— Thomson on Bills, 164, and cases there cited;) nor in an action against the maker that it was endorsed upon such a consideration. Knights vs. Putnam, 3 Pick. 184; and see 2 Caines's Cas. 66 —13 Johns. Rep. 52. —15 Johns. Rep. 44 —Ed.] [(d)] [The analogy does not appear to be complete ; for although the note might be avoided by the maker, at his election, for usury; yet, if any part of the consideration were a preexisting debt, the payee might have an action against him for that. — Johnson vs. Johnson, 11 Mass. Rep. 359. —Ed.] [(e)] [The plaintiff might have maintained an action on the case against the payee for damages. — Ed.] [(4)] 2 Esp. Rep. 483. [(f)] [See Revised Statutes, c. 35, § 1, 2, 3, 4.— Ed.]