Fulford v. Johnson, Hendon & Co.

CHILTON, J. In Jordan, use, &c. v. Garrett, 3 Ala. R. 610, it was held that an irregular indorsement on paper not mercantile, is not provided for by the act of 1828, and that the liability thereby created is, that the assignor is liable to pay the debt, if by the use of proper diligence, it cannot be obtained from the maker. It is also added, that the question .of diligence is one of fact, to be found by the jury, but that to [391] constitute such diligence, the maker must be sued to the first court after the maturity of the note, unless some valid reason, such as the insolvency of the maker, excused it. This case has been repeatedly recognized since, as correctly settling the law. See Hall et al. v. McCampbell, 3 Ala. Rep. 635; Nesbit v. Bradford, 6 ib. 746; Milton v. DeYampert, 3 ib. 648; Bank v. Gaffney, 9 ib. 159. So also when the note of a third person is indorsed by an irregular indorsement, in consideration of a precedent debt due from the indorser to the indorsee, the plaintiff, whether he declare upon the indorsement or upon the original consideration, is equally bound to show due diligence in respect to the collection of said note, and that it still remains his property. Bates v. Ryland, 6 Ala. Rep. 673-4. It is also settled, that where the action is brought upon the indorsement of a promissory note, the plaintiff’s right to recover cannot be made out by proof of á fraudulent concealment, or misrepresentation by the indorser in respect to the ability of the maker to pay, but to make such a fraud available as a ground of action, it must be specifically declared on in a suit brought by the party defrauded. Bank v. Gaffney, 9 Ala. Rep. 153. Applying these principles to the case before us, we shall have little difficulty in arriving at a correct conclusion in respect to the first and third counts, to which demurrers were interposed in the court below, and overruled. The first count, after averring the indorsement of the note to the plaintiffs, continues, “ and the said plaintiffs aver that afterwards, to-wit, on the day and year aforesaid, in the county of Greene, in the state aforesaid, where the said Taylor, the maker, ordinarily resided, suit was commenced upon said note against said Taylor, but the said Taylor could not, on diligent search and inquiry there .and elsewhere in said state, be found; nor hath said Taylor paid said note, &c.” Does this count show the exercise of such diligence by the holders as to charge the indorser ? It does not show that the maker removed beyond the jurisdiction of the court after the note was indorsed, so as to bring the case within the principle decided in Woodcock v. Campbell, 2 Porter’s Rep. 456; neither does it advise us as to the court in' which suit was com [392] menced, or what has been done in such suit, or that the defendant was insolvent. That the defendant could not be found, upon diligent search and inquiry, when the suit was first instituted, is a sufficient excuse for not proceeding to judgment at the first term at which such judgment might otherwise have been rendered, but does not excuse the party from proceeding afterwards to collect the demand, if the maker was solvent, and it could have been collected. The third count deduces the defendant’s liability on the indorsement, from the fact, that the maker, at the time of the indorsement, and since that time, to the bringing of this suit, was a non-resident of this State, which fact of non-residence, was unknown to the plaintiffs at that time. It is not pretended that the plaintiffs were defrauded, or that the defendant was under any obligation to communicate the non-residence of the maker to them. We know of no principle of law, in the absence of fraudulent or false representations as to the residence of the maker, or a suppression of the truth, which would amount to a fraud, which would authorise the plaintiff to recover, upon the isolated ground, that he did not know of the maker’s non-residence. Suppose neither party knew whether or not Taylor resided without the State, but plaintiffs contracted, risking that matter, it would be going too far, to hold that the plaintiffs should not be held to any diligence to collect the note. This hypothesis is consistent with the count, as the plaintiffs do not aver that they were in any way deceived, by their want of a knowledge of the maker’s residence. But if they were deceived, we have shown they must declare for the deceit, and not upon the indorsement. The Bank v. Gaffney, supra. What we have said, as applicable to the counts, is a sufficient indication of our views in respect to the points raised by the bill of exceptions. The clerk of the plaintiffs, who received the note indorsed by the defendant, swears that it was received in part payment of the amount. The remainder of the account for which the defendant, at the time, executed his own note, has been paid, and the account was receipted, as paid, and delivered to the defendant. There being an express agreement that the note should operate as a payment, it is very clear the plaintiffs cannot recover upon the account) [393] unless it could be shown that the note was void, and therefore constituted no consideration for the contract. See the authorities collected in Lee’s adm’r v. Fontaine & Freeman, 10 Ala. Rep. 755; see also Moore v. Briggs, at the present term. The rule is, that where the note of a third person is indorsed and transferred as an ahsohciepayment of a pre-existing debt, then no action can be had on such debt, or its original consideration, and the creditor must seek his remedy on the paper so transferred, unless the note be a forgery, or fraud be committed in the transfer, by false representations as to its value, &c. Trotter v. Crockett, 2 Porter’s Rep. 401.— Whether the substituted note wps intended as a payment absolutely, or was received as collateral, or as a conditional payment, is a fact to be ascertained by the jury. If received as a payment, absolutely, and there be no fraud, and the note creates a liability upon the maker, then the plaintiffs, being compelled to resort to the contract evidenced by the indorsement, must show that they haveuseddue diligence to collect it from the maker. This is also a question of fact forthejury, tobe ascertained, subject to the rules which the law furnishes for their guidance. If the note, adding the interest, amount to more than fifty dollars, the plaintiff must sue to the first court tp which the suit could be brought, or must show that such suit would have been unavailing. If he releases a part of the debt, and seeks his remedy in a forum not in the contemplation of the parties at the time the contract was entered into, and which, without such release, had no jurisdiction of a suit upon the note, it is the same as though no suit had been commenced. The. law regulating the indorsement becomes incorporated into and forms part of the contract. This law required the plaintiffs to sue in the circuit or county court, in which event, had the party obtained a judgment, a lien eo-extensive with the State, would have attached upon the lands of Taylor. In suing before a justice, to whom they give jurisdiction by their release, they violate this implied stipulation in the contract of indorsement, and therefore may not make their violation of the contract, the ground for a recovery against the indorser. [394] It follows, from what we have said, that the court should have charged the jury, that the proceedings had before the justice, as the same appears in proof, did not entitle the plaintiffs to recover upon the indorsement; not that the proof, having been admitted without objection, was illegal, but that it did not amount, in legal contemplation, to the exercise of due diligence. These views are deemed sufficient to guide the primary court, in its future action upon the case. Let the judgment be reversed, and the cause be remanded.