McAdam v. Grand Forks Mercantile Co.

Bruce, J. (after stating the facts as above). An examination of -the complaint will hardly show that the defendant is sought to be held to the liability of an indorser. He is certainly not sought to be held as a maker of a new note. As we construe the complaint, the liability as a vendor or warrantor is alone relied upon. Even if a proper foundation is laid for proof of the liability of an indorser, we are quite satisfied that there is no reason for reversing the judgment of the trial court. Even if we concede that presentment for payment was dispensed with, on which we do not express an opinion, we are perfectly satisfied that no right to a recovery was proved by the plaintiff. All that the plaintiff, himself, paid for the notes in question was $50, while all that the original purchaser, Titus, paid was $51. The evidence is conclusive and undisputed that Titus recovered, out of the notes that he purchased, to say nothing of the $50 received from Yallely, more than he paid for all of the notes; and it is also undisputed that the plaintiff recovered from the balance of the notes purchased by him from Yallely, more than he, himself, paid for all of the notes so purchased. The law seems to be well established that, in the case of an indorsement or transfer of a negotiable instrument after its dishonor or maturity, where the consideration passing between the indorsee and his indorser is not equal to the amount of the paper, the indorsee, in an action against the indorser, can recover only the consideration he has actually paid. The face of the note sued upon was $600. The amount paid for all of the notes [654] by Titus was $51, and by the plaintiff, $50. Under tbe authorities, plaintiff’s right of recovery, therefore, would be limited in any event to $50. Even this right of recovery he has not proved, as it is conclusively shown that he bought the notes in bulk, that is to say, notes of the face value of from sixteen hundred to seventeen hundred dollars, including the note in question, and that he has already realized on such bulk purchase more than the $50 that was paid. See Coye v. Palmer, 16 Cal. 159; Cook v. Cockrill, 1 Stew. (Ala.) 475, 18 Am. Dec. 67; Brown v. Mott, 7 Johns. 361; Braman v. Hess, 13 Johns. 52; Munn v. Commission Co. 15 Johns. 44, 8 Am. Dec. 219; Youse v. M’Creary, 2 Blackf. 243; Arents v. Com. 18 Gratt. 750; Davis v. Miller, 14 Gratt. 1. There is no question that the note under consideration Avas past due, both when purchased by Vallely and Avhen purchased by the plaintiff. It was a demand note, dated January 16, 1904. It was purchased by the plaintiff on March 6, 1905. It is Avell established that a note payable on demand is due within a reasonable time after its date, and there are practically no authorities which hold that such reasonable time can be extended beyond a year. Rev. Stat. 1905, Sec. 6355; Morey v. Wakefield, 41 Vt. 24, 98 Am. Dec. 562; Camp v. Scott, 14 Vt. 387; Vinton v. King, 4 Allen, 562; Thompson v. Hale, 6 Pick. 259; Paine v. Central Vermont R. Co. 14 Fed. 269; Bull v. First Nat. Bank, 14 Fed. 612; Losee v. Dunkin, 7 Johns. 70, 5 Am. Dec. 245; Herrick v. Wolverton, 41 N. Y. 581, 1 Am. Rep. 461; LaDue v. First Nat. Bank, 31 Minn. 33, 16 N. W. 426; Carlton v. Bailey, 27 N. H. 230; American Bank v. Jenness, 2 Met. 288. There can therefore be no liability as-an indorser under §§ 6366 and 6367 of the Civil Code of 1905. Nor can any liability be founded upon the theory that there was a new indorsement and a new issue of the notes. In the first place, there is no foundation laid for any such claim or liability in the pleadings. In the second place, there is no proof whatever that there was any such new indorsement or reissue. The note in question was not physically indorsed after maturity. It was at the most only sold to the original purchaser, Titus, in the condition it was in when it was among the profit and loss papers of the defendant. The total inadequacy of the consideration, and the collateral agreement, absolutely negative any presumption of a reissue or reindorsement. Such being the case, it [655] was not a note which had been indorsed after maturity and then sold, but one which had been indorsed before maturity and sold as a chattel in such condition. It is quite clear from the authorities that in such a case the plaintiff would have no further or greater rights than would the original purchaser, Titus. Huddleston v. Kempner, 3 Tex. Civ. App. 252, 22 S. W. 871; McPherson v. Weston, 85 Cal. 90, 24 Pac. 733; Kernohan v. Durham, 48 Ohio St. 1, 12 L.R.A. 41, 26 N. E. 982; Simons v. Morris, 53 Mich. 155, 18 N. W. 625; Mayfield Grocer Co. v. Price, 43 Tex. Civ. App. 391, 95 S. W. 31; Brown v. Smedley, 136 Mich. 65, 98 N. W. 856; Chase v. Whitmore, 68 Cal. 545, 9 Pac. 942. It is also clear that this is a case where the clause of § 6367, Eev. Codes 1905, that “when the negotiation is by delivery only, the warranty extends in favor of no holder other than the immediate transferee,” would apply. There is no. liability, in short, under § 6367, for the simple reason that the transfer to Titus, in spite of the alleged indorsement, was a transfer by delivery only, that is to say, a sale of a chattel, rather than an indorsement. Nor can there be any liability under § 5428, which provides that “one who sells or agrees to sell an instrument purporting to bind anyone to the performance of an act, thereby warrants . . . that he has no knowledge of any facts which tend to prove it worthless, such as the insolvency of any of the parties thereto, when that is material, the extinction of its obligations, or its invalidity for any cause.” This section of the statute is not a section which relates or pertains to indorsers of, or, necessarily, to commercial paper at all. It is a section which relates to vendors of chattels and to the liability of such. Its warranty, therefore, is not the warranty of an indorser, but the warranty of a vendor, and is a warranty that is personal to the vendee. Even as far as the vendee is concerned, the inadequacy of the consideration and the collateral agreement positively negative any liability on the part of the vendor. Even if there was any liability, as we have before stated, it was personal to the vendee, Titus. The suit before us is not a suit between Titus and the mercantile company, but between the assignee or indorsee of an assignee or indorsee of the said Titus and the company. Such being the case, and since there is no allegation of any prior assignment by Titus of his cause of action, if any he had, there can be no liability to the plaintiff in this suit. Bord [656] well v. Collie, 45 N. Y. 494; Nelson v. Armour Packing Co: 76 Ark. 353, 90 S. W. 288, 6 Ann. Cas. 237; Smith v. Williams, 117 Ga. 782, 97 Am. St. Rep. 220, 45 S. E. 394; Thistler v. Keith, 7 Kan. App. 363, 52 Pac. 619; Ashler Lumber Co. v. Cornett, 22 Ky. L. Rep. 569, 56 L.R.A. 672, 58 S. W. 438; Prater v. Campbell, 110 Ky. 23, 60 S. W. 918; Pemberton v. Dean, 88 Minn. 60, 60 L.R.A. 311, 97 Am. St. Rep. 503, 92 N. W. 47.8; Watson v. Chesire, 18 Iowa, 202, 87 Am. Dec. 382. The judgment of the District Court is affirmed.