Huie v. Bailey

Garland, J., delivered the opinion of the court. The defendant is sued as the endorser of a bill of exchange, drawn, at Quintana, in Texas, by M’Kinnly & Williams, on Thomas Toby & Brother, New-Orleans, for three thousand five hundred and seventy dollars, payable at six months from the 25th December, 1835. The bill was accepted, and after-wards protested for non-payment, and due notice given to the endorser. A suit was brought against the acceptors, prosecuted to judgement, and a capias ad satisfaciendum finally issued, and Toby & Brother arrested. They gave a bond to remain in the prison bounds, and so remained from the 16th of October to the 23d December, 1837, when the plaintiff agreed to cancel the bond and discharge them from the bounds, they agreeing, in writing, that his doing so should “in no way prejudice any right which saidHuie has or may have for his debt and interest hereafter.” He further permitted them to go to Texas, on a promise they would pay the debt on their return, in June or July following. This was done without the consent, or knowledge of the defendant, who says in his answer, he is thereby discharged from all liability. He further says, the plaintiff having given time to the acceptors, without, his assent, has discharged him. We find a bill of exception in the record, to the opinion of the District Court, permitting the plaintiff to strike out his special endorsement on the note, after the trial had closed,and the judge had ordered a judgment to be entered against the defendant. This was irregular, perhaps, but we cannot say it was absolutely unlawful, more particularly, as the defendant cannot be injured by it. We have considered the case, without reference to the time of erasing the endorsement, but exclusively as to the right, so the act does not prejudice the party. The holder of a bill or note, endorsed in blank by the payee, can recover, notwithstanding there were sub-» sequent endorsements in full upon it, and he may strike them out or not, as he pleases, So, where a person endorses a bill or note to another,whether for value or for the purpose of collection, and comes again into the possession of it, he is to be regarded as the bonajide holder, and can recover, even if there be one or more subsequent endorsers in full, without producing any receipt or endorsement back to him, and whose names he may strike out or not, as he thinks proper. The question submitted is, whether the holder of a promissory note upon which there is a subsequent special endorsement, can erase it, and recover against the maker or anterior endorsers. The early decisions of (his court were that he could not, and such was the opinion of several authors and jurists. But the court, nearly three years ago, were induced to change their opinion, and decided that the holder of a bill or promissory note, endorsed in blank by lhe payee, might recover on it, notwithstanding (here were subsequent endorsements in full upon it, and he may strike them out or not, as he pleased. We have maturely revised all the previous opinions, and adhere to the doctrine laid down in the cases in 12 Louisiana Reports, 93 — 6. It has long been settled, that a blank endorsement may be erased from a bill by a bona fide holder, and we see no sufficient reason why an endorsement that has been filled up may not be stricken out, as well as one that may at any moment be filled up. The name of the parly on the paper essentially transfers it. We think the true rule has been established by the Supreme Court of the United States, in the case of Dugan vs. The United States ; 3 Wheaton 173, 183, where it was held that “ if a person who endorses a bill to another, whether for value or for the purpose of collection, comes again to the possession thereof, he is regarded, until the contrary appears in evidence, as the bona fide holder and proprietor; and shall be entitled to recover thereon, notwithstanding there may be on it one or more endorsements in full, subsequent to the endorsement to him, without, producing any receipt or endorsement back to him from either of such endorsers, whose names he may strike out or not, as he thinks proper.” 6 Cowen, 445 ; 3 Johnson's Cases, 263 ; 11 Johnson, 53; 16 Johnson, 73; 1 Cowen 387 ; 17 Massachusetts Reports, 618 ; 3 Kent's Commentaries, 114. The next point in the case is, whether the plaintiff by permitting the acceptors of the bill to go to Texas, with a promise to pay on their return, was such a giving or prolongation of time for payment as will discharge the defendant, who is endorser. The holder of a bill need not use active diligence to sue the acceptor or endorser ; he maybe passive and forbear to sue, if he do not so agree to give - time to the acceptor as to preclude himself from suing, or suspend his remedy to the prejudice of the drawer and endorser. A delay withoxdXsujficient consideration or new security, being a nudum pactum, will not discharge other par ties, if the holder has not entered into such an agreement, as will disable him from suing the acceptor. So, where the holder released the acceptors from the prison limits, allowing them to leave the state, on a written agreement “ that it should in no way prejudice the holder’s rights, which he has or may hereafter have for his debt,” does not discharge the endorser. Chitty says there is no obligation of active diligence on the part of the holder, to sue the acceptor or any other party, and he may be passive and forbear to sue, as long as he pleases; but he must not so agree to give time to the acceptor, as to preclude himself from suing him, and suspend his remedy against him, to the prejudice of the drawer and endorsers. To make any agreement for indulgence, obligatory, it must be for an adequate consideration. Chitty on Bills, 8th American edition, 441, 442,443,446; 3 Kent’s Commentaries, 2d edition, 111, 112. The old opinion was, that any agreement to give time, discharged the drawer and endorsers, whether without consideration or not; but the later doctrine is, a delay without sufficient consideration, and without taking any new security, being a nudum pactum, will not discharge other parties, if the holder has not entered into such an agreement as will disable him from suing the acceptor. Chitty on Bills, 447. It not appearing that any consideration was made (he plaintiff for releasing Thomas Toby & Brother from the prison bounds, and letting them go to Texas, and the defendant not appearing to have sustained any injury from it, we do not think he ought to be discharged for that reason. The last ground taken- by the defendant is, that he is discharged by the release of Toby & Brother from the prison bounds, in New Orleans, when arrested under the ca. sa. In England, it is very probable that such an act would have discharged the endorser and acceptors also, if there was no special agreement to the contrary ; but in this state, it is not certain that it will. It has been decided, that a creditor by releasing his debtor on a ca. sa., does not thereby release the debt: 7 Martin, N. S., 163 ; and a plaintiff may take out a second ca. sa. after discharging the defendant from the first: 8 Idem., 315. The true test of this question is, has the plaintiff done any thing to discharge the judgment he has obtained against Thomas Toby & Brother; or deprived himself of any right to which the defendant would be entitled, in the event of his being subrogated to the judgment? If the defendant should now pay the plaintiff the amount of the judgment and be [219] subrogated, as he would of right be, he might issue execution on the judgment, and seize property if any could be found. If the acceptors, Toby & Brother, have no property, a capias ad satisfaciendum may issue, to take their bodies and confine them in prison or in the bounds.. He can avail himself of all the process and remedies allowed by law ; and, besides, has the express obligation of Thomas and Samuel Toby, that none of the rights of the plaintiff shall be impaired by the discharge and cancelling of the bond ; he can, therefore, transfer them to defendant, whenever he shall pay the amount for which he is endorser, and can proceed to collect it in any manner authorized by law, subject to such equities as may exist between the parties. A release of acceptors from the prison limits ■when arrested under a ca. sa.9 does not discharge the endorser, provided nothing ís done to discharge the judgment, so as to prevent a subrogation of the endorser to the holder’s right, in case he pays. It is, therefore, ordered and adjudged, that the judgment of the District Court be affirmed, with costs.