Haynes Automobile Co. v. Shepherd

Clark, J. Plaintiff, an Indiana corporation, received of the Devlin Company, a Michigan corporation, a note; “$1000. Detroit, Mich., June 23, 1917. “Sixty days after date I promise to pay to the Haynes Automobile Company, or order, one thousand [232] and no-100 dollars, at Kokomo, Ind. Value received with 6 per cent, interest per annum. “The Devlin Company, “By Lyle A. Devlin. “Indorsed: “Marion M. Shepherd, “George A. Devlin." This was the last renewal of a note originally $5,000. Lyle A. Devlin was president of the Devlin Company and managed its affairs. George A. Devlin, father of Lyle, was vice-president but not actively connected with the management. He devoted his time to the business of another company. The other indorser, Marion M. Shepherd, was not associated with the maker of the note in any capacity. The Devlin Company was indebted also to plaintiff on open account. Shortly before the making of the note, the Devlin Company being in financial difficulties, Mr. Watson of plaintiff company, by agreement between the maker and the payee, came to Detroit, and assumed management of the business of the Devlin Company. This was in the interest of plaintiff, for its protection, and to effect payment of the amounts due it, and in this Watson was aided and assisted by Lyle A. Devlin. Just prior to the making of the note the indebtedness was reduced by credits for advertising and for defective parts and by return of new parts, but dealing was continued after the making of the note. The due date of the note was August 22,1917. It is fairly established by the record that at least during the month of August it was the Relief of Watson and of both the Devlins that the note was paid, and that George A. Devlin was so advised by Watson. On August 7th, the Devlin Company, after full conference and consideration by the Devlins, contemplated bankruptcy, and on that day, at the suggestion of Lyle A. Devlin, Watson wired plaintiff: [233] “Detroit, Mich., Aug. 7, 1917. “Haynes Auto Co., “Kokomo, Ind. “Devlin Company in bankruptcy for our interest mail special delivery to me canceled note $1,000 paid by audits [credits] better get account cleared up quick. ' “C, L. Watson.” The record shows no response to this telegram or other communication to Watson, the Devlins, or the maker until upwards of a year later, though the treasurer of plaintiff caused the note to be stamped “canceled” in preparation for its return, but did not return it for the reason, as he says, that he learned that it was not paid. A petition in bankruptcy was filed by creditors against the Devlin Company. The appointment of a receiver and an adjudication followed. For upwards of a year following plaintiff filed no claim in such proceeding. This suit is against the indorsers. The defense is that there was no notice of dishonor. It is conceded that no notice was given and that therefore defendant Shepherd is released. The trial court directed a verdict in favor of defendant Devlin and judgment thereon was entered. Plaintiff brings error. It was contended in the trial court that the case was ruled by the negotiable instrument act of Indiana, but counsel seem' to agree that the statutes of the States respecting the question presented are identical and the case is here argued with citation of our statute and, in the main, our decisions. That the maker was bankrupt on the due date of the note, and that the indorser had knowledge of that fact and of the financial condition of the maker, did not relieve plaintiff of the requirement respecting notice of dishonor. 2 Daniel on Negotiable Instruments (6th Ed.), §§ 1171, 1172, and cases cited. Indorser Devlin was not “the person to whom the [234] instrument is presented for payment” to bring the case within the second exception of section 6156, 2 Comp. Laws 1915, considered in Whitney v. Chadsey, 216 Mich. 604, cited by counsel. Bessenger v. Wenzel, 161 Mich. 61, and Gelder v. Welsh, 169 Mich. 490, are also cited and. discussed. As to failure to give'notice of dishonor those cases turned upon the proof of waiver. The record here is barren of anything to indicate waiver of notice of dishonor by the indorser. The belief of the maker and the indorser Devlin that the note was paid, and the telegram to plaintiff, do not square with the claim of waiver. Judgment affirmed. Fellows, C. J., and Wiest, McDonald, Bird, Sharpe, Moore, and Steere, JJ., concurred.