Torgerson v. Ohnstad

Brown, C. J. Action to recover against defendant as an indorser, of a promissory note. Plaintiffs had a verdict which was set aside and judgment ordered for defendant. Plaintiffs appealed. It appears that the note in suit was given to defendant for a loan of $1,100 to the makers, who were mercantile dealers in the village of Ellendale, in Steele county, this state. Plaintiffs were engaged in automobile repair work in the same place, as was one Carl Aronson also. Plaintiffs desired to dispose of their business and negotiations with Aron-son resulted in a sale thereof to him. Aronson is the son-in-law of defendant. He was in need of funds to complete the transaction and applied to defendant for financial help. The purchase price of the property, which included stock in trade, tools and automobile accessories, and a town lot and the building in which plaintiffs had carried on the business, was $2,500.' This was furnished'by defendant. As a part thereof he indorsed the note in suit, then past due, and turned it in at its face value. Under the Uniform Negotiable Instruments Act, the note, though overdue when so indorsed and transferred, became, as to the parties concerned in the particular transaction, payable on demand, and it was incumbent upon plaintiffs as indorsees, to charge defendant with continued liability as indorser, to demand payment of the makers within a reasonable time, and, if not paid, to give notice thereof to defendant within the time fixed by that act. G. S. 1913, §§ 5819, 5883 and 5926. The only question involved on the appeal is whether there was a compliance with the statute. The trial court Submitted the question to the jury and the general verdict for plaintiffs was an affirmative answer, based on [48] the facts and rules -of law laid down for their guidance by the court’s instructions. On subsequent consideration of the question, on defendant’s motion for judgment notwithstanding the verdict or a new trial, the court concluded that the evidence was conclusive that the statute had not been -complied with and judgment notwithstanding the verdict was ordered for defendant. Plaintiffs insist that there was a proper presentation and demand of payment and notice of dishonor, and that the court below was in error in holding otherwise. The facts are not in material dispute, though the conclusion to be drawn therefrom forms the essence and substance of the case. The transaction as a result of which the note was indorsed and transferred to plaintiffs took place on November 6, 1916. Plaintiffs’ automobile repair shop w-as then transferred to Aronson and the purchase price paid over to them in the manner stated. Two days later, November 8, plaintiffs formally presented the note to the makers at their place- of business and demanded payment, and payment was refused on the ground that they were not able to make payment at that time. They, however, then stated to the member -of plaintiffs’ firm who presented the note that they were in the hope of selling out their mercantile business soon, and if a sale was made they would be in funds and able to pay. No notice of this presentation and dishonor was given to defendant during the next succeeding day, as required by the negotiable instruments act, or at all. Thereafter in May, 1917, some six months from the date of the transfer of the note to plaintiffs, and after the makers had turned their property over to -a trustee for the benefit of their creditors, they again presented it with a demand for payment, which was refused, this time for the total lack of funds. Thi-s was followed by a proper notice to defendant. An indispensable element of a cause of action against the indorser of a negotiable instrument, is notice of its dishonor by the maker, given by the holder in the manner and within the time prescribed by law. The right of action does not accrue until the notice is given, and the failure to give it cannot be excused, except perhaps for special reasons not here presented. The requirements of the law are unyielding in thi-s respect. 3 R. C. L. 1218, and citations in notes §§ 440 and 446. The note in suit was dishonored by the makers on November 8,1916, but no notice thereof was given to defendant. This discharged the defendant and ends the [49] case, unless we are required by the record to sustain the contention that the presentation and demand of payment on November 8 was not intended- as a formal presentation, or as a compliance with the requirements of the law on the subject, but rather as informal -and merely “sounding out the makers,” therefore not of legal significance or effect. But the record does not sustain that contention. The evidence, presented by plaintiffs in their case in chief, shows beyond dispute an intentional persentation of the note to the makers and a demand of payment, which was in full compliance with the essentials prescribed by the negotiable instruments act. It shows also- a refusal of payment, coupled with the statement that the makers expected to sell their property and would then be able to pay. The suggestion that plaintiffs did not intend this as a formal presentation is without force, since the evidence conclusively shows to the contrary. The failure to give notice cannot be excused on the theory that the refusal to pay the note came to plaintiffs in 'an “informal” way, nor by a showing that defendant was in no way injured or prejudiced by their default. Rosson v. Carroll, 90 Tenn. 90, 16 S. W. 66, 12 L.R.A. 727; 3 R. C. L. 1218, §§ 440, 446, 459, and 8 C. J. 545, § 757, and citations. Defendant was discharged from further liability, and the subsequent second presentation followed by a proper no-. tice, though in conformity with a local custom as to time, did not revive the original liability. Rosson v. Carroll, supra. The learned trial court therefore properly ordered judgment for defendant notwithstanding the verdict, and the order so directing must be affirmed. Order affirmed.