Bank of Jamaica v. Jefferson

Wilkes, , J. The Bank of Jamaica, claiming in its bill to be a corporation under the laws of New York, brought suit in the Chancery Court , of Shelby County against J. T. Jefferson, C. C. Glover, and Toof, McGowan & Co., to recover a note for $1,500 and interest. The note is as follows: “$1,500.00. Memphis, Tenn., D(ec. 4, 1890. “ Pour months after date I promise to pay to the order of P. W. Dunton fifteeen hundred dollars at Corbin Banking Co., New York, N. Y. Yalue received. J. T. Jefferson.” Indorsed as follows: “Without recourse. “P. W. Dunton, “ C. C. Glover, “Toof, McGowan & Co. [539] “ Pay W. II. Porter, Esq., Cashier, or order, for collection account of Bank of .Jamaica, Jamaica,. .Long Island. Wm. S. Wood, Cashier.” Upon the hearing the Chancellor rendered judgment against all the defendants (E. W. -Dunton not being sued), and defendants Toof, McGowan & Co. have brought the case to this Court on writ of error, and assign as error that the note shows that Toof, McGowan & Co. are only accommodation in-’ dorsers on it, and that they are not principals, and that there is no proof in the record that any demand was ever made upon the maker and that he made default in payment, and that the note was thereupon protested for non-payment, and especially that no notice was ever given to them of such demand and protest for non-payment. The law is plain that, to hold an indorser liable upon his indorsement made regularly. in the ordinary course of business or for accommodation, there must be presentment and demand made of the maker, and protest if payment is not made, and that notice of such demand, failure to pay, and protest, must be given to the indorser, and all these facts must affirmatively appear, and the bur-deu of proof Is on the party suing upon the note to show such facts. Rosson v. Carroll, 6 Pick., 90-130. This is a universal rule in cases where indorsements are made in the regular course of business. In the case at bar, however, it appears from [540] the testimony of Jefferson, the maker, and Dunton, the payee, .which is the only testimony in the case, that the note sued on was made by Jefferson to cover a balance due from him to Dunton; that Dunton lived in New York and Jefferson in Memphis. Jefferson states that before he sent the note to Dunton, he procured Gilo ver and Toof, • McGowan k Co. to indorse it for him, and that they did "indorse it merely as additional security to Dunton, the payee, for the money that Jefferson owed him, and to enable Dunton to ' discount it and obtain the money thereon. Dunton states that he received the note by mail with the same understanding, and, inasmuch as the note was payable to him, he indorsed it without recourse, so as to transfer the legal title without legal \ liability against himself; that it Avas transferred before due to the Bank of Jamaica, and that by inadvertence the indorsement made by him was placed above the names and indorsements of the other parties. Under these facts, which are competent to be shown by parol, Toof, McGowan & Co., as well as C. C. Glover, must be regarded as joint makers with Jefferson of the note, and not simply as ordinary indorsers in due course of trade, and they are liable without any demand, protest, or notice being made. Harding v. The Heirs of Waters, 6 Lea, 333, 334; Rivers v. Thomas, 2 Lea, 649; Rey v. Simpson, 22 How., 341; 2 Parsons on Bills and Notes, 120, 121. [541] Again, it is assigned as error that complainant sues as a foreign corporation, and it is insisted that no recovery can he had unless that allegation is sustained by proof, and that no proof was offered on this point in the Court below. On the other hand, it is insisted that this allegation of the bill is not denied in the answer; that the character in which plaintiff sues is not put in issue by the answer; and that, under a general denial, or the general issue, proof of the character in which the suit is .brought is not necessary to be made. This latter contention is unquestionably correct in actions at law, in which actions, if the plaintiff alleges that it is a corporation, even though it be a foreign corporation, that fact need not be proven unless it is put in issue by a specific denial, and the general issue would not be sufficient, and pleading to the merits would be an admission of the char-, acter in which the plaintiff' sues. 2 Beach on Private Corporations, 867-869; 4 Am. & Eng. Enc. of Law, 285-6, and notes; Union Cement Co. v. Noble, 15 Fed. Rep., 502; Harrison v. Martinsville Railroad Co., 79 Am. Dec., 447; Arono v. Wedgewood, 69 Am. Dec., 81; West Winstead Asso. v. Ford, 71 Am. Dec., 447; Marble Co. v. Black, 5 Pick., 118, 120, 121. We do not think the cases of Jones v. State, 5 Sneed, 346, 348; Owen v. State, 5 Sneed, 493, 495; and Augusta Mfg. Co. v. Vertrees, 4 Lea, 75, 78, are in conflict with- this ruling. The cases of Jones [542] v. The State and Owen v. The State are criminal prosecutions, in which greater strictness of proof is-required, and the case of Augusta Mfg. Co. v. Vertrees was an action of ejectment, in which by statute (M. & V. Comp., 3963) it is provided that, under the general plea of not guilty the defendant may avail himself of all legal defenses. The rule is different in chancery cases. At law every fact alleged in the declaration, and not denied in' the plea, is taken as true. Code, §2910; M. & V., § 3620. But in chancery every allegation of fact not admitted, whether denied or not, must be proved, the failure to admit or deny being equivalent to a denial. Hill v. Walker, 6 Col., 429; Hardeman v. Burge, 10 Yer., 202; Smith v. St. Louis Ins. Co., 2 Tenn. Ch., 602; Gribson’s Suits in Chancery, sec. 457. The fact that complainant is a foreign corporation is alleged in the bill, and it is a fact material to the right to recover. It is not admitted in the answer, and there is a general denial of all matters not admitted. It should therefore have been proven; and, for the failure to prove this, we are constrained to reverse the decree of the" Court below and remand the cause for proof of the corporation, _and for further proceedings under the statute. Code, § 3170. The costs of the appeal will be paid one-half by complainants and the other half by defendants.