Westphal v. Ludlow

Nelson, D. J. The plaintiffs are not held to the strict rules in regard to the presentment, at maturity, of the note taken as collateral security, and notice of non-payment to his debtor. The note was not received, although indorsed by the defendant, upon the condition that they would use such diligence. It does not represent the original debt, and to hold the defendant it is not necessary that the plaintiffs should regularly proceed to have the note presented and protested. It was [350] not a satisfaction and extinguishment of the original debt, and a failure to give notice of non-payment will not necessarily defeat a recovery. If, however, by the neglect and laches of the plaintiffs the defendant was injured and the amount of the note lost, he may plead such negligence as a defence, for in such case the plaintiffs would he bound, as trustees or agents, to see that the defendant did not suffer loss on their account. Was the note lost through the plaintiffs’ negligence ? Defendant urges that the insolvency of the maker occurred after its maturity, and if he had been informed of its non-payment he could have secured himself. The evidence, as interpreted by me, does not prove the insolvency of the maker occurred after the note matured. The maker, in his testimony, says his financial condition at the maturity of the note was the same as December 5th, when several judgments were confessed by him in favor of other creditors, and there is no evidence to the contrary. He certainly had not sufficient property to pay his debts, and /thus, I think, was insolvent at the maturity of the note. Judge Washington, in Gallagher's Ex’rs v. Roberts, 2 Wash. 191, says Buller lays down the true rule in his Nisi Prius, (Ed. 1806) p. 182: “If a note is indorsed for a precedent debt, and a receipt was given as for so much money when the note shall be paid, and the creditor neglects to apply to the maker in time, and by his laches the note is lost, the precedent debt is extinguished;” but if it is kept without demand and insolvency takes place, the creditor who receives it must lose. See, also, 2 How. (U. S.) 457. This doctrine determines this case. The note taken as collateral security matured November 17,1878. The defendant knew it was unpaid November 29, when he quieted the plaintiffs by writing them that Cole would pay it soon. There is no direct evidence of a demand made for payment at maturity, and if it is conceded that he was not applied to in time, there is not in addition laches which damaged the defendant. Cole was insolvent, in fact, when the note matured, and the ordinary mode of legal proceedings would not [351] save the debt. There is no evidence to show that a writ of attachment could have been obtained, and even the defendant, who lived near Cole, says that lie was not aware of his insolvency at that time, and doubted it as late as December, when the levies were made. Judgment will be entered for the plaintiffs for the amount claimed.