Case ID: nc_7/html/0070-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The President and Directors of the State Bank of North-Carolina, v. Nathan Smith.
    >From Craven.
    A promissory note drawn by A. and indorsed by B. was made negotiable at the Newbern Branch of the State Bank of North-Carolina, and payable on the 11th December. B. lived in the Town of Newbern near to the Bank. Notice of non-payment of the note by the drawer, was not given to the indorser until the 17th December, this delay of giving notice, discharges the indorser from all liability.
    This was an action of assumpsit against the Defendant as the indorser of a promissory note, the note was dated on the eleventh of- March 1814, drawn at nine months, and made negotiable and payable at the Newbern Branch of the State Bank of North-Carolina. The Defendant’s indorsement was admitted ; and it was proved that previous to the time when the note fell due, it had been offered at the NeAvbern-Branch of the State Bank, for discount, by the Defendant, and had been discounted for his benefit. It was proved that the makers had provided no funds for the payment of the note when due. It was proved by the Clerk of the Bank, that.from its establishment, the course of business had been for the President and Directors .of the Branch to meet at the Bank on Tuesday and Friday evenings in each week, when all notes offered to the Bank were either discounted or rejected by them — That at the time this note fell due, the debtors to the Bank were permitted to renew their notes by paying an eighth of the debt, and giving a new note for the other seven eighths— That on Friday the 16th of December, a note for renewal was offered by three of the makers, but without the name of one of the makers, and without the indorsement of the Defendant. This note was not discounted, and on Saturday the 17th of December, notice was left at the house of the Defendant as indorser. It was also proved to be the custom of the Bank to retain interest by way of discount for three days beyond that on which the note was payable on its face ; and that at the time of this transaction and for some time previous, it had been the custom of the officers of this Branch, to give notice to indorsers within three, four, -five or six days, after the day of payment mentioned in the face of the note; and that no order of the Bank at that time existed, fixing a time of giving notice to indorsers ; the Clerk, whose duty it was to give the notice, using his discretion, in some cases delaying the notice longer than in others, that he might not fey an early notice of the delinquency of the maker affect his credit with the indorser, nor injure the Bank by what might be deemed a rigorous proceeding. The Defendant resided in the town of Newbern, within three hundred yards of the Bank.
    Upon the trial of this case, the Court charged the jury' that the Defendant was exonerated from his liability as indorser by the delay to give him notice. The jury found a verdict for the Defendant; and a rule for a new trial being obtained, the same was ordered to be sent to this Court.
    
      Gaston, for the Defendant.
    The engagement of an indorser on a promissory note is conditional merely, viz . that he will fee responsible, according to the usages among merchants in the negotiation of bills of exchange and prom*SS01T notes, and not otherwise. It is important to the interests of the community that the law which requires diligence in the holder of negotiable instruments, to enable him to exact payment from one only conditionally liable, should be strictly enforced. The question of the sufficiency and reasonableness of the notice has been decided by the competent tribunal; and unless a manifest error has been committed, that decision ought not to be overruled.
    The reasonableness of the notice is regarded as a question of fact for the jury, assisted by the Court: it is a mixed question of law and fact. There are no circumstances in this case to lesson the rigor of the rule of diligence j but every circumstance to render its exact performance proper. This was a business note, negotiated at a bank, and the indorser living within three hundred yards : the note fell due on the 11th of December, and notice was not given until the 17th.
    In England three days of grace are allowed, and are regarded as a right, although at first they were purely gratuitous.
    
    In Massachusetts the three days of grace are not allowed, unless stipulated in the contract. They are allowed in New-York and Pennsylvania. With us no rule is fixed on this subject. But if the three days of grace be claimed as matter of right, still notice has not been given within reasonable time, for three days over have elapsed. Notice ought generally to be given to an indorser on the very day of dishonor ,* or, at all events, the next, if he live in the same town; and if he do not, then by the next mail.
      Nearly a century ago it was liolden that two days delay, after the days of grace, was unreasonable,'and three days delay in the same city is unreasonable delay.
    
    
      
      
         7 Massts. Rep. 495.
    
    
      
       Id. 487.
    
    
      
       Chitty 238. 6 East 14,15. 2 Hayw. 48.
    
    
      
       Cnitty 271, 4 Term Rep. 151, 2.
    
    
      
       4 Massts. Rep. 251.
    
    
      
       1 John. Ca. 328. 2 Caines, 343, 4, Id. 127. 5 Binney, 541.
    
    
      
       Chitty, 320, 238. 1 Tern Rep. 167. 2 Id. 186, 6 East. 3.
      
    
    
      
       2 Strange, 829.
    
    
      
       11 John. 187.
    
   By the Court.

We think the Court below instructed the jury correctly. The residence of the Defendant, within a short distance of the hank, rendered the most prompt notice equally necessary and convenient. Allowing the days of grace, the notice should have been given on the 15th; but it was delayed to the 17th. Let the rule for a new trial be discharged. 
      
       2 Wheat. 376.