Case ID: mass_24/html/0297-01.html
Source: Caselaw Access Project
Author: {"author": "Parker C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Micajah Burrill versus Noah Smith.
    £ being indebted to B, S, who was E’s agent, agreed to give E’s notes to B to be indorsed by S, in consideration of time being given for payment; four notes were accordingly made payable to S, one on demand, the others on time. These notes 'were signed by another person acting as attorney for E, for which he had sufficient authority. They were indorsed by S and passed to B. E had died before the agreement to give the notes was made, but his death was not known to any of the parties until after the notes were made. E’s estate was insolvent, and B, with the consent of S, received a dividend from it on the notes, and gave a discharge in full of all demands to the administrator. The notes on time were duly presented.for payment to the administrator of E, and S duly notified of their non-payment. In an action brought by B against S as indorser of the notes, it was held: —1. That S vras liable as indorser, and dould not in this suit set up as a defence, that the notes were void as to E on account of his death before they were signed :—2. That the discharge of the estate of E was only personal, and did not discharge the defendant, who could still resort to E’s estate : — 3. That a demand on the note payable on demand was needless, as there was no person on whom to make the demand : — 4. That the defendant was liable for the balance due on the notes after deducting the amount received of the estate of E.
    This was an action against Smith as the indorser of four promissory notes. The case was submitted to the Court on the following facts agreed by the parties.
    Samuel Evans being indebted to the plaintiff in a larger amount than these notes, (the debt having been contracted by the defendant, as the agent of Evans,) for the purpose of paying or securing the payment of the amount specified in the notes, Asa L. Boardman, who had been and was then supposed by himself and by the plaintiff and defendant, to be the lawful attorney of Evans, made the notes declared on, which were signed “ Samuel Evans, by Asa L. Boardman, his Attorney,” payable to the defendant, who indorsed them to the plaintiff. The notes were given in pursuance of an agreement which had been previously made between the plaintiff and the defendant, the plaintiff having refused to extend the credit to Evans, unless notes thus indorsed by the defendant were given him. Evans died some time before the agreement to give the notes was made, but his death was unknown to the plaintiff', the defendant and Boardman, at the time the notes were made and indorsed. One of the notes was on demand, the others were on time. Evans’s estate was insolvent, and Boardman was his administrator in Massachusetts ; which facts were known to the defendant before either of the notes which were on time became due. The plaintiff obtained a dividend of about 27 or 28 per cent upon the notes from the estate of Evans, and the defendant was requested by the plaintiff, previously to his presenting the notes to the commissioners, to give his own (the defendant’s) notes to the plaintiff, for the amount of the original notes, and receive the original notes and present them for allowance himself, which the defendant declined doing. Payment of the notes was demanded of Board-man and of the defendant.
    Boardman has not yet settled his account as administrator of Evans, but the plaintiff has given a discharge in full of all demands to Boardman as administrator, and also to an authorized agent of an administrator of Evans in Georgia. It was supposed at the time of receiving the payment above mentioned, that the estate of Evans would pay something more than the above dividend ; but the plaintiff and all the other creditors, including the defendant, agreed to settle it in the manner above stated, in preference to waiting for a further dividend at a more distant time.
    The case was argued in writing.
    
      Cummins, for the plaintiff,
    cited Copp v. M'Dugall, 9 Mass. R. 1 ; 1 Dane’s Abr. 418, c. 20, art. 15, § 1, 6 ; Com. Dig. Merchant, F13 ; De Berdt v. Atkinson, 2 H. Bl. 336 ; Slacum v. Pomery, 6 Cranch, 224 ; Brown v. Mott, 7 Johns. R. 361 ; Chitty on Bills, 25 ; Haley v. Lane, 2 Atlc. 181. J. Pickering, for the defendant. The defendant is not liable as indorser ; — 1. Because his engagement being to pay the notes if the maker should not, and in this case there being no maker, as Evans was dead when they were made, and his agent’s authority had consequently ceased, the notes were a nullity in their origin. —2. Even if the defendant could be liable as indorser, the evidence which shows that the notes were not the notes of Evans, does not support the declaration, in which they are set out as the notes of Evans. 3. The indorser, on paying the notes, ought to have a claim against the maker, but here there being no maker, the defendant’s paying the notes will give him no claim against Evans’s estate.
    These arguments rest on the ground that the power of the attorney ceases with the death of the principal, and therefore that the notes were a nullity. This principle is well settled. Wallace v. Cook, 5 Esp. R. 118; Watson v. King, 4 Campb. 272 ; Harper v. Little, 2 Greenl. 14.
    But it is objected by the plaintiff, that whatever might be the effect of the notes, as between the maker and payee, yet the indorsement makes a new contract, which is binding on an indorser, even in cases of notes given by infants, and femes coverts, and of forged notes, &c. But this doctrine only applies to cases of indorsements in the common course of mercantile business ; and not to a case in which the holder knew all the circumstances under which the note was made. In Skilding v. Warren, 15 Johns. R. 270, the court say, it is a good defence to an action against an indorser of anote, that the holder knew at the time of receiving it, that the maker had no right to transfer it. In Levy v. Gadsby, 3 Cranch, 180, in an action by an indorsee, against an indorser, usury in the making of the note was held to be a good defence.
    2. All the parties, when the notes were made, acted under a mere mistake, in supposing Evans to be alive ; consequently
    there is no foundation for a contract; there could be no agreement. The parties, if they had known Evans to be dead, would never have thought of making these notes. The case is like Garland v. Salem Bank, 9 Mass. R. 408, and various others, in which a mistake has prevented the operation of a supposed contract. See also Crain v. Colwell, 8 Johns. R. 299.
    3. The plaintiff, when he received his dividends, gave a discharge to the administrators of Evans, and he also agreed to take a smaller dividend than might have been realized, zz? preference to waiting. If then the notes were Evans’s, the plaintiff has received his due.
    4. The defendant is not liable on the note payable on demand, as no notice was given upon that note. Field v. Nickerson, 13 Mass. R. 131.
   The opinion of the Court was afterward drawn up by

Parker C. J.

We cannot find any legal ground to discharge the defendant from the ordinary consequences of the contract which he has made. Boardman made the note in the name of Evans, professing and believing that he had authority, payable to the defendant or order, and the defendant, with the like belief, indorsed it.

The indorser always warrants the existence and legality of the contract which he undertakes to assign. The indorsee takes it on the credit chiefly of the indorser.

Thus if a note void between promisor and payee, on account of usury or other illegal consideration, is indorsed bona jide for valuable consideration, the indorser must make it good.

So if the indorsement is of a note made by a minor or of a feme covert, and even if the name of the promisor is forged, the indorser is held upon his contract to pay the indorsee.

In this case, one of the strong points of the argument for the defendant is, that there being in fact no promisor, the indorser, if compelled to pay, will have none to call upon to reimburse him. Also that the common requisites of an action against indorsers cannot be complied with, for there can be no demand upon the promisor. But this will affect only the form of the declaration. The same difficulty, if it is one, will occur in the cases of void or voidable notes above mentioned ; for a demand in such cases would be merely formal. The administrator of a deceased person, whose name appears to a note, may as well be called upon, in order to give an action against an indorser, as the person whose name is forged. An averment, that at the time of writing the note by the attorney for the principal, the principal was dead, would be sufficient to entitle the plaintiff to recover.

But it is said, that the transaction having proceeded upon the supposition by the parties that Evans was alive, the contract of Smith was void, being founded in mistake. But could not tire same answer be given in all the other cases which have been mentioned ? In the case of the infant, the feme covert or the forged note, will it be a defence by the indorser, that he and the indorsee believed that the note indorsed was genuine and binding on the supposed promisor ? We apprehend not; because the indorser is not at liberty to deny the validity • of the contract which he has assigned, for the purpose of defeating his own liability.

The principle of the civil law, that acts done by an agent after the death of the principal, until his death is known, shall be valid, though not recognised by the common law, may at least furnish ground for the liability of any one who by his own act becomes quasi a guarantor of that contract. Suppose the principal to be in a foreign country, and the agent having authority here, makes a negotiable contract to a third person who indorses it; shall his contract be avoided because the note may not be binding on the supposed original contractor ? Such a principle would exceedingly embarrass commercial transactions. Whether the indorser in such case would not have a remedy against the agent, is a question not arising in this case. The indorser must take the risk of the validity of the note which he assigns. He gives currency to it ; in fact warrants its genuineness in respect of the indorsee. We think tire ignorance of all parties of the death of Evans rather strengthens than impairs the claim of the plaintiff. His proceedings before the commissioners of insolvency on Evans’s estate, the defendant being charged by notice, cannot affect his right to recover the balance. This was advantageous to the indorser ; and the discharge of the estate of Evans is only personal. It does not prevent Smith from resorting to that for relief. In regard to the note payable on demand, as there was no person living to make die demand upon, a demand would have been useless. It is sufficient that Smith had notice of the demand made upon the administrator of Evans, and an offer of the notes.

Judgment must be entered for the plaintiff for the amount of the notes and interest, deducting what has been paid. 
      
       See Bayley on Bills, (Phillips & Sewall’s 2nd ed.) 149.
     
      
       See Bayley on Bills, (Phillips & Sewall’s 2nd ed.) 219, 220.