Case ID: nc_175/html/0602-01.html
Source: Caselaw Access Project
Author: {"author": "AlleN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

W. W. BARBER v. THE WILLIAM ABSHER COMPANY et al.
    (Filed 22 May, 1918.)
    1. Courts — Evidence—Findings—Trials—Verdicts.
    The findings of fact by the trial judge where a trial by jury has been waived by the parties is as conclusive upon them as a verdict upon the evidence.
    2. Bills and Notes — Negotiable. Instruments — Endorsers—Dishonor—Notice —Statutes.
    An endorser of a negotiable instrument is entitled to notice of dishonor under our statute, and upon failure to do so his liability thereon is discharged. Revisal, sec. 2239.
    
      3. Bills and Notes — Negotiable Instruments — Limitation of Actions — Payment — Endorsers.
    A payment on a promissory note to repel tbe bar of tbe statute of limitations must be made by one of tbe same class of liability tbereon; and a payment by tbe maker does not continue tbe right of action against tbe endorser thereof.
    4. Same — Mortgages. •
    Where the endorsers of a promissory note thereafter take a mortgage on the maker’s lands to secure them as such, without further liability for tbe payment of tbe debt, they do not thereby change their relationship. as endorsers only, and a payment made on tbe note by the maker does not affect the running of tbe statute of limitations in the endorser’s favor.
    Appeal by plaintiff from Garter, J., at tbe October Term, 1917, of Wilkes.
    Tbis is an action' on a note executed by tbe defendant, tbe W. M. Absber Company, a corporation, and'indorsed by tbe defendants, E. E. Forrester and J. II. Johnson. Tbe Absber Company makes no defense.
    Tbe defendants Forrester and Johnson rely on tbe defenses of failure to give them notice of dishonor and tbe statute of limitations.
    A jury trial was waived and bis Honor found tbe following facts:
    “1. That W. M. Absber Company, on 21 April, 1910, executed tbe ' following note to W. W. Barber, to wit:
    “$800 — One year after date, with’interest from date, we promise to pay to W. W. Barber or order eight hundred dollars, for value received — ■ interest due and payable semiannually.
    The W. M.' Absher Co. (Seal)
    H. O. Absber, Pr. & Treas.
    “2. That defendants F. D. Forrester and J. H. Johnson endorsed their names in blank on tbe back of said note before its delivery to W. W. Barber.
    “3. That there was no notice of dishonor given to J. H. Johnson and F. D. Forrester.
    “4. That tbe summons in tbis action was issued and delivered to tbe sheriff of Wilkes County on 27 July, 1915.
    “5. That more than three years elapsed after tbe maturity of said note prior to tbe beginning of tbis action.
    “6. That the maker of tbe above note made tbe following payments on tbe dates named as follows: $48 interest to 21 April, 1911; May, 1912, or. $48; May, 1913, or. $48; May, 1914, or. $48.”
    On 20 July, 1912, tbe Absber Company executed a mortgage to tbe defendants Forrester and Johnson by which was conveyed a tract of land in which there is tbe following provisions:
    
      “This mortgage is given to secure tbe parties of tbe second part for ■endorsing a note of $1,000 executed on 20 July, 1912, by tbe W. M. Absher Company, payable one year after date to J. H. Carrigan, and is intended to and does cover any endorsement on renewals or substitutes in full or in part and any and all other endorsements now made or may hereafter be made by all or any one of tbe above named parties of tbe second part.”
    Judgment was rendered in favor of tbe defendants and tbe plaintiff ■appealed.
    
      Finley & Hendren and Squires & Whisnant for plaintiff.
    
    
      Hayes & Jones for defendant.
    
   AlleN, J.

Tbe findings of fact by tbe judge, a jury trial being waived, are as conclusive as tbe verdict of a jury (Matthews v. Fry, 143 N. C., 384), and we must therefore deal with tbe legal questions presented by tbe appeal, accepting as being established that tbe defendants Forrester -and Johnson signed tbe note sued on as endorsers; that no notice of dishonor has been given to either of them; that more than three years elapsed after tbe maturity of tbe note before this action was commenced; that tbe payments on tbe note were made by tbe maker, and upon these facts it is clear that these defendants are discharged from liability on account of failure to give notice of dishonor, and that tbe cause of action is barred as to them by tbe statute of limitations, unless tbe acceptance of tbe mortgage of 20 July, 1912, changes their relationship to tbe debt.

Tbe statute (Revisal, sec. 2239) provides that “notice of dishonor must be given to tbe drawer and each endorser, and any drawer or endorser to whom such notice is not given is discharged,” and following tbe statute, it was held in Perry v. Taylor, 148 N. C., 362, that failure to give notice of dishonor discharged tbe endorser from further liability.

It is also settled that a payment, to have tbe effect of repelling tbe ■statute of limitations, must be made by one in tbe same class, and that .a payment by tbe maker does not continue tbe right of action against tbe ■endorser.

“To giveu this effect to tbe act of one, there must be a community of interest and a common obligation among them. They must be obligors in a bond, makers of a promissory note, drawers or accepters of a bill, ■or joint endorsers of either. An admission, direct or involved in tbe act of payment by one of either class, under tbe same measure of responsibility, becomes tbe legal act of all that class, but does not revive tbe liability of others of a different class. Thus if one of several joint .acceptors promises to pay as directed in tbe statute, or makes a pay-meat, Ms associate acceptors are bound by wbat be does; but tbe drawers are not, because there is no sucb common interest and responsibility as gives legal force to tbe act, and so of other classes who may be bound in like manner.” Wood v. Barber, 90 N. C., 80.

To tbe same effect, see Le Duc v. Butts, 112 N. C., 461; Houser v. Fayssoux, 168 N. C., 2.

In tbe last case tbe Court says: “It is true that it is well settled in-this State that a payment by tbe principal on a note before tbe-bar of tbe statute operates as a renewal of tbe debt as to himself and also to-tbe sureties on tbe note. At one time this was true as to endorsers likewise, as an endorser was regarded as a surety. Green v. Greensboro College, 83 N. C., 449; Garrett v. Reeves, 125 N. C., 529. . . .

“While tbe law remains tbe same as to a surety, and a payment by tbe principal will operate as a renewal of tbe debt as to tbe surety, who-is regarded as a maker of tbe note, an endorser is no longer so regarded.
“There is a broad and well recognized distinction between a surety and an endorser, as is pointed out clearly in Le Duc v. Butler, 112 N. C., 461, in which case it is said: ‘Part payment of a note by tbe payee, who has endorsed it, will not repel tbe bar of tbe statute of limitations-as against tbe maker, tbe statute confining tbe act, admission, or acknowledgment, as evidence to repel tbe bar, to tbe associated partners,, obligors, and makers of a note.’ ”

Tbe plaintiff, conceding these positions to be sound, contends, however, that the execution of tbe mortgage of 20 July, 1912, to secure the-defendants on their endorsement, has changed the status of tbe parties,, and that now they are principals and not entitled to notice of dishonor,, and that tbe payment made prevents tbe bar of tbe statute of limitations, and be relies on the case of Denny v. Palmer, 27 N. C., 610, as. an authority sustaining this view.

We have given careful consideration to tbe reasoning and tbe decision in tbe case cited, and are of opinion that it is an authority for tbe defendants, and not against them.

In tbe Denny case Rawlins and Coleman were largely indebted to. various parties, and there, were several endorsers for them on different notes, among them tbe defendant Palmer. In 1837 they executed a deed of trust to secure tbe payment of their debts, and in 1842 tbe debts-remaining unpaid, tbe defendant Palmer, being dissatisfied with the-delay in disposing of tbe trust property and with having bis security in common with so many other persons, proposed, and it was finally agreed by the bank, Rawlins and Coleman, tbe trustees, and Palmer, that .the-trustees should reconvey to Rawlins and Coleman certain real estate in Danville, Richmond, and Greenbrier County, in Virginia, estimated as-of tbe value of $8,180, that Rawlins and Coleman should give new notes endorsed by Palmer for tbe said debts (wbicb bad been suspended about five years), pay off tbe arrears of interest and thereafter keep active tbe new notes-by paying tbe discount every 60 days, and from time to time pay installments until tbe debts should be fully paid; and that Rawlins and Coleman should convey tbe said estates and others to one William Lynn, of Danville, in trust to indemnify tbe said Palmer as endorser, and to secure tbe payment of tbe said notes, so to be given, and any others that might be given in renewal of them.

On tbe maturity of these last notes there was failure to give Palmer notice of dishonor, and upon tbe trial tbe judge presiding charged tbe jury “that tbe mere fact of tbe insolvency of tbe makers of tbe notes, and tbe further fact that tbe defendant bad taken tbe deed of trust of their property as an indemnity, did not dispense with notice to tbe defendant of tbe default of tbe makers, in order to charge him as endorser.”

This charge was affirmed on appeal, and tbe conclusion reached by tbe Court is that tbe acceptance of an indemnity or security by tbe endorser does not dispense with notice unless tbe endorser has, as a consideration for tbe security, assumed tbe payment of tbe debt. “Such an obligation (tbe Court says) we conceive to be tbe true test of tbe endorser’s being entitled or not entitled to notice,” and it was held that tbe endorser was discharged from liability on account of tbe failure to give notice, although tbe deed in trust was made to secure tbe payment of tbe notes on wbicb was bis endorsement, and to protect him as endorser, and this is tbe question now before us, as tbe defendants have not assumed payment of tbe debts except by reason of their endorsement.

No question is raised by tbe appeal as to tbe right of tbe plaintiff to proceed against tbe land conveyed in tbe mortgage under Ijames v. Gaither, 93 N. C., 358.

Affirmed.