Case ID: scl_39/html/0537-01.html
Source: Caselaw Access Project
Author: {"author": "Withers, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

C. J. Pride vs. L. Berkley.
    
    A note payable to A. B. or bearer may 6e indorsed by the payee or any subsequent holder.
    On a note drawn by G. payable to H. or bearer, L. B., after the note was due, wrote the following indorsement, “Dec. 13, 1848. I indorse the within note. L. B.” Held, that L. B. was liable as indorser.
    In order to charge the indorser of a note past due, there must be some proof of diligence : proof of demand of the maker and that he was insolvent, held insufficient— there being no evidence of notice to the indorser.
    
      Before Whitner, J. at Kershaw, Fall Term, 1851.
    The plaintiff sued defendant by sum. pro. alleging the indebtedness of the latter in the sum of $36 85, by promissory note, a copy of which was indorsed, &c.
    On the process was copied a promissory note, dated 9th May, 1848, payable one day after date to James Harrison or bearer, for $36 85, signed by N. G. Gibson; and a copy indorsement as follows : “Dec. 13, 1848. I indorse the within note. L. Berkley.”
    A witness proved that Gibson had died insolvent; that the note had been presented to him twice in the year 1849, and was not paid, and also proved the indorsement, but knew nothing of the transfer or the consideration.
    It was admitted that after suit brought, defendant had expressed his willingness to pay the debt and interest, and the costs, except the costs of a commission which had been issued.
    Upon the case made, his Honor did not think the defendant liable, either as the indorser of the note or as the drawer of a new note, and ordered a nonsuit.
    The plaintiff appealed, on the grounds:
    1. Because his Honor, the presiding Judge, erred in deciding that the defendant was indorser instead of the maker of a new note.
    2. Admitting that defendant was indorser instead of maker, it is respectfully submitted that (in the process jurisdiction) defendant was sued as indorser, as there was a copy of the note and indorsement upon the back of the process, and referred to in the body of the process, which made it a part of such process.
    3. Because the process substantially conformed to the requisites of the Act creating the process jurisdiction.
    
      W. H. Talley, for the.motion.
    The allegation in the process was sufficient to charge the defendant as indorser. (Ballard vs. Biram, 2 Rice Dig. 227 ; 1 Bail. 138 ; 2 Bail. 446.) Then, is the defendant liable, upon the contract, as indorser? Effect should be given to his undertaking in some form: and, if liable at all, it must be either as maker, on the authority of Stoney vs. Beaubien, (2McM. 313,) and Cockrell vs. Milling, (1 Strob. 444,) or as guarantor; or as the drawer of a bill of exchange; or, lastly, as indorser. The defendant cannot be treated as maker on the authority of iStoney vs. Beaubien and Cockrell vs. Milling. In each of those cases, the indorsement was made at the inception of the note — here, when it was past due : there the note was payable to A. B. or order, and the indorsement was by C. D., obviously and necessarily a stranger to the contract, — here the note was payable to bearer. Nor is the defendant a guarantor, (Upham vs. Prince, 12 Mass. 14 ; Benton vs. Gibson, 1 Hill, 16,) for the contract of guaranty is, in its nature, special, (Chit, on Con. 499, note 2): whereas this indorsement is general. It is not important to inquire, whether the defendant may be regarded as the drawer of a new bill; for as such his liability is the same as that of an indorser, (Gray vs. Bell, 2 Rich. 71). Then, is the defendant liable as an indorser ? Prima facie he is, by the very terms of his contract: and, unless the legal objections suggested by the peculiarities of the note prevail, he must be held so liable. The note is payable to H. or bearer; but one who indorses such a note may be sued as indorser. (Bush vs. Reeves, 3 Johns. R. 439 ; Allwood vs. Haseldon, 2 Bail. 457). It is not, however, indorsed by the payee but by defendant, whose connection with it does not appear on its face. But in the absence of proof to the contrary, it may be fairly presumed that defendant was the holder: the holder of a note payable to A. B. or bearer is within the technical description of the payee, (2 Bl. Com. 467,) and as bearer may indorse it; (Story on Prom. Notes, § 132; 4 Halst. 144.) The principle of Franvpton vs. Dudley, (1 N. & McC. 128,) does not apply, because there the note was payable to the plaintiff himself, and the indorsement was made at the inception of the note. Garret vs. Butler, (2 Strob. 193,) is foreign to the questions here involved; for the defendant there was not sued as indorser; and moreover the indorsement- was conditional, and the condition was not performed. Then, as to the question of diligence. Constructive notice is sufficient, and the question of diligence is one for the jury. (1 Hill, 62; 1 Bail. 322; 2 McC. 388; 1 Rich. 397; 2 Rich. 71; 3 Rich 72). The question is, has the indorser suffered injury by the remissness of the indorsee ? The insolvency of the maker shews that he has not.
    
      Kershaw, contra.
   The opinion of the Court was delivered by

Withers, J.

The brief shews that the cause of action was an undertaking, written by Berkley, on the back of a note, in these words : “ Dec. 13, 1848. I indorse the within note — that the note was dated and due more than seven months before the indorsement, was made by one Gibson, and payable to one Harrison or bearer. It was not, therefore, an undertaking by the defendant, at the date of the note, as in Stoney vs. Beaubien, (2 McM. 313,) and Cockrell vs. Milling, (1 Strob. 444); and so it is not easy to see that he could be treated as a maker. It is not an undertaking upon an unnegotiable note, for the promise of the maker is to H. or bearer. The payee has not indorsed the note, but the legal interest therein may well have vested in the plaintiff by delivery. The indorsement of the defendant is not in blank, so as to open the question in what character he intended to be liable — nor is there any evidence on the subject. He undertakes to “indorse” a note, negotiable by delivery, and after due. We know nothing of the consideration or the circumstances of the transaction. He is sued and charged (as a maker would be) as being indebted to the plaintiff by promissory note, a copy whereof is indorsed on the process and referred to accordingly.

The plaintiff, in his process, does not declare in so many words whether he sues as indorsee or in what particular character, nor charge the defendant in any particular character. It may admit of question whether this is enough where a plaintiff is driven to treat himself as indorsee and the defendant as indorser. In the case of Hilburn vs. Paysinger, (1 Bail. 97,) it was determined, that conciseness of averment is allowable in the summary jurisdiction ; that a formal averment of demand, refusal and notice, was not necessary ; and a statement, that defendant “ is indebted as indorser,” would be sufficient. However, this case is not made to turn here upon that question, and it will not be discussed.

We must treat the defendant, Berkley, as an indorser — the language he uses, uncontrolled and uninterpreted by any proof of circumstances, drives us to that result.

We. have the opinion of Judge Story, fortified by the cases which he cites to section 132 of his work on promissory notes, to the effect, that such a note as that in this case, though transferable by delivery, may also be by indorsement, on the part of the payee or of any subsequent holder. He also thinks, that such an indorser incurs the same liabilities and obligations as an indorser on a note payable to order.

The duty of the receiver of a note indorsed, arising from his implied undertaking to have recourse to another as primarily liable to him, is to pursue the party primarily liable with proper diligence, and, in case of failure, to notify the person collaterally or contingently liable of such failure, with proper diligence also. .Hence the rule as to presentment for payment, and notice of nonpayment to one who is strictly indorser, or who guarantees the collection of a note from another, according to its terms.

Though this last is not exactly Berkley’s condition, for the maker had already made default when Berkley indorsed, and though we cannot certainly know whether Berkley would have resort to the maker as liable to him, yet, in the absence of all proof to the contrary, we must infer that he made a collateral promise to pay Gibson’s debt, as indorser of a note over due; and when the indorsee seeks to enforce such a liability, he must shew some diligence, that shall be deemed reasonable, in pursuing the maker as the primary debtor, and notice to Berkley of his default. None of our cases, thus far, have dispensed with this much, as is manifested by what was said and determined in Chadwick vs. Jeffers, (1 Rich. 397,) and Gray vs. Bell, (2 Rich. 72).

No proof was made of such diligence by the plaintiff in this case, and we cannot relieve him from the nonsuit ordered on the circuit.

The motion is therefore dismissed.

O’Neall, Evans, Wardlaw, Frost and Whitner, JJ. concurred.

Motion dismissed.