Case ID: la-ann_21/html/0024-01.html
Source: Caselaw Access Project
Author: {"author": "Howell, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

No. 1449.
    Cyrus W. Field & Co. v. New Orleans Delta Newspaper Company.
    The holdor of negotiable paper must, in order to bind the indorser, give notice of non-payment by the maker in conformity with the rules prescribed by the law merchant!
    The doctrine on which the necessity of notice to the indorser rests, is the presumption of damage or injury in his favor.
    •Whoever is entitled to a recourse over against another paity, is presumed in law to be injured by a delay in receiving notice of non-payment. •
    from the Second District Court of blew Orleans, Thomas, J.
    JF. TP". Sandlin, for appellants. II. J. Leovy, for self and D. Da Ponte, Hosier and JBuohamm & Gilmore, for Mrs. Bonford, appellees.
   Howell, J.

As stated by counsel for plaintiffs and appellants, the only question presented on this appeal is: Áre the members of theNew Orleans Delta Newspaper Company, who indorsed tbe notes sued on, liable, without notice of dishonor?

The notes are made by H. J. Leovy, business manager, .to his own order and indorsed by him. individually and before delivery to plaintiffs, tbe first holders, by D. Da Ponte and P. E. Bonford, all three of whom were members of tbe company.

Itis urged by plaintiffs that these parties ape piei;c sureties, andno.ten-titled to notice, ándinsuppprtof thisposijjión tbeyrely.ona doctrine in the case of Crane, executor, v. Trudeau, 19 A. 308, in tie following (words:

“ j,n relation to third persons and bona fide holders, the obligations of accommodation indorsers are coextensive with those of indorsers of .business paper. It would be different if the transferee of a note indorsed (jets it from the malcer. In such a case the'indorser would be a surety.”

Tiie latter doctrine, not being essential to the decision'in that case, may be regarded as obiter; but whetlici-a correct law or not, it cannot apply in this case, when the note is duly indorsed by the payee (who is not the holder), and the subsequent indorsers thus malting it, on its face, commercial paper, and the evidence shows that the defendants intended to bind themselves as accommodation indorsers, and it seems to be settled here, at least since the case oi Weaver v. Murrell, 12 A. 517, that although they may, in some sense, be sureties, they are entitled to notice. We must view them as accommodation indorsers, whose liability depends on the rules applicable to negotiable instruments in general, and consequently the holder must take the steps necessary to bind any indorser of business paper' according, to the law merchant. They were parties to the notes when received by the plaintiffs. See Story on Notes, $$ 134, 268, 288, 292, 295, 367, 479, 480; 6 N. S. 517; 12 R. 183; 10 A. 98; 12 A. 517; 14 A. 305; 16 A. 108.

In the case of. Keeler v. Bartine, 12 Wendell 118, it is said that “the circumstances that the indorser is an accommodation indorser adds cogency to the considerations in favor of strict notice of the defaidt.”

The doctrine on which the necessity of notice rests seems to be the presumption of damage or prejudice in favor of the indorser, who is entitled to a recourse over against another party. In other words, whoever is entitled to a recourse over against another party is presumed in law to be injured by a delay in receiving knowledge of non-payment — is therefore entitled to prompt notice. ■ Chitty on Bills 435.

In this case the indorsers, if notified in due time, may have secured themselves against, or obtained payment from the maker.

The plaintiffs contend, however, that the New.Orleans Delta Newspaper Company was a mere private partnership, and its members not being permitted to plead ignorance of their o'Wn affairs, must be held to know that the notes were not'paid, that-the maker, knew it, and notice to one was notice to all.

The reply to this is that plaintiffs have introduced in evidence the charter, which shows that none of the 'stockholders had any control of, or anything to do with the business, except Leovy, the business manager, and that knowledge is not necessarily notice. The notes were made payable at the Canal Bank, and although Leovy, as business manager, may have known that they were not paid, he did not, therefore, know, without legal notice from the holder or other proper party, that he would be looked to for payment as indorser. See 1 Parson on Notes and Bills 521, 525, 526 and 629. ' ,

The judgment was correctly rendered in favor of the indorsers.

It is therefore ordered that the judgment appealed from be affirmed with costs.

Rehearing refused.