Case ID: mass_24/html/0092-01.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

Merrimack Bank versus Joseph Parker et al.
    
    Where a negotiable promissory note signed by one person as principal and others as sureties, is paid by the principal after it is due, no action can be maintained on it by any person against the sureties.
    Where such a note was paid to the promisee after it was due, and the evidence left it doubtful whether it was paid by the principal or by A, another person not a party to the note, and the note was given up, but not indorsed by the promisee at the time, it was held, that an action brought against the makers of the note in the name of the promisee for the benefit of A, could not be maintained, although A, after the commencement of the action, had procured an authority from the promisee to carry on the suit for his own benefit.
    This was an action on a promissorj note dated August 2, 1823, by which Parker, as principal, and the other defendants, as sureties, jointly and severally promised to pay the Mem mack Bank or order 600 dollars in sixty days and grace. The writ is dated June 28, 1826.
    Parker was defaulted; the other defendants pleaded the general issue.
    At the trial, before Wilde J., the counsel for the plaintiffs stated that the action was commenced and prosecuted for the benefit of Francis Kidder, of Andover.
    The defence set up was, that the note had been fully paid to the bank. From the deposition of the cashier of the bank (taken December 6, 1826), it appeared that more than half the principal of the note, with the interest, had been paid at the bank, prior to June 2, 1825, on which day the balance due on the note was paid, and according to the witness’s recollection, not by the principal promisor, but by some other person, whom he did not recollect, and that the note was then taken away ; that in the summer of 1826, the note was brought to the witness, he was not certain by whom, but thought it was one Kidder, of Andover, who requested him to indorse it without recourse to the bank, which the, witness did, without consulting the directors and without their knowledge ; and that the bank, to his knowledge, had never authorized any one to bring a suit on the note in the name of the corporation, unless his indorsing the note had that effect.
    
      Oct 16th.
    
    The counsel for the plaintiffs then gave in evidence a writing signed by the directors of the bank, dated December 1, 1827, authorizing Francis Kidder to prosecute this suit for his own use and benefit. On this evidence it was contended that the plaintiffs were entitled to a verdict for the benefit of Kidder as a bond fide holder of the note.
    But the judge, thinking the action not maintainable on the evidence, ordered a nonsuit, with leave &c.
    
      Stearns and Joseph Locke,
    for the plaintiffs, contended that there was no such evidence of payment by the promisors in this case, as would preclude the plaintiffs from recovering for the benefit of a bond fide holder. A note, after it is paid, may still be negotiated, where it will not prejudice any person who is discharged by the payment. The old notion, that a note once paid is functus officio and cannot be negotiated, is now exploded. Boylston v. Greene, 8 Mass. R. 465 ; Callow v. Lawrence, 3 Maule & Selw. 95 ; Guild v. Eager, 17 Mass. R. 615 ; Mead v. Small, 2 Greenl. 207 ; Gomezserra v. Berkley, 1 Wils. 46 ; Emerson v. Cutts, 12 Mass. R. 78. A bond fide holder may sue in the name of the promisee, where the note is not negotiable, or has not been indorsed to him. The possession of a bill or note is prima facie evidence of title. Bayley on Bills (by Phillips & Sewall),) 317. Any person paying a note, even without the request of the promisor, has a right to sue in the name of the promisee. No special agreement to purchase the note of the bank was necessary, to give Kidder a right to sue. If he paid the note at the request of the principal, he has a right to hold the sureties liable upon it, if such was his intention, which it must be presumed to have been. His holding the note is a strong fact to show his intention. By paying the note he puts himself in the place of the bank. Clason v. Morris, 10 Johns. R. 539.
    Hoar, for the defendants.
    When this note was taken up at the bank, it was simply paid, which is evident from no endorsement having been made at the time. Kidder paid the note for Parker, the principal, and therefore can have no rights against the sureties any more than Parker himself could have. A note once paid cannot be put in circulation so as to endanger a person who ought to be discharged. Bayley on Bills (by Phillips & Sewall,) 90 ; [2nd ed. 142 et seq.;~\ White v. Kibling, 11 Johns. R. 128. The conduct of the parties in this case with regard to this note discharges the sureties. The People v. Jansen, 7 Johns. R. 332. It would be unjust to the sureties to support this action, for when the note was taken up at the bank, they had a right to suppose it to be paid and them selves discharged in consequence.
    Stearns, in reply,
    said that if the defendants had not intend ed to assume the full responsibility of promisors, they ough merely to have indorsed the note.
    At a subsequent day in the term the opinion of the Court was delivered, as drawn up by
    
      
       2nd ed. 333, 492. But the mere possession of an unindorsed note is not sufficient evidence of authority to bring a suit on it for the payee. Parham v. Murphey, 16 Martin, 355.
    
   Parker C. J.

The only legal inference which can be drawn from the facts reported in this case, is, that the note on which the action is brought was paid at the bank by the principal promisor, whose duty it was to pay it ; so that it became *unctus officio, and incapable of transfer or being in any way the ground of action. It is possible it was paid by Kidder, for whose use this action is brought, but there is no evidence that it was so ; and if so in fact, the presumption, without any evidence to the contrary, is, that he paid it as the agent of the principal promisor. How otherwise should he have contented himself with merely talcing possession of the note and keeping it a year, without any notice or call upon the promisors standing as sureties, or without any attempt to furnish himself with any evidence of transfer from the bank ?

The cases cited in support of the action are altogether of a different character. They show an actual or equitable assignment from the payee to the holders or a payment by some party to the note who stood prior in contract to the party on whom he calls. The law aids such transfers or assignments, but will not assist one who has paid the debt of another and taken up the security, in his claim upon other parties to the note, after the failure of him on whose credit it was paid. Such is the appearance of this transaction. If Kidder paid the balance of the note with his own money, it was undoubtedly at the request of Parker and for his benefit, and probably for the very purpose of discharging his sureties. The plaintiff lay by a year, when Parker having failed, he attempts to revive the note under color of authority from the bank.

Motion to take off nonsuit overruled.