#### Owensboro Savings Bank & Trust Co.’s Receiver v. Haynes.

(Decided May 9, 1911.)

Appeal from Daviess Circuit .Court.

Promissory Note — Accommodation Endorser — Waiver of Diligence in •Bringing Suit — A written waiver m a body of a note, of diligence in bringing suit, becomes a part of the 'contract, and is a waiver of diligence, it matters not how the -right thereto may arise: therefore an accommodation endorser even if entitled 'to the benefit of Section 4668 Ky. St. giving to sureties and others the right to give written notice to the creditor -requiring him to -sue at the next term -of the court 'thereafter (a question not decided) hy becoming a par-ty to the note containing such waiver, thereby waives the right conferred by the Statute.

R. A. MILDER and R. S. TODD for appellant.

LITTLE *&*SLACK for appellee.

Opinion op the Court by

William RogeRs Clay, Commissioner

Reversing.

■ On November 21, 1904, the Deanefield Coal Company executed and delivered to Guy M. Deane its promissory note, by which it agreed and promised to pay to said Deane, on January 10, 1905, the sum of $1,255.98. *535Tbe note was indorsed on tbe day of its daEe by Gny M. Deane, W. S. Wilson and Cray Haynes. It was first discounted by tbe Carterville State & Savings Bank of Car-terville, Illinois. Thereafter, and before maturity, tbe note was discounted by tbe Owensboro Savings Bank & Trust Company, and tbe sum of $1,292.60 paid therefor. On payment of this sum tbe Carterville State & Savings Bank indorsed and delivered the note to tbe Owensboro Savings Bank & Trust Co. Subsequently tbe Owensboro Savings Bank & Trust Company became insolvent, and T. A. Pedley was appointed receiver. Tbe latter, as receiver, brought this action against tbe Deanefield Coal Company, Cuy M. Deane and W. S. Wilson, and appel-lee, Cray Haynes, to recover on tbe note. Tbe law and facts were submitted to tbe court. Tbe court made a separate finding as to each, and being of opinion that tbe receiver was not entitled to recover, entered judgment in favor of appellee. From that judgment this appeal is prosecuted.

Appellee defended on tbe ground that be bad signed tbe note in question as indorser, solely for* tbe accommodation of tbe Deanefield Coal Company, and was, therefore, only a surety; and that having given to tbe Owens-boro Savings Blank & Trust Company a written notice, requiring it to institute suit on tbe note, and tbe. bank having let two terms of court pass without bringing suit, be was released from liability by virtue of tbe provisions of section 4668, of tbe Kentucky Statutes, which is as follows:

> “A surety, co-obligor, or co-contractor, or one of several defendants to a judgment, may, by notice in writing served in person within tbe State on tbe creditor or plaintiff, or if tbe plaintiff be a non-resident or. absent from tbe place of bis residence for the. period of thirty^ days consecutively, upon bis agent or bis attorney, require him to sue or issue execution, and if tbe creditor shall not sue to tbe next term thereafter at which be can obtain judgment, and in good faith prosecute tbe suit with reasonable diligence, or if the plaintiff shall not, within ten days thereafter, sue out execution, and in good faith prosecute tbe collection thereof, such co-surety, co-obligor, co-contractor, or defendant, shall be discharged from all liability as such, except for the proper share of such-'I co-o’bligo'r, - co-contractor, ór défendant,' according to tbe then existing condition of tbe several obligors, *536contractors, or defendants; and in any joint suit against the whole, or separate, snit against him, judgment shall be rendered against him separately, and only for snch proper share. The written notice herein required shall not be waiyed, unless such waiver be in writing; and no waiver of such notice shall be pleaded as a defense, or given in' evidence, unless such waiver be in writing.”

It appeal's from the trial court’s finding of facts, that the Deanefield Coal Company was principal in the note sued on, and received the entire proceeds thereof. Ap-pellee Haynes was merely an accommodation-indorser and paid no part of the interest shown by the indorse-ments on the note to have been paid. On December 30. 1907, appellee delivered to James H. Parrish, president of the Owensboro Savings Bank & Trust Company, a notice to said bank and trust company requiring it to sue on the note in question. After the receipt of this notice the Owensboro Savings Bank & Trust Company permitted two terms of the Daviess Circuit Court, at which suit could have been brought, to go by without bringing suit on the note; and no suit was brought until this action was commenced on July 9th, 1908. In tne body of the note sued on is the following agreement:

> ‘‘ The parties hereto, including the makers and indor-sers of this note, hereby expressly waive presentment thereof for payment, notice of non-payment, protest and notice of protest, and diligence in bringing suit against any party hereto, either maker or indorser.”

The rule is that where the waiver is inserted in the body of the note, it becomes a part of the contract of the indorser as well as of the maker, and is binding upon the indorser. (Bryant v. Merchants’ Bank of Kentucky, 8 Bush, 43.) The question, then, is: What effect must be given the waiver ?

For appellee it is contended that the holder of a note is under no obligations to use diligence as to the maker in order to hold a surety or accommodation-indorser liable, and that, therefore, the provision has no reference to such parties. It is also insisted that it is not proper to construe a waiver of the diligence provided by law into a waiver of the statutory right to' require the institution of an action. The language of the waiver is unambiguous ; by its terms it applies to an indorser and lo each of the parties to the instrument. One of the things *537waived is diligence in bringing suit against any party thereto, either the maker or the indorser. Appellee contends that the waiver, itself, made him liable at all events, and, therefore, a snrety. He then invokes the statute in question on the ground that he is a surety. Diligence in bringing suit being the thing waived, it is immaterial whether there is an absence of diligence under the common law, or an absence of diligence after notice given pursuant to the statute. The language is broad enough to include a waiver of diligence, it matters not how the right to diligence may arise. Where a party has cantracted away all right to demand diligence in bringing suit, he can not afterwards give notice under the statute and insist on that diligence which he has expressly waived. A contract can not be defeated in this way.

Being of opinion that, even if appellee is a surety, and, therefore, entitled to the benefit of the statute whose aid he invokes, he waived his rights under the statute, we deem it unnecessary to determine the question whether or not, as a matter of fact, he is a surety, and, therefore, included within the language of the statute.

Judgment reversed, with directions to enter judgment in favor of appellant.