Case Name: Edwards against Thayer
Court: South Carolina Court of Appeals
Jurisdiction: South Carolina
Decision Date: 1799
Citations: 2 Bay 217
Docket Number: 
Parties: Edwards against Thayer.
Judges: Present, Burice, Grimke, Waties and Bav-
Reporter: South Carolina Law Reports
Volume: 2
Pages: 217–219

Head Matter:
Edwards against Thayer.
Charleston District,
1799.
Indorsee of a promis>oiy note is bou ml to use duo diligence to get the money from the maker of if> and if lie fails in payment, then he is bound in all cases to give due notice thereof to the indorsor before he can maintain an action against him
A constructive^ notice arising from the insolvency or supposed insolvency of the maker of the note, is not sufficient; actual notice should be given agreeable loth. mercantile law.
Cunn. m DiilSj
ASSUMPSIT on five notes of hand, for SOL each, against defendant as indorsor of Moses Sarcedas, who had lately become a bankrupt.
The defence set up. was want of due notice on the part of the holder that the notes had not been duly paid off. It appeared in evidence, that the drawer had become insolvent, after the drawing and indorsing of these notes ; and that. the. holder had omitted to protest them for non-payment, or to give the defendant notice thereof ; whereupon, the jury, under the direction of the judge who tried the cause, found a verdict for the defendant.
A motion for a new trial was made to the court of appeals, on the ground of misdirection.
Mr. Holmes, in support of the motion,
contended, that this case formed an exception out of the general rule of mercantile law, respecting notice and due diligence. That a protest or formal notice to the indorsor was unnecessary in this case, as it was notorious to all the world, that Sarcedas had become a bankrupt, and therefore it would have been a work of supererogation, to have notified him of what every body knew before, and the defendant himself must have known it.
To this it was answered, by defendant’s counsel, that the law of merchants made no such exception out of the general rule, as the one contended for. Every indorsee or holder of a note, is bound to use due dihgence to obtain his money from the drawer of the note; and if he fails, to give due notice thereof to the indorsor. This is the condition upon which every indorsement is made, and imposes this obliga tion on the indorsee, which if he fails to perform, he loses ^1S money. He has himself to blame for his laches. It would be a most dangerous thing to commerce, if rumour or reports, or the common fame of the day were to be substituted as notice of non-payment by the drawer of a Dili of exchange or promissory note, instead of a protest, or other good and legal notice of such failure ; for which reason the law requires positive, not such implied notice, and for this good reason, because the indorsor may have funds in his hands, which he might otherwise be induced to part with; or the means of indemnification within his reach, which he might otherwise neglect to make use of upon vague reports, but which certain information would justify him in detaining, or pursuing.

Opinion:
Per Curiam.
The plaintiff in this case seems to rely upon common fame pr report as a sufficient justification for not prote sting the notes in question, or giving due notice of nonpayment by the drawer. In order to form a correct idea of this case, it is necessary to consider the true nature of an indorsor on a note of hand. As long as a note of hand remains unindorsed, it has no similitude to a bill of exchange ; but when it is indorsed, its resemblance begins, and it is then governed by the same rules. It then becomes an order by ihe indorsor, on the maker of the note, to pay the in-dorsee the contents. The indorsor, from that moment, becomes the drawer. The maker of the note is in nature of an acceptor, and the indorsee is the person to xohoni it is made payable. The indorsor, therefore, only undertakes in case the maker of the note does not pay. The indorsee, therefore, is bound to apply to the maker of the note. He takes it upon this condition, and therefore in all cases must resort to him. He must know xvlio he is, and where he lives ; and if, after the note becomes payable, he is guilty of neglect, and the maker becomes insolvent, he loses his money, arid cannot come upon the indorsor. 2 Burr. 676. Therefore, before the indorsee of a promissory note brings an action against the indorsor, he must shew a demand, or. due diligence to get the money from the maker of the note ; just as the person to whom a bill of exchange is payable, must shew a demand, or due diligence to get the money from the acceptor, before he brings his action against the drawer ; so that the rule is exactly the same upon promissory notes as it is upon bills of exchange. In the case under consideration, it does not appear that any diligence was used at all to get the money from Sarcedas, the maker of these notes, after they were due, or any notice of non-payment ever given to the indorsor; so that none of the requisites of the law have been complied with on the present occasion. We are all, therefore, of opinion, that no suit can be maintained on these notes against the indorsor, as plaintiff" is bound to prove a demand or due diligence to get the money from the maker of the notes, and due notice thereof to the indorsor. A constructive notice arising from insolvency, or supposed insolvency, is by no means sufficient to charge the indorsor. Actual notice should have been given and proved, agreeable to the mercantile usage and custom.
New trial refusedj and rule discharged.
Present, Burice, Grimke, Waties and Bav-