Case Name: William Thurston versus John M'Kown
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1810-05
Citations: 5 Tyng 428
Docket Number: 
Parties: William Thurston versus John M’Kown.
Judges: 
Reporter: Massachusetts Reports
Volume: 6
Pages: 349–351

Head Matter:
William Thurston versus John M’Kown.
Where a Kote was obtained by unfair means from the maker, it was held, that he was still liable to an endorsee, who had obtained it bona fide, for a full consideration, and without any knowledge of the fraud, and within seven days from its date, the note having been made at Portland, payable on demand, and sold to the endorsee in Boston.
Case upon a promissory note, dated Sept. 22, 1806, signed by the defendant, payable on demand to one Samuel Broolcs, and by him endorsed to the plaintiff.
In a case stated for the opinion of the Court, the parties agree that the note declared on, being made and signed at Portland, and payable on demand, was endorsed by the payee to the plaintifl at Boston, where the plaintiff dwells, on the seventh day after it was made. The payee originally obtained, the note by unfair means, without- any consideration, in the following manner: On the day the note is dated, it was taken of the defendant for a balance of account due to Brooks, under an expectation that one Daniel Johnson would endorse it as surety for the payment of it. Immediately on receiving it, the payee carried it to Johnson, to be so endorsed ; but he refused to endorse it, unless it should be made payable at sixty days. Upon this the payee went back to the defendant^ and stated Johnson’s objection. The defendant accordingly made another note for the same sum, payable in sixty days, supposing that the payee had left the first note with Johnson, who afterwards found the note which he had endorsed, [*429] in*the hands of an endorsee, to whom he paid the money for it, and took it up. The plaintiff was not knowing to any unfairness in this transaction, but obtained the note bond fide, and paid a full and valuable consideration for the same.
If, upon this statement, the Court should be of opinion that the plaintiff ought to recover, it was agreed that the defendant should be defaulted; otherwise that the plaintiff should become nonsuit, and judgment, in either case, be rendered accordingly.
Whitman, for the defendant,
relied on the general principle, that a note endorsed when over due, is liable to all. the equity in the hands of the endorsee, that it is subject to in the hands of the original payee. ' And he contended that the note, in this case, having been seven days due when it was endorsed, came within the general principle.
Hopkins, for the plaintiff,
was stopped by the Court.
The opinion of the Court was delivered by
1 Campbell's N. P. 19.

Opinion:
Parsons, C. J.
The question upon the merits of this case is, whether the loss shall fall on the bona fide purchaser of the note, or on the maker, who was defrauded. And it is settled law, that of two innocent parties, in a case like this, the loss shall fall on the maker of the note. The endorsee gave credit to his name, and on this credit he paid a valuable consideration. The maker suffered himself to be overreached, and by his own inattention, or negligence, or undue confidence in the payee, the note has been negotiated, and has honestly and fairly come into the possession of the plaintiff. On equitable as well as legal principles, the maker must bear the loss arising from his own negligence or improper confidence, and not the endorsee, to whom no fault or indiscretion can be imputed by the promisor.
The defendant has urged, in this case, that the note was over due when the plaintiff purchased it, and, therefore, that any defence, which might be set up against the payee, ought to be admitted against the endorsee.
* It certainly is a correct principle of law, that, if the [ * 480 ] endorsee purchase a note, when, from the length of time in which it has been payable, there is reasonable cause to suspect that it has been dishonored, he shall not deprive the maker of any defence which would avail him against the promisee.
But on the facts agreed, this note is not within that principle. It was payable on demand, and the promisee was not obliged to demand payment immediately ; if a demand of payment was not unreasonably neglected, the promisor cannot object to any reasonable delay. The note was given at Portland on the twenty-second of September, and, seven days after, was sold in Boston to the plaintiff. This note, therefore, cannot be considered as over due, within the true intent of the principle of law relied on by the plain tiff, as there were no circumstances existing, which ought to have induced, in the mind of the purchaser, a suspicion that the note had been dishonored.
On this point our opinion is founded not only on the usage universally prevailing in this state, to give notes payable to order on demand, when they are intended by the parties as securities for money on a long credit, and not as circulating cash notes; but on an analogy between notes payable on demand, and bills payable at sight, or a certain time after sight. ,
Let the defendant be defaulted.
7 D. & E. 423, Boehm & Al. vs. Sterling & Al. — 2 H. Black. 565, Mulman & Al. vs. D'Eguino.
[When a promissory note is payable on demand, a demand must be made in a reasonable time. — Bailey on Bills, &c., 5th Lond. ed. 234 — 244. — Chitty on Bills, 8th Lond. ed. 402 — 425. — Bank vs. Broderick, 10 Wend. 304. — Lice vs. Cunningham, 1 Cow. 397. — Vrelan vs. Hyde, 2 Hall. 429.— Martin vs. Winslow, 2 Mason, 241 Field vs. Nickerson, 13 Mass. 131. — Ed.]