Case Name: Palmer et al. v. Whitney, President, &c.
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1863-11
Citations: 21 Ind. 58
Docket Number: 
Parties: Palmer et al. v. Whitney, President, &c.
Judges: 
Reporter: Indiana Reports
Volume: 21
Pages: 58–64

Head Matter:
Palmer et al. v. Whitney, President, &c.
Promissory Notes — Liability op Indorsers. — Where A draws a bill of exchange on B, (who accepts it,) payable to the order of C, who indorses it to B, and D indorses it back to G, the latter can maintain no action thereon against D.
Same. — But where A draws a bill of exchange on B, (who accepts it,) payable to the order of G, who indorses it to D, who indorses it back to G, all on the day of its date, and the latter, before its maturity, indorses it, and procures it to be discounted, on his own account, by a bank, such bank may maintain an action upon it against J); because, in the latter ease, the transaction imports, upon its face, that the subsequent indorsement was made for the accommodation of the prior indorser, G.
Same — Notice op Protest. — It is enough to bind the indorser, if the holder of a bill make diligent inquiry for the indorser, and act upon the best information he can procure. There must be ordinary or reasonable diligence, such as men of business usually exercise when their interests depend upon obtaining correct information.
Same. — Where a bank, discounting a note or bill, inquires of the person presenting it as to the residence of the indorser, and sends notice to the place named by him, this is due diligence, and sufficient to charge the indorser, though he never resided there, or had removed to another place.
Notary, Notice By. — A notary, in giving notice of protest, does not act officially, but as the agent of the holder of the bill, and, therefore, L^is signature to the notice, without attestation by his seal of office, is sufficient.
APPEAL from the Bartholomew Circuit Court.

Opinion:
Davison, J.
The appellee, who was the plaintiff, sued Geo. W. Palmer and Thos. J. Richards, alleging in the complaint that the defendant, Palmer, on the 10th of August, 1857, at Bartholomew county, drew a bill of exchange on Burris Moore, and thereby required him, three months after the date thereof, to pay to the order of J. Lakin, at the Bank of Louisville, in the State of Kentucky, 1,000 dollars, value received; that on the day of the date of the bill Moore, the drawee, accepted it, and Lakin, the payee thereof, indorsed and delivered the same to the defendant, Richards, who after-wards, on the same day, indorsed and delivered it to said Lakin, and that Lakin afterwards, and before the maturity of the bill, for value received, indorsed it to the plaintiff', who, when the bill matured, presented it for payment at the place where payable, and demanded payment, but payment thereof was refused, and the same was protested for non-payment.' It is averred that on or about the time of the indorsement to Richards, he resided in said county, and his post office address then, or about that time, was at Columbus, in said county; that Lakin, when he sold and indorsed the bill to the plaintiff', was inquired of, by the plaintiff, where the drawer and indorsers resided, and he, Lakin, in answer to that inquiry, then and there stated that Richards resided in Bartholomew county, and his post office address was Columbus, and that plaintiff, upon the presentation and non-payment of the bill, instituted further inquiry as to the residence and post office address of Richards, and was told by persons who knew him, and where he resided, shortly before that time,that he resided in said county, and that Columbus was his post office address; and further, it is averred that plaintiff, on the 14th of November, 1857, the day on which he received notice of said protest, put in the post office at Madison, Indiana, post paid, notices to Palmer and Richards, severally, of the presentment, non-payment and protest aforesaid, and that he did not learn that Richards had removed from said county until after the commencement of this suit. And the plaintiff, in fact, says that the sum specified in the bill, with interest, &c., is due and unpaid; wherefore, &c. Richards, one of the defendants, demurred to the complaint; but his demurrer was overruled, and he excepted. The defendants answered by a denial. The Court tried the issues and found for the plaintiff. Motion for a new trial denied, and judgment.
As has been seen, LaJcin, the payee, indorsed the bill to the defendant, Richards, who indorsed it back to Lakin, and he indorsed it to the plaintiff; hence it is argued that Lakin, having become the indorsee of Richards, was placed in his original position of payee and first indorser, and could not, therefore, have held Richards liable on his indorsement; and, that being the case, Richards is not liable to the plaintiff', because the plaintiff, as indorsee of the bill could have no right of action against Richards, not held by Lakin when he indorsed it. "We are referred to Chitty on Bills, p. 442, where it is said that, " unless under circumstances which must be specially stated on the record, no action can be maintained on a bill against a person who became a party subsequently to the holder, or plaintiff, for if it were otherwise the defendant in such action might, as indorser, deriving title from the plaintiff, be entitled to recover back again in another action against the plaintiff, the identical sum which the plaintiff had previously recovered from him, which would introduce a circuity of action; and, therefore, where A having brought suit .against B, on a promissory note made by C to A, and indorsed by him to B, and by B again indorsed to A, and having obtained a verdict, the judgment was arrested." See, also, Bishop v. Hayward, 1 T. R. 470, and Mainwaring v. Newman, 2 Bos. and Pul. 125. These authorities are referred to by Judge Story in his treatise on bills, &c., with seeming approval. Story on Bills of Exchange, sec. 218. In this case the bill, with its indorsements, was filed with the pleading; they are in the usual form, and it must be conceded that, in the complaint, there is nothing specifically stated, which, in any degree, tends to show that the indorsements were made, under any circumstances, other than those which ordinarily attend such transactions. If, then, the authorities to which we have been referred express the law, and we think they do, it is very clear that Lakin, when he indorsed to the plaintiff, could not have maintained an action against Richards as his indorser. Can the plaintiff in this action recover against Richards as a party to the bill? The appellee contends that, in view of the alleged facts, it must be presumed that the indorsement of Richards was made by him to enable Lakin to raise the money by the negotiation of the bill, and that he was, therefore, a mere accommodation indccser, and as such, though he was not responsible to Lakin, is liable to the plaintiff. There are authorities in support of that position. Thus, in Mauldin v. Branch Bank, 2 Ala. 502, it was decided that, "if a prior indorser offer a note to a bank to be discounted, on his own account, the transaction imports upon its face that the subsequent indorsement was made for the accommodation of the prior indorser." See, also, Wallace v. Branch, 1 Ala. 565. These decisions are cited and relied on in Runyon v. Reed, 6 Am. Law Reg. p. 302, which was an action against Lsaac Reed, upon a promissory note made by Osmon Reed in favor of James Whetham, who indorsed it to the defendant, who indorsed to the maker, and he, before the maturity of the note, indorsed it to Runyon, the plaintiff Held, that the indorsement of the maker was, when standing unexplained, evidence that the indorsements prior to his name were for his accommodation. The principle involved in the decisions to which we have just referred evidently applies to the case at bar, and we are inclined to follow them. In the absence of contrary proof, it must be presumed that Richards indorsed the bill for the mere purpose of enabling Lakin to raise the money by its negotiation. This conclusion seems to be consistent with the present mode of making and indorsing a bill of exchange, intended to be discounted at a bank, for the use of one of its parties, and the result is, we must, in view of the ease made by the complaint, regard the defendant an indorser for the accommodation of Lakin, and as such liable to the plaintiff.
The next question to settle is, was the the notice of protest sufficient? The record does not, as required by rule 30 of this Court, purport to contain "all the evidence given in the cause." But the evidence before us, so far as it relates to the notice, proves, in effect, the same facts alleged in the complaint. The facts proved areas follows: Richards for many years resided in Bartholomew county, but some five months prior to the time he indorsed the bill removed from that county to Tipton county, became a resident of the last named county, and has continued ever since to reside therein. His post office address, while he resided in Bartholomew county, was Columbus, where he was well known. Afterwards, and while his residence was in Tipton county, his post office address was Tipton. The bill was drawn at Columbus, and there indorsed by Richards, who was then at Bartholomew county on a visit. The bank, of which the plaintiff is president, is at Madison, about forty-two miles from Columbus. Between these places there is a daily communication by railroad, and also a communication by telegraph. The plaintiff' had acquaintances and correspondents in Columbus when the bill became due, and might, by writing to them, have ascertained the post office address of Richards in less than twenty-four hours. When Bakin presented the bill for discount he stated, in answer to an inquiry addressed to him by the plaintiff, who was then the president of the bank, that Richards was a farmer living in Bartholomew county, near Columbus. On the evening of the day on which the bank received notice of the protest, the plaintiff, who was still the president, &c., inquired of one Huffman Barton, who had formerly resided in said county, as to the post office address of Richards, and was informed by him that it was at Columbus, that he, Barton, knew where Richards lived, and had been at his house. And on the same evening the notice was put into an envelope, addressed to Thomas J. Richards, at Columbus, and deposited in the post office in Madison.
Are these facts sufficient to charge the indorser? The notice of the non-payment of the bill was not directed to him at his nearest post office. But was that essential? It is said to be " enough that the holder of a bill make diligent inquiry for the indorsers, and acts upon the best information he can procure. If, after doing so, the notice fail to reach the indorser, the misfoi'tune falls on him and not on the holder. There must be ordinary or reasonable diligence, such as men of business usually exercise when their interest depends upon obtaining correct information. The holder must, however, act in good faith, and not give credit to doubtful information when better could have been obtained." Bank, &c. v. Bender, 21 Wend. 642. Thus, "where a bank, on discounting a note or bill, inquires of the person presenting it as to the residence of the indorser, and sends notice to the place named by him, this is due diligence and sufficient to charge the indorser, though he never resided there, or had removed to another place." Edwards on Bills, &c., p. 609, and cases there cited. These authorities, it seems to us, enunciate a correct exposition of the law. Do they apply to the case at bar? The plaintiff, as we have seen, inquired of the person who presented the bill for discount as to the residence of the indorser, and was informed " that he resided near Columbus, in Bartholomew county." For aught that appears in the evidence, he had no reason to doubt the correctness of this information. And, having made further inquiry of a person who professed to know, was told that the indorser's post office address was Columbus. This, we think, was an exercise of ordinary diligence. As holder of the bill the plaintiff was not, in our opinion, required by any rule of law to make further inquiry as to the defendant's residence. And though in point of fact he did not reside " near Columbus, in Bartholomew county," the notice, as directed and sent, was sufficient. Ransom v. Mack, 2 Hill 587; Bank of Utica v. Davidson, 5 Wend. 587; Dikens v. Beal, 10 Peters 572.
S. Stansifer, for the appellant.
F. T. Hord, for the appellee.
There is, however, another ground on which the notice of protest is said to be defective. It is in the usual form and signed by the notary who protested the bill, but the alleged defect is that it does not bear his official seal. This objection is not well taken. The statute, it is true, requires " all notarial acts" to be attested by a seal. 1 R. S. p. 377, § 4. But a notary, when he gives notice of protest, does so, not officially, but as agent for the holder of the bill, and thus acting as agent, his mere signature to the notice, without attestation by his seal of office, is sufficient. Harris v. Robinson, 4 Howard 346; Warren v. Gilman, 17 Maine 360; Bank, &c. v. Smith, 18 Johns. 230; Crawford v. Branch Bank, 7 Ala. 205; Cowperwait v. Shepfield, 1 Sandf. 416; Edwards on Bills, &c., 628.
Another point is made by the appellant in his brief, but it does not appear to have been presented to the Circuit Court for its consideration, and will not, therefore, be noticed in this Court.
Per Curiam. — The judgment is affirmed, with 3 per cent. damages and costs.
(1) No brief with the record.