Court Opinion

ID: 9808367
Source: CourtListenerOpinion
Date Created: 2023-08-31 20:36:09.308578+00
Date Added: 2024-06-11T12:11:57.251642
License: Public Domain

Clark, O. J.,
dissenting: It would seem that the court below ruled correctly. Rev., 2239, provides: “Except as herein otherwise provided, when a negotiable instrument has been dishonored by nonacceptance or nonpayment, notice of dishonor must be given to the drawer and each indorser, and any drawer or indorser to whom such notice is not given is discharged.”
Rev., 2259, provides that notice of dishonor may be waived, and section 2260 that such waiver may be embodied in the instrument. Rev., 2270, provides that “A person secondarily liable on the instrument is discharged by any agreement binding on the holder to extend the time of payment, or to postpone the holder’s right to enforce the instrument, unless made with the assent of the party secondarily liable, or unless the right of recourse against such party is expressly reserved.”
The agreement in this instrument to which the indorser is a party, by writing his name on the back thereof, provides: “The subscribers and indorsers hereby agree to continue and remain bound for the pay*531ment of tbis note and all interest and charges thereon, notwithstanding any extension of time granted to the principal, hereby waiving all notice of such extension of time.” It is clear, beyond controversy, that the waiver of the indorser was to the granting of an extension of time and to nothing more. Without such waiver he would have been discharged by the extension of time granted by the plaintiffs to the principal debtor. It is clear that he entered into no contract whatever to waive notice of dishonor by nonpayment at the maturity of the note, to which notice he was entitled by Eev., 2239.
The object of giving notice of dishonor by nonpayment as required by Eev., 2239, is that the party secondarily liable may take prompt steps to secure himself in the manner provided by law. If this is so when the note falls due at the original date, there is still more reason that such notice shall be given when by reason of extensions, of which the indorser knows nothing, the note falls due and is then dishonored without his knowledge. Presumably he knows when the original note falls due, but even in such case the statute requires that notice shall be given him, if the note is not paid at maturity, for the presumption is that it will be paid. For a far stronger reason, when, as in this case, the indorser has waived a release which would have come to him by an extension of time, the indorser is entitled to notice of nonpayment at the maturity of the note, which occurs by reason of the fact that the bank refuses to again extend the note. The holder knows of this date. The indorser does not. The indorser in this ease has done nothing expressly or impliedly to waive notice of nonpayment, and should have had it, as Eev., 2239, requires.
It is true that in other States there have been conflicting decisions on this point. The statute varies in different States, and the decisions also, most of which were prior to the adoption of the Uniform Negotiable Instruments Law. ¥e have no statute, and no decisions, depriving the indorser of notice of the nonpayment of a negotiable instrument when it falls due when, as in this case, he has not waived the same. His waiver of release by reason of any extension of time by the bank made it all the more incumbent upon the bank to give notice of nonpayment when the hank, by its own act in refusing further extension, has fixed a new date for the maturity of the note, of which the indorser has no notice. If given notice, the indorser would have had the right to take up the note, and could have taken steps to secure himself, which may now be beyond his power.
A waiver of release by an extension is not a waiver of notice of nonpayment, which puts an end, without the knowledge of the indorser, to such extension.