Court Opinion

ID: 8743097
Source: CourtListenerOpinion
Date Created: 2022-11-26 10:56:52.350865+00
Date Added: 2024-06-11T17:00:30.848838
License: Public Domain

LOWELL, District Judge.
Under St. Mass. 1898, c. 533, §§ 63, 64, Hodges was an indorser of the note in question. By sections 70 and 82 of the same act, presentment for payment was necessary to charge him as indorser, “except as herein otherwise provided.” ' The first exception relied on by the creditor is found in section 79; “Presentment for payment is not required in order to charge the drawer where he hafe no right to expect or require that the drawee or acceptor will pay the instrument.” The appealing creditor of the joint estate contends that section ,79 applies only to the drawer of a bill of exchange, and not to the indorser of a promissory note. In some cases it is said or assumed that the rights of a drawer of a bill of *68exchange regarding demand and notice are the same as those of an indorser of a promissory note (see Bank v. Fulmer, 8 Pa. St. 399), but it is at least doubtful if the assumed identity governs the construction of a statute like that before the court, where the words drawer, maker, indorser, etc.,' appear to be used in their discriminated sense. It is not necessary to decide this point, in view of the construction put upon other sections of the act.
The second exception insisted upon is that found in section 82: “(3) By waiver of presentment, express or implied.” Ho express waiver is here shown, and the case turns upon the existence or absence of waiver implied from the facts agreed by the parties and stated by the referee. St. Mass. 1898 is intended to supersede all other statutes relating to promissory notes, and, as it does not purport merely to rearrange statutes previously existing, there is no strong presumption that any one of its provisions is merely a codification of the law previously existing. When it attaches certain results to an implied waiver of demand, however, a court called upon to define such waiver may appropriately look at definitions of the term previously established. When the legislature of Massachusetts used the words, “waiver of presentment, express or implied,” it may be supposed to have used these words in the meaning consistently attributed to them by the courts of Massachusetts. In Kent v. Warner, 12 Allen, 561, 563, Mr. Justice Foster said, in delivering the opinion of the supreme court:
“Strictly speaking, a waiver is an intentional relinquishment of a known right; but where the indorser of a note by words or acts has in fact misled and put the holder off his guard and reasonably induced him to omit due presentment for payment and notice of nonpayment, he is deemed in law to have waived the performance of these ceremonies, because it 'would be inconsistent with good faith on his part to insist upon a condition compliance with which had been prevented by his own conduct.”
That which puts the holder off his guard is said to be waiver, in other cases, among them Gordon v. Parmelee, 15 Gray, 413, 422; Armstrong v. Chadwick, 127 Mass. 156.
Do the facts stated in the referee’s certificate establish that the holder of the note was reasonably put off his guard by the acts of Hodges? I think they do.. Hodges was liable on the note both as maker and indorser. About a week before maturity he consulted with the holder regarding a general assignment of the firm and its partners, which assignment was made as a result of the consultation. ■ The note was discussed, and Hodges told the holder that neither the firm which made the note, nor lie himself, the partner who had indorsed it, could pay it at maturity. It is not necessary to decide that, where the maker and indorser of a note are quite separate persons, the bare statement by the indorser that the maker will not pay operates to excuse demand. Here the maker and indorser were, in an important sense, the same person. Hodges said, in effect, “1 cannot pay you this note either as maker or as indorser.” Doubtless he might have added, “In spite of the fact just stated, I require you to go through the useless ceremony of demanding payment.” Had he said this, there would have been no waiver; but, in the absence of such a reservation, I think that the holder reasonably un*69derstood Mm to waive the useless ceremony. Upon this understanding the holder acted. It should be noticed that Hodges and his creditor were not dealing at arm’s length, or as opposing parties, but were conferring about the general condition of Hodges’ affairs.
In construing a term found in a statute of Massachusetts, and previously defined in Massachusetts decisions, it may be sufficient 10 refer to those decisions. As the statute in question is intended to introduce uniformity into the laws of the several states, it would be unfortunate, however, if the Massachusetts decisions concerning waiver of demand were opposed to a great weight of authority elsewhere, and to the law merchant as generally laid down. I do not find that opposition exists. The definitions in 2 Daniel, Neg. Inst. (4th Ed.) § 1103, and in 2 Pars. Notes & B. (2d Ed.) p. 582, are similar to those declared by the supreme court of Massachusetts. In Bank v. Dill, 5 Hill, 403, no waiver of demahd was understood by the creditor at the time the alleged waiver took place. It was set up as an afterthought to excuse a mistake concerning the date of the note. When the holder was asked by the indorser why the note had not been presented for payment, he answered that presentment would be made that same afternoon, and claimed a waiver only after he had found out, to his surprise, that this presentment would be too late. In Re Grant, Fed. Cas. No. 5,691, the court found that the waiver, so far as there was one, was not made with any regard to the indorsement, and that all parties were considering only the right's of the maker. In- the case at bar the indorsement was expressly referred to. I hold, therefore, that there was no implied waiver of presentment, within the purview of the statute.
That waiver of presentment for payment, and knowledge of nonpayment arising from the identity of the maker and indorser, taken together, will excuse notice of nonpayment, is a conclusion so sensible that it must stand unless plainly opposed to the words of the statute. That this is the law merchant is not denied. To present for payment in order to charge an indorser, where the indorser has already told the holder that he cannot pay the note either as maker or as indorser, seems a useless ceremony, but it is a matter of substantial importance, by comparison with giving notice to the in-dorser who has waived presentment, that he, the indorser, has not ■paid the note as maker. The notice, if given, would run substantially thus: “Please take notice that you have not paid the note which, in accordance with our agreement, I have not presented to you for payment.” The facts which wrere held to constitute a waiver of demand were held also to constitute a waiver of notice in most or all the cases above cited. Waiver of notice seems to have been implied from waiver of presentment. ■
That notice would be excused by waiver, even in the absence of an express provision of statute, I am inclined to think; but this case seems fairly covered by the statute itself. By section 115, notice of dishonor is not required “where the indorser is the person to whom the instrument is presented for payment.” The instrument here was not presented to Hodges for payment, because he had given the creditor to understand that presentment would be useless. The excep-*70iion was inserted to avoid the necessity of giving notice of a fact which, by the terms of the exception, must be within the personal knowledge of the man notified. It is no straining of language to hold that the term, "person to whom the instrument is presented for payment,” includes a person to whom the instrument would have been presented if he had not, both as maker and as indorser, waived such presentment. The creditor is therefore entitled to prove against Hodges’ separate estate.
' The proving creditor seeks to review the decision of the referee in deducting from the amount proved against the separate estate the amount of the dividend declared on the joint estate. That a creditor may prove for the full amount of a note against both its maker and indorser, and may collect from both estates dividends on such proof until his whole debt is satisfied, is settled law. Where, however, proof against the* estate of the-indorser is made after part payment by the maker, the proof must be limited to the balance due on the note after deducting the part payment. And it.appears to be settled that a dividend from the estate of the maker, declared in favor of the creditor, and payable before proof is made against the estate of the indorser, is the equivalent of actual part payment. In this case, proof agqinst the estate of the maker was made after the declaration- of the first dividend. By section 65c, the creditor making proof after the declaration of the first dividend is entitled to be paid “dividends equal in amount to those already received by the other creditors, if the estate equal so much before such other creditors are paid any further dividends.” This right of the creditor to a preference in future dividends does not seem to me equivalent to a declaration- of a dividend in his favor, or to actual part payment of the note. In re Hicks, Fed. Cas. No. 6,456; In re Hamilton (D. C.) 1 Fed. 800; In re Meyer, 78 Wis. 615, 626, 48 N. W. 55, 11 L. R. A. 841; Ex parte Todd, 2 Rose, 202, note. The estate might not be large enough to pay to this creditor the rate declared in favor of,the other creditors. Considering the situation as shown in the finding - of the referee and in the subsequent stipulation, I think the creditor was entitled to prove for the whole amount of the note against the estate of the indorser. The judgment of the referee is reversed, in so far as it provides for a diminution of the proof presented against the separate estate of E. O. Hodges; in other respects it is affirmed.