Court Opinion

ID: 8299125
Source: CourtListenerOpinion
Date Created: 2022-10-17 11:10:35.146335+00
Date Added: 2024-06-11T16:44:05.725925
License: Public Domain

*433PETITION TO REHEAR.
Beard, J.
This case is before us on a petition for rehearing filed by complainant. In this petition it is insisted that serious injustice has been done the petitioner (1) in failing to hold that under the circumstances of this case no demand was necessary as a prerequisite to protest; (2) in declining to follow the Court of Chancery Appeals in giving relief as to the realty.
With regard to the first proposition, it is proper to restate, briefly, the facts. The note sued on was made payable at the Commercial National Bank of Nashville. Some time before its maturity, this bank, having become insolvent, under the directions of the Comptroller of the Currency of the United States, had passed into the hands of a receiver, who, when the note did mature, was in charge of the bank’s assets, engaged in liquidating its affairs, at a place of public notoriety in the city of Nashville. Under these circumstances, we held that it was the Notary’s duty to present this paper at that place and make demand there.
No case on all fours with this has been called to our attention, but we think that there are many cases which furnish analogies sufficiently close, when taken in connection with the general rule that the relations of the indorsee • and indorser of commercial paper are sin'otmmd jurix, to furnish abundant warrant for the conclusion reached by us on that point. *434In the rule in question the place of payment named therein had ceased to exist as a going concern, but it still existed as a legal entity, and its assets were in the hands of one who stood for that emergency in the room and stead of the officers of the bank, managing them primarily, however, for the creditors of the bank, and, after their satisfaction, for the stockholders. We do not think it could be for a moment maintained, if this bank had suspended all active business and its own officers had been winding-up its affairs in the interest of creditors and stockholders, in the order named, that this note, maturing-while the bank was in this condition, could have been protested without first presenting it at the bank. Nor do we think the position any more maintainable, if, immediately after the receiver took charge, and while he was administering his trust in the business house where the bank, only a few days before, had been engaged in active operations, that note had fallen due, that the holder could have protested without making demand at this particular place. In neither of these cases would the holder have a right to expect payment, as from a going concern, of his note; still, in each, the Commercial National Bank would have been an existing, legal concern, where the maker could, if he would, provide the. means to meet the note. And so it was said by this Court, in Bynum v. Appenum, 9 Heis., 637, “whether in a condition to do a general banking business or not, or whether its assets were in its vaults or in *435some other place, however distant, could make no difference to the holder of the paper, nor in any way change the duties imposed upon him by the terms of the contract under the law. ’ ’
The words £ £ place of payment ’ ’ mean a house, bank, counting-room, store, or place of business, where the holder can present the note, where the maker can deposit or provide funds to meet it, and where a legal offer to pay can be made. Montross v. Doak, 7 Robinson, 170 (S. C., 41 A. D., 278).
We have in the office of the receiver of this bank at least enough .of the essential elements here enumerated to constitute this as still the £ £ place of business ’ ’ where the note was payable. It was a house or countingroom, where the holder could have presented this note, where the maker could have provided funds to meet it, and where a legal effort to pay could be made. As before intimated, the contract of the indorser is conditional, and it becomes fixed only on the holder observing rules that are very technical. As illustrations of this, it will be sufficient to mention a few cases. A note payable at a particular bank must be presented there and payment demanded at maturity, to charge the indorser, though the maker informs the holder, before maturity, that a demand will be useless, as he cannot pay. 6 Met., 308 (S. C., 30 A. Dec., 734). .If the maker of a note die before its maturity, and an indorser becomes his administrator, yet demand must be made upon the indorser, as adminis*436trator, and notice of nonpayment given to him, as indorser, in order to hold the latter liable. Magruder v. The Union Bank, 3 Peters, 87; affirmed in 7 Peters, 291. The holder must present the note at the place fixed for payment, at its maturity, and his failure to do so will not be excused by the insolvency of the maker, and his removal from the state. Farwell v. St. Paul Tr. Co., 45 Minn., 495 , (S. C., 22 A. S. R., 742).
The same rule that is illustrated in these cases, and which would have made it essential for the holder to have presented this papey at the Commercial National Bank, under the conditions first put, that is, of both voluntary and inyoluntary liquidation, we were satisfied to adopt and apply in this case. In reaching this conclusion, the subject was one of serious consideration, and was only arrived at after much debate, and by a majority opinion of the Court. We are entirely content with it, as we think it is in line with the best considered cases, where the general question has been carefully examined, and especially is in harmony with Bank v. Junk Bros., already referred to.
It is insisted on the second point, that we misconstrued the finding of the Court of Chancery Appeals, as to the grounds upon which they let complainant into the Crutcher lot. In this petitioner is in error. That Cour]t distinctly repudiated the doctrine of marshaling assets as being inapplicable in the case, and as distinctly placed their finding on *437that of subrogation, and not upon the theory, suggested in the petition, that Hutchison, when he purchased the Smith note, ‘ ‘ became an equitable owner of the lot to the extent of his lien.” For he neither purchased the lien, nor by acquiring the note obtained any ownership in the lot. He simply bought the note, and, as an incident to it, the security of the lien reserved for its benefit. As before stated, the finding of that Court was rested distinctly on the rule of subrogation — a rule applied in favor of one who has been compelled to appropriate his estate to the payment of a debt for which the other party is primarily liable, and who, under the rule, is let in to any liens or equities of the creditor for his reimbursement. The doctrine rests upon the idea of the liability of the party against whom it is invoked, and can here be applied only upon the theory that Crutcher was bound on the Hutchison note.
After giving in full Sec. 262- of Brandt on Sure-tyship and Guaranty, which opens with this sentence: ‘ ‘Anyone who stands in the position of a surety or guarantor, whether strictly and technically such or not, is entitled to subrogation the same as a surety or guarantor,” that Court, in its opinion, then quoted at great length from Eddy v. Traver, 6 Paige, 521, as an authority largely controlling in the present case. In that case it was held that where real estate descended to an heir at law charged with the payment of debts due from the decedent, *438and such heir afterwards sold a part of the estate to another person with a warranty, and this was afterwards sold under an order of Court for the payment of such debts, that the purchaser from the heir was entitled to be reimbursed out of the remaining estate in the hands of such heir to the extent that his property had been thus taken — thus putting the purchaser in the attitude of a surety for the heir, so far as this debt was concerned, and, as such, entitled to be subrogated to the right of the creditor whose debt he had to pay. But the purchaser in that case discharged a' debt, which his vendor, the heir, by his warranty had undertaken to protect him against, while in this there has never been any debtor relation of any sort on the part of Crutcher to complainant, nor has Crutcher ever-been under any primary obligation to complainant to discharge either the Jolly notes or the Smith note. This essential was lacking in the case, and so we held the rule was improperly applied.
If Crutcher had been absolutely bound to complainant on the Smith note, and the Smith lot had been sold to discharge the superior lien of the Jolly notes, then it is possible equity would have brought relief to complainant by this doctrine of subrogation. But this was not the case. His liability as in-dorser was purely contingent, and has never become fixed. It cannot therefore be in any sense true that complainant sustained a surety relation to Crutcher, for this presupposes not only liability on *439the part of Crutcher, but primary liability. It was for this reason we declined to affirm the decree of the Court of Chancery Appeals, as its effect was to make Crutcher’s estate liable for an obligation from which that Court agrees with us in saying he has been discharged by the laches of complainant.
So far as fraud in the failure of Crutcher to make Hutchison a party to his cross bill is concerned, the Court of Chancery Appeals neither find it, nor do they find facts from which fraud would be necessarily inferred. If they did, however, it would not help out complainant in the present contention. While it might be if the fraud of Crutcher caused a loss to complainant, the latter might recover in an action of deceit, yet it would not give him a lien on Crutcher’s property.