Court Opinion

ID: 3308533
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:22:30.955899+00
Date Added: 2024-06-11T13:41:05.035644
License: Public Domain

I dissent. In view of the fact that the prevailing opinion holds that the complaint is sufficient, while the contrary opinion prevailed in Department, it seems proper to express in a dissent the view taken in Department, to which I still adhere.
In Navajo County Bank v. Dolson, 163 Cal. 485, [41 L.R.A. (N.S.) 787, 126 P. 153], the court in Bank, speaking *Page 273 
through Chief Justice Angellotti, where a note had been indorsed by three persons (the defendants) before its delivery, as an accommodation to the payer, said: "It cannot be doubted that if the note was a negotiable instrument, the defendants were mere indorsers with no other liability than that of indorsers. As such, notice of dishonor or nonpayment would be essential to their liability in the absence of waiver on their part to right of such notice." The main opinion holds that the words, "For value received I hereby waive presentment, demand and notice of protest on the within note," converts the indorsements which would otherwise be construed as successive indorsements into joint indorsements. This view, it seems to me, does not give sufficient weight to the effect of an indorsement as provided by the law. It is conceded that without the waiver clause the effect of the indorsement of Hurlbut, as between Hurlbut and Quigley, was that Hurlbut, the first indorser, agreed to reimburse Quigley, the last indorser, upon proper presentment, demand, and notice, in the event that Quigley was called upon to pay the note, and the effect of Quigley's indorsement was that Quigley would pay the note to the payee, in the event that the payer failed to do so, upon proper presentment, demand, and notice, with recourse, in case of such payment for reimbursement against Hurlbut. This rule is thus stated in Daniel on Negotiable Instruments, section 704: "But in the absence of any agreement among accommodation indorsers, the law fixes their liability in accordance with the order of the names on the paper, and the indorser who pays a bill or note has recourse against a prior indorser for reimbursement." The same rule concerning indorsers is stated in a note in 28 L.R.A. (N.S.) 1039: "Their liability inter se,
in the absence of an express agreement to the contrary, is that expressed by the paper itself, and their liability is successive and not joint; consequently they are not cosureties and the doctrine of contribution does not obtain. . . . The only question, in the absence of an agreement to the contrary, is what is the prima facie liability of the parties as shown by the paper itself." The rule may perhaps best be stated in the language of section 3116 of the Civil Code, in force at the time of the transaction:". . . Every indorser of a negotiable instrument, unless his indorsement is qualified, warrants toevery subsequent holder thereof, who is not liable thereon to *Page 274 
him . . . that if the instrument is dishonored, the indorser will, upon notice thereof duly given to him, or without notice,where it is excused by law, pay the same with interest. . . ." Now, where notice is waived the giving of notice is "excused by law," and do not we have here a situation expressly provided for by section 3116, namely, that the first indorser warrants to the last indorser that he will, without notice, pay the same with interest? If we hold, as I agree may properly be done, that the waiver clause applies to all the subsequent indorsements (although there are authorities in other states to the contrary, Daniel on Negotiable Instruments, sec. 1092a, 6th ed., p. 1247), it seems to me that we give full effect to such clause by holding that this waiver is a joint and several agreement of waiver, the legal effect of which is to remove from the indorsement the condition implied by law that the obligation to pay shall be conditioned upon proper presentment, demand, and notice, so that Hurlbut's agreement to pay the payer of the note in the case of the default of the payee, or to reimburse Quigley in the event that Quigley is called upon to pay the same, is no longer conditioned upon presentment, demand, and notice, but absolute without such presentment, demand, and notice, while Quigley's agreement to pay the payee of the note with recourse on Hurlbut for reimbursement also becomes absolute, instead of conditional upon such presentment, demand, and notice. To hold that because the indorsers join in the one agreement to waive notice, etc., they thereby completely change the contract implied by law, so that instead of Hurlbut's agreement to pay Quigley we have an implied agreement that Quigley will pay to Hurlbut, seems to me to give an effect to such waiver wholly foreign to its language and evident purpose. The main opinion states that the effect of the waiver and indorsement simply constitutes a contract ofindorsement with enlarged liability, while the effect of the decision is that where several indorsers join in such waiver, their contract becomes one of guaranty, or suretyship; a joint obligation to pay the payee in the event of the payer's default, with the obligation to mutually contribute in the event anyone is called to pay more than his proportion to the payee. The rules of the law-merchant, previously in effect, governing such cases have been incorporated into our Civil Code, in the uniform negotiable instrument law, since the case was tried, and may well be stated in the *Page 275 
language of section 3148 of the Civil Code, as amended in 1917, [Stats. 1917, p. 1543], providing, as follows: "Where a person places his indorsement on an instrument negotiable by delivery he incurs all the liabilities of an indorser." Section 3149 of the Civil Code: "As respects one another indorsers are liableprima facie in the order in which they indorse; but evidence is admissible to show that as between or among themselves they have agreed otherwise. Joint payees or joint indorsers who indorse are deemed to indorse jointly and severally." Section3145 of the Civil Code provides as follows: "Where a person, not otherwise a party to an instrument, places thereon hissignature in blank before delivery he is liable as indorser, in accordance with the following rules: (1) If the instrument ispayable to the order of a third person, he is liable to thepayee and to all subsequent parties. (2) If the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the waker or drawer. (3) If he signs for the accommodation of the payee, he is liable to all parties subsequent to the payee." It seems to me, therefore, that the fact that the indorsers joined together in the waiver does not affect that part of the contract relating to their obligation to pay one another and to pay the payee. I do not believe that the mere waiver of notice can convert an agreement which the law expressly provides shall be that of indorser into a mere contract of guaranty.