Court Opinion

ID: 6573746
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:32:21.003886+00
Date Added: 2024-06-11T15:57:00.261522
License: Public Domain

Hosmer, Ch. J.
Two general questions are presented by the case before the court. 1. What is the nature of an indorsement in blank, on a promissory note not negotiable? 2. What is the obligation the contract puts on the holder?
1. By usage for a long period, perhaps immemorial, and by frequent adjudications on a subject of common occurrence, the nature of the indorsement alluded to, has been clearly and definitely established. I confine myself to the usage and decisions of this state, which have given a peculiar construction to the matter in question. The contract by an indorsement in blank on a note not negotiable, has long been settled to be, that such note is collectible according to its tenor, by the use of due diligence. This idea is fully expressed by the court, in Bradley & al. v. Phelps, 2 Root 325. decided nearly thirty years since. “In ordinary cases,” say the court, “the indorser of a note undertakes that the money shall be obtained from the promiser, when it falls due, by the indorsee, he using due diligence, and taking the remedies which the law has provided; but if the indorsee neglects to call on the promiser for the money when it becomes due, and suffers it to lie, without taking any legal steps to secure or recover it, the indorser will be exonerated, in case of a loss, unless the promiser was absolutely a bankrupt, when the note fell due.” It is likewise said, by the court, that the unquestionable construction of a blank indorsement on a note not negotiable, is, that the indorsee shall be able to obtain the money when the note falls due. To the same effect are the observations, in his treatise on Evidence, (p. 342.) of the late Ch. J. Swift, whose long acquaintance with the usage and determinations of courts on this subject, gave him a familiar knowledge of the law. A blank indorsement, said he, contains a warranty, that the note is collectible, and that the maker is of sufficient ability to pay it; that is, to make the indorsee satisfaction of the note according to its tenor. The nature of a blank indorsement, of a non-negotiable note, is so definitely established, and the language and import of the agreement so unquestionably clear, that the indorsee cannot legally insert over the indorser’s name any special contract repugnant to this determinate and irrefutable engagement; and if he in fact does, such pretended stipulation will be *533void. Swift's Evid. 342. Bradley & al. v. Phelps, 2 Root 325. These remarks, perhaps, are unnecessarily particular; but I have been induced to make them, in order to put at rest, if possible, all future controversy relative to the nature of the contract under discussion.
2. Having stated the import of the contract in question, it remains to enquire what is the obligation it puts on the holder of the note.
In general, it may be observed, he is obliged to pursue with diligence, the proper legal measures for the recovery of the money, and if these fail, the indorser is holden. Sheldon v. Ackley, 4 Day 460. By way of exception, it may be remarked, that if the maker, when the note falls due, is insolvent, and without property to pay it, the contract of warranty is broken, and the assignee has an immediate right of action upon it. Swift's Evid. 346. 2 Root 325. But if the maker is solvent, the holder is bound to put the note in suit, by writ of attachment, as soon as it is due; and, unless the debt is secured by him, if it can be done, by the exertion of due diligence, he is guilty of neglect, and takes the responsibility on himself. Swift's Evid. 347.
The holder is not obliged to attach land, and for this very plain reason; it is the contract of the indorsee, that by due diligence, he shall be able to obtain payment of the note according to its tenor; and, of consequence, if payable in money, that he shall be satisfied in this medium. Land is not money; and therefore, the holder is not bound to take it. It has been insisted, that he was obliged to act the part of a faithful attorney or agent; but this wholly misconceives the nature of the transaction. The assignee is virtually a purchaser, and not an agent; and the obligations resting on him are only those which result from the contract of assignment. Now, this contract does not oblige him to receive land in payment of the note assigned, nor to levy on it for the benefit of the assignor; and were he to do it, he would not only extinguish the demand against the maker, but his claim against the indorser. I admit, that the assignee, by special contract, may subject himself to the obligation of taking land in payment, or of securing it for the benefit of the assignor; and this was precisely the case of Phelps v. Foot, 1 Conn. Rep. 387. But a blank indorsement infers no such liability. This opinion disposes of the first objection made.
It is, in the next place, claimed, that the body of the debtor *534ought to have been promptly arrested; and it is denied, that this was done within a proper time.
It is unquestionably true, that if the debtor has real estate or other property, it is the legal duty of the assignee to attach his body, without any unreasonable delay, in order to coerce the payment of the demand. And it appears to have been the fact, that the body of the debtor was arrested on process, the day on which the writ issued, which was immediately after the note fell due, not at the earliest hour of the day, but probably after a due enquiry for property, and without suffering the lapse of any time unnecessarily. This, undoubtedly, was due diligence; and no sufficient objection to the proceeding below arises from this source.
The maker of the note had some personal property, but the jury were instructed, that the assignee was not bound to take it by process, if it fell, in any measure, short of the debt. A supposed incorrectness in the charge, as above expressed, constitutes a third objection in this case. The judge’s charge is fully supported, by a decision of this Court, in Sheldon v. Ackley, 4 Day 458. made thirteen years since, and unquestioned to the present time. On the best consideration I have been able to give the subject, that determination was just. The misconception of the defendant, in this case, has its foundation in the want of a clear and accurate view of the point in question. He persists in considering the assignee of a note as the agent of the assignor, and then applies the rules of law, applicable to such an agency, to the present case. But the assignee, I repeat, is not an agent, but virtually a purchaser; and the contract between the parties is the measure of his rights and duties. The indorser has engaged, that by due diligence used, the assignee shall collect the whole debt, and if he cannot do this, the contract of warranty is broken. Besides, the inconvenience and delay, which must attend the principle now contended for, would manifestly be great. If there be any personal property, the assignee must commence his suit and pursue it, until, not improbably, after much expense and procrastination, judgment is obtained, execution issued and the property sold; and then he may demand of the assignor the unsatisfied balance of the note. That the parties, by a special contract, may render this proceeding necessary, cannot be disputed; but such an obligation never can result from an engagement that the debtor shall be *535able to pay the assignee the whole sum due on the assigned note.
Finally, it is insisted, that the omission of the judge to charge the jury, that the direction given the officer to attach a horse and wagon, was a restriction on the enquiry whether he used due diligence in searching after other property. Instead of this, he informed them, that the plaintiff was not bound to give any directions, and that the officer was obliged by law to make all reasonable search in quest of estate. For this objection there does not exist the slightest foundation. The process put into the officer's hands, and the law of the land, gave him a full view of his duty. No directions to him were requisite; as they would, at best, have been repetitions, and so far as they were lawful, a mere lecture on his official duty. And with any correctness, it can never be said, that a direction to take an article of property, of much less value than the debt, absolved the officer from the search and enquiry, which the law had prescribed.
In conclusion, I am clear, that no error has intervened; and that a new trial ought not to be advised.
The other Judges were of the same opinion.
New trial not to be granted.