Court Opinion

ID: 3617318
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:00:07.73417+00
Date Added: 2024-06-11T14:07:34.764813
License: Public Domain

The first question for consideration in this case is, whether the defendant could be made liable for the payment of the note in any other position than as second indorser to Sweezey, to whose order the note was made payable. No evidence was given as to the consideration or purpose for which the defendant became indorser. His liability must be determined from the paper alone. That he cannot be charged in any mode other than indorser, was settled in this State in Hull v. Newcomb (7 Hill, 416). The rule settled in this case was re-asserted by this court in Spier v. Gilman
(1 Comst. 322), and has since been regarded as the law of the State. The defendant being liable only as indorser, can he be made so liable except as subsequent to Sweezey? This question was substantially decided in Herrick v. Carman (10 Johns. 224). In that case it was held that Herrick, who indorsed the note of one Ryan, payable to Carman  Co., or order, in the same way the defendant indorsed the note in suit, was not liable thereon to the payees, and that, consequently, the plaintiff, to whom the payees had indorsed the same for collection, could not recover. The same doctrine was re-affirmed by the court, in Herrick v.Carman (12 Johns. 159). This has been regarded as the law for more than half a century. A rule, governing the rights of parties to commercial paper, of such standing, ought not to be changed by the court. It follows, that Sweezey, the payee, could not have maintained an action against the defendant, upon the note, had he been the owner at the time it became due. But the evidence shows that he was not such owner at that time, but that, before it became due, he transferred it to one Kingsley, accompanied *Page 619 
by the following writing thereon, signed by him: "For value received, I hereby guarantee the collection of the within note of the maker and indorser, with costs of collection." The express contract entered into by Sweezey, upon the transfer of the note, it is obvious, was all the obligation incurred by him. That made him the surety of the maker, and of the defendant, to Kingsley, for the collection of the note. It did not make Sweezey surety to the defendant for the payment of the note by the maker. Consequently, had the defendant, upon default of the maker and the service of the proper notices to charge indorsers, voluntarily paid the note to Kingsley, he would have had no remedy against Sweezey upon the contract. But the note, on its face, showed that the defendant had only agreed to assume the responsibility of indorser, upon the contingency of Sweezey becoming liable as first indorser. Kingsley knew this, from the paper, and also knew that Sweezey had not thus become liable. He, therefore, was notified by the paper itself that the contingency had not occurred which was a prerequisite to the liability of the defendant. He could not recover, and, therefore, abandoned the suit brought by him against the defendant for the recovery of the note, procured the indorsement of Sweezey, waiving demand and notice, and transferred the note to the plaintiff. But this indorsement was made, and the note transferred to plaintiff, long after it became due. The plaintiff was not, therefore, a bonafide holder, and took it subject to any defense that was available against Kingsley at the time of the transfer. The question then is, whether, if the defendant was not liable at the time the note became due, he could be so made by any subsequent indorsement of Sweezey. Had Sweezey indorsed and negotiated the note before maturity, and the defendant had been charged with its payment in behalf of any bona fide holder, he would have had the right at once to pay the holder and proceed against Sweezey to recover his indemnity. Any act of the holder, suspending this right, would have discharged the defendant. For the same reasons, any omission to perfect this right, so that it was in full force at the time of maturity, would have *Page 620 
the like effect. If the parties, by the indorsement of Sweezey after the note became due, could thereby create a liability against the defendant, they could do the same thing at any time within six years from that time; the defendant having no right, in the mean time, to take any steps for his protection. This was not the contract into which the defendant entered: that was, to become liable as second indorser, with Sweezey as first, with all the rights incident thereto. He was not liable upon the proof given, in which there was no conflict. His motion for a nonsuit should have been granted. Upon a second trial, proof may be given, bringing the case within the principle of Morse v.Cross (19 N.Y. 227). In that event, the plaintiff will entitle himself to a recovery.
The judgment appealed from should be reversed, and a new trial ordered; costs to abide event.
All the other judges concurring, except HUNT, Ch. J., who took no part,
Judgment reversed, and new trial ordered. *Page 621