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Sledge Norfleet Co. v. Dye

Supreme Court of Mississippi, Division B
Oct 8, 1928
118 So. 414 (Miss. 1928)

Opinion

No. 27145.

October 8, 1928.

1. BILLS AND NOTES. Where notes were past due when indorsed and no presentment for payment was made within reasonable time after indorsement, indorser was not bound ( Hemingway's Code 1917, sections 2585 and 2649).

Where notes sued on were past due when indorsed and delivered by payee so that, under Hemingway's Code 1917, section 2585, they became demand obligations, and no presentment for payment was made within reasonable time after indorsement and delivery as required by section 2649 in case of demand obligations, indorser was not bound.

2. BILLS AND NOTES. Notice of dishonor, to indorser's administrator was not excused because indorser had no right to expect notes would be paid ( Hemingway's Code 1927, section 2852).

Notice of dishonor to administrator of deceased indorser of note, required by Hemingway's Code 1927, section 2852, was not excused on ground that indorser had no right to expect that notes would be paid and that notice of dishonor would have been an idle and fruitless ceremony.

APPEAL from chancery court of Tate county; HON. N.R. SLEDGE, Chancellor.

Jas. R. McDowell and Geo. J. Leftwich, Jr., for appellant.

There remains but one real question in the case and that is, was notice of dishonor of these two collateral notes, Exhibits "B" and "C" duly given to the executor of the estate of Mrs. Jones, the endorser? Section 2852, Hemingway's Code, 1927. Section 2856, Hemingway's Code 1927, provides that notice of dishonor must be given within the times fixed by the Act. Section 2857, Hemingway's Code 1927.

We do not contend that notice of dishonor was formally given to the executor of the estate of the deceased within the time as provided by the section of the Code just referred to. Our contention is that notice of dishonor was unnecessary because:

(a) It was waived by implication before the maturity of the main note Exhibit "A" and therefore before complainant could rightfully demand payment of the collateral notes, Exhibits "B" and "C";

(b) It was waived by implication after maturity of the main note Exhibit "A" on November 15, 1922, and therefore after the date when complainant could look to the maker and to the endorsers for the payment of the notes Exhibits "B" and "C";

(c) Notice of dishonor was excused because the notes were negotiated for the accommodation of the endorser, Mrs. Jones;

(d) Notice of dishonor was not required to be given because the drawer (endorser), Mrs. Jones, had no right to expect or require that the drawee would honor the instrument; and

(e) Notice of dishonor would have been an idle and fruitless ceremony.

Section 2863 of Hemingway's Code 1927; Section 2869 of Hemingway's Code 1927. Mrs. Jones was both the drawer and endorser within the meaning of the two statutes above referred to. She was undoubtedly an endorser and according to the rule laid down in the case of Hawkins v. Shields, 100 Miss. 747, she was a drawer.

In Westinghouse Electric Manufacturing Company v. Hodge, 167 S.W. 1187 (Mo.), the court held that the purpose of giving notice is fully served when the endorser has actual knowledge of dishonor and the law does not require the doing of a vain and useless act. In that case the endorser was president of the corporation. The facts there were very similar to the facts in the case at bar with the one exception that the endorser was an officer of the corporation, whereas in this case Mrs. Jones is not shown to be an officer of the Coldwater Mercantile Company although she owned thirty-eight per cent. of its stock. That decision was rendered in construing the section of Negotiable Instruments Act which provides that notice of dishonor is not required to be given to an endorser "where the endorser is a person to whom the instrument is presented for payment." We have the difference in this case only in that Mrs. Jones or her executor who stood in her place after her death is not shown to be the officer of the corporation on whom presentment for payment by the maker should have been made. See Whitney v. Chadsey, 185 N.W. 826. Fosdick v. Government Mineral Springs Hotel Company, 196 P. 652; Belch v. Roberts (Mo.), 177 S.W. 1062; Worley v. Johnson (Fla), 33 L.R.A. (N.S.) at page 645.

Brooks Brooks and Cutrer Smith, for appellee.

Section 1765, Hemingway's Mississippi Code of 1917. There can be no doubt but that Mrs. Jones at most was an endorser. Section 2641, Hemingway's Mississippi Code of 1917. It is undisputed that the instruments sued on were endorsed by Mrs. Jones after their maturity, the instruments, therefore became payable on demand.

Section 2585, Hemingway's Mississippi Code of 1917. Carter v. Jennings, 134 Miss. 263, 98 So. 687. In order to charge an endorser, presentment for payment is necessary.

Section 2646, Hemingway's Mississippi Code of 1917. "Where the instrument is not payable on demand, presentment must be made on the day it falls due. Where it is payable on demand, presentment must be made within reasonable time after its issue, except that in the case of a bill of exchange presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof.

See Section 4649, Hemingway's Mississippi Code of 1917; Section 2650 of Hemingway's Mississippi Code of 1917; Section 2651, Hemingway's Mississippi Code of 1917; Section 2652, Hemingway's Mississippi Code of 1917; Section 2661, Hemingway's Mississippi Code of 1917; Section 2267, Hemingway's Code of 1917; Sec-2680, Hemingway's Mississippi Code of 1917; Section 2683, Hemingway's Code of 1917.

It is manifest from the statute law of this state that the failure to present the two notes for payment to the Coldwater Mercantile Company within a reasonable time, after they were delivered to the complainant and the failure to notify the endorser or her administrator of such presentment, and dishonor, if the instrument was dishonored, as provided by the statute, discharged the endorser and necessarily her administrator.

We think this case is controlled by the following adjudicated cases: Skinner v. Mahoney (Miss.), 106 So. 211; Carter v. Jennings, 134 Miss. 263; Taylor v. Ross et al., 129 Miss. 536; Gresham v. State Bank of Sunflower, 131 Miss. 20. See 21 R.C.L. 668, 649, 1061; 3 R.C.L. 1178, 1061; 5 R.C.L. 1167; 6 R.C.L. 1277, L.R.A. 1918C. 625; Harris v. Lombard, 60 Miss. 29; Jones v. Hicks, 52 Miss. 682; Baker v. Burbelt, 75 Miss. 89; Trenholm v. Miles, 102 Miss. 825, 827; Canal Trust Savings Bank v. Earl Brewer, 143 Miss. 146; Persons v. Russell, 103 So. 543; First National Bank v. Morgan, 104 So. 3; Stradley v. Tout et al. (Cal.), 224 P. 469; Sparks v. Caldwell (Cal.), 109 P. 276. Jas. R. McDowell and Geo. J. Leftwich, Jr., for appellant.

It will be observed that the notes were endorsed unconditionally, and it will also be observed that the notes were past due and unpaid at the time they were endorsed and delivered to Norfleet, which was sufficient notice to Mrs. Jones that the notes had not been paid at maturity, and, therefore there was no necessity of presentation, or notice to Mrs. Jones of their nonpayment inasmuch as she had delivered the unpaid notes as collateral knowing at the time that they were past due and unpaid, and knowing at the time that she had endorsed same without any condition or restriction at Norfleet's request.

It could have served no purpose if, immediately upon her delivering the notes to Norfleet, he had then presented them to the Coldwater Mercantile Company for payment and then notified Mrs. Jones that they were not paid. That would have been running around in a circle for no purpose whatever, and the law does not contemplate the doing of a vain, useless and foolish thing. Hawkins v. Shields, 100 Miss. 739.

Appellee now contends that appellant, as holder of the pledged collateral, is without authority to bring this suit. I am at a loss to follow his line of reasoning under the well-settled law, and I do not see how he can get much comfort out of the cases cited by him.

Our own court, in the case of Bank v. McGrath, 111 Miss. 872, 72 So. 701, held that the pledgee of a collateral note had a right to sue the maker, and it made no difference that the principal debt for which the collateral was pledged had been extended from time to time. This case was decided under the Negotiable Instruments Law now is force in Mississippi. See Jones v. Hicks, 52 Miss. 682; 3 R.C.L. 1061.

We invite the court's attention to the following citations: It has been held that endorsers of overdue paper are not entitled to notice of nonpayment. 3 R.C.L., sec. 396. Injury must be shown if failure to give notice is set up. Ib., sec. 391. Demand is necessary when note matured after death of maker and before expiration of time during which administrator could not be sued. 8 C.J. 564. What is a reasonable time is governed by the circumstances of each case. 8 C.J. 527, 653; Bacon v. Bacon, 94 Va. 686, 27 S.E. 576.

Argued orally by Jas. R. McDowell, for appellant.



This is an appeal from the chancery court of Tate county. Hon. J.R. Caldwell sat as special chancellor. After a hearing on bill, answer and proof, relief was denied complainant, appellant here, and the bill was dismissed. This is the second appearance of the case in this court. The former opinion is reported in 140 Miss. 779, 106 So. 519. The only point decided on the former appeal, it being here on bill and demurrer, was that the notes sued on were not such claims as were required to be probated against the estate of the deceased.

The Coldwater Mercantile Company was a corporation, and Mrs. R.A. Jones, deceased, was a stockholder in the business, though it does not appear that she had anything to do with the management of the business. This mercantile company executed and delivered two notes to Mrs. Jones evidencing dividends earned by the company on her stock therein. The first note was for four thousand three hundred eight dollars and forty-five cents, dated January 1, 1920, due January 1, 1921; the second was for one thousand four hundred ninety-one dollars and sixty-nine cents, dated May 7, 1921, due January 1, 1922. These notes were not paid at maturity. During the month of February, 1922, the Coldwater Mercantile Company, acting through one Mr. Yates, its manager, desiring to procure further advances from Sledge Norfleet Company, executed to it a note for two thousand five hundred dollars, which note was indorsed by Mrs. Jones, and paid at maturity, together with advances made the mercantile company for that year.

It also appears that the Coldwater Mercantile Company was largely indebted to complainant for advances covering former years. This indebtedness was reduced to a note in the sum of twenty-two thousand two hundred twenty-five dollars and seventy-seven cents, dated February 16, 1922, payable to Sledge Norfleet Company on November 15, 1922.

Some time thereafter the two dividend notes of the mercantile company still held by Mrs. Jones were indorsed by her in blank, and delivered to Mr. Yates, who, in turn, deposited them with complainant as collateral to the principal note of twenty-two thousand two hundred twenty-five dollars and seventy-seven cents given by the mercantile company.

Mrs. Jones having died, T.M. Dye was appointed administrator of her estate, and is made defendant herein. The bill alleges that the principal note of twenty-two thousand two hundred twenty-five dollars and seventy-seven cents had not been paid, which entitled the complainant to recover on the two collateral notes. The bill further alleges that neither collateral note had been paid, although presentment and demand for payment had been made on the maker, and notice of dishonor of the notes had been given to the said Mrs. R.A. Jones prior to her death, and to the administrator after her death.

The bill prayed for a decree against Mrs. Jones for the total amount of the two collateral notes; the bill was amended, making the Coldwater Mercantile Company a defendant, resulting in a decree against it, from which there is no appeal.

The administrator, in his answer, interposes several defenses, but the one which we think is decisive of the case challenged the right to recover on the ground that there was no presentment and demand for payment on the maker, and no notice of dishonor given to Mrs. Jones or to her administrator.

The notes sued on were past due when indorsed and delivered by Mrs. Jones, and, under section 2585, Hemingway's 1917 Code, became demand obligations. Being such obligations, section 2649 of the same Code requires presentment for payment within a reasonable time after indorsement and delivery, otherwise the indorser will not be bound. Skinner v. Mahoney, 140 Miss. 625, 106 So. 211; Carter v. Jennings, 134 Miss. 263, 98 So. 687; Taylor v. Ross et al., 129 Miss. 536, 92 So. 637; Gresham v. State Bank of Sunflower, 131 Miss. 20, 95 So. 65.

Appellant makes the point that, since these notes were placed as collateral to the principal note, the liability of the indorser could not accrue until after default in the payment of the principal note for which they were collateral security. No authority is cited for this position, and conceding, but not deciding, its soundness, the evidence is in conflict as to whether presentment and demand for payment was made within a reasonable time after maturity of the principal note. Indeed, it is in conflict as to whether there ever was a presentment and demand. Mr. Norfleet, for complainant, testified that demand was made. Mr. Yates, manager for the Coldwater Mercantile Company, testified that there was no presentment and demand.

Mrs. Jones died in May, 1922, prior to the maturity of the principal note on November 15, thereafter. Section 2852, Hemingway's 1927 Code, provides that notice of dishonor must be given to the personal representative of a deceased indorser.

Counsel for appellant, in his able brief, frankly concedes that no formal notice of dishonor was given to the administrator. He says:

"We do not contend that notice of dishonor was formally given to the executor of the estate of the deceased within the time as provided by the section of the Code just referred to."

He contends, however, that notice of dishonor was waived by implication, and introduced letters purporting to establish this position. Considerable correspondence between complainant and attorneys for the administrator was introduced, and also between the complainant and the administrator. On the part of the administrator and his attorneys, these letters evince a desire for information regarding the exact status of these notes; but in none of the correspondence is it shown that presentation and demand for payment was made on the maker of these notes. A reading of all this correspondence convinces us that there was no waiver of notice. We reach this conclusion without passing upon the question of whether an administrator would have the right to waive notice, and by such waiver bind the estate; this question not being argued in the brief.

It is further contended that notice of dishonor was excused, and not required to be given, because the indorser, Mrs. Jones, had no right to expect that the notes would be paid, and that notice of dishonor would have been an idle and fruitless ceremony. We think this position untenable, and find no reason or proof in the record that will support it.

The chancellor resolved all disputed facts in favor of complainant, and there being, in our judgment, sufficient facts to uphold his finding, the judgment of the court below will be affirmed.

Affirmed.


Summaries of

Sledge Norfleet Co. v. Dye

Supreme Court of Mississippi, Division B
Oct 8, 1928
118 So. 414 (Miss. 1928)
Case details for

Sledge Norfleet Co. v. Dye

Case Details

Full title:SLEDGE NORFLEET CO. v. DYE

Court:Supreme Court of Mississippi, Division B

Date published: Oct 8, 1928

Citations

118 So. 414 (Miss. 1928)
118 So. 414

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