Opinion
No. 33158.
April 18, 1938. Suggestion of Error Overruled May 2, 1938.
1. BILLS AND NOTES.
The payee of a note who indorsed it for transfer by his signature preceded by words "for value received I hereby transfer to" indorsee was liable thereon as indorser, as against contention that indorsement was qualified, where payee indorsed note before maturity, and there was no plea setting up any defense of failure of notice of dishonor of note when it was presented (Code 1930, section 2722).
2. BILLS AND NOTES.
Indorser of note was not relieved from liability by continuance of case against maker without indorser's consent during which continuance maker became insolvent, where same firm of attorneys represented both maker and indorser, and attorneys' consent to continuance was within scope of their authority and bound indorser (Code 1930, section 2722).
3. BILLS AND NOTES.
Indorser was not relieved of liability on note because of continuance of case against maker during which continuance maker became insolvent, where indorser was informed of continuance and made no objection thereto (Code 1930, section 2722).
APPEAL from the circuit court of Neshoba county; HON. D.M. ANDERSON, Judge.
W.T. Weir, of Philadelphia, for appellant.
We most respectfully submit that the court should have give appellant judgment and not held him liable for the reason that the undisputed evidence in this case shows that the cause was for valuable consideration continued several times by the attorney for the plaintiff without any knowledge or consent of appellant. The defendant Peebles and the attorney for the plaintiff agreed to continue the case and it was continued by the maker of the note and the attorney for plaintiff making an agreement that upon the payment of certain money that it would be continued and that the money was actually paid. This of itself ought to by operation of the law discharge appellant
Rupert v. Grant, 6 S. M. 433; 8 Am. Juris., pages 455, 456, secs. 807-808; Timberlake v. Thayer, 71 Miss. 279, 14 So. 446, 24 L.R.A. 231.
The indorser of a note being only secondarily liable is discharged by an agreement between the holder and maker, without his consent, by which the right of action against the latter is suspended, if but for a day.
Timberlake v. Thayer, 71 Miss. 279, 14 So. 446, 24 L.R.A. 231; Case v. Hawkins, 53 Miss. 702.
An agreement between the holder and principal maker of a note that the latter may retain the sum due for a definite period of time, upon his promise to pay usurious interest, will discharge a surety on said note not consenting to such contract of forbearance.
Brown v. Prophit, 53 Miss. 649; Sec. 2776, Code of 1930.
The testimony of appellant was to the effect that he wanted to trade the note for the items he was purchasing and give the difference by check and which he says he did. That he refused to indorse the note excepting to transfer it to him. By so doing he was not liable on the note, and if he was even secondarily liable, according to the testimony in this case, there was for a valuable consideration a continuance without the knowledge of the appellant.
Bass v. Borries, 116 Miss. 419, 77 So. 189; 7 Cyc., page 822; Allen v. Smith Brand, 133 So. 599, 160 Miss. 303.
We respectfully submit that the transfer of the instrument in this cause was only for the purpose of making a transfer without recourse and that the extension of payment as testified about in this case would justify a discharge of appellant and we most respectfully submit that for the foregoing reasons the judgment of the circuit court should be reversed and appellant given judgment.
Graham Graham, of Meridian, for appellee.
Counsel entirely misconceives the relation of appellant to the note sued on in contending that appellant was secondarily liable on the note sued on, for the simple reason, that appellant bought and received the machinery from appellee with appellant's endorsement of the note sued on instead of paying the cash for the machinery, as per agreement in obtaining the lowest cash price, but as appellant already had the machinery on his truck before the endorsed note was presented for payment instead of cash, and since the appellee found that the endorsement of said note by appellant made the note good, it was accepted by the appellee solely on the endorsement of appellant; so that, all the argument of counsel to the effect that the appellant was released by the appellee consenting to continuances of the suit falls flat.
The payments were made on the debt, after the suit was brought, were all past due payments and no more was paid than was due, and there was no consideration flowing to the appellee in receiving said past due payments on said suit, but they were accepted and the case was continued purely and solely for the convenience of the defendants in said suit, to-wit, appellant and R.C. Peebles.
The endorsement of W.L. Perry on said note negotiated by him to appellee, was general endorsement under the case of Divelbiss v. Burns, 138 So. 346, 161 Miss. 724, and 144 So. 464.
The Consumers Lumber Supply Company brought suit against R.C. Peebles and W.L. Perry on a promissory note executed by Peebles to Perry, due November 1, 1931, to which note was attached stock certificate No. 3 for five shares in the Ben Walt Hotel at Philadelphia, Miss. The note and stock certificate were indorsed and transferred to the Consumers Lumber Supply Company by the following endorsement of transfer: "For value received I hereby transfer to Consumers Lumber Supply Company. (Signed) W.L. Perry." The face amount of the note was $450; the rate of interest 8 per cent. per annum.
There was a plea of the general issue by Perry; and also another plea by him in which he averred that the plaintiff ought not to recover from him on the note, because the indorsement thereon was a qualified indorsement; and, further, because the plaintiff had entered into a binding agreement with the maker of the note, R.C. Peebles, to extend the time of payment without the assent or knowledge of Perry, who was secondarily liable; and that the recourse against him is not expressly reserved. There was also a plea of the general issue by R.C. Peebles; he and W.L. Perry being represented by the same attorneys.
Prior to the filing of suit the certificates of stock were sold to the son of W.L. Perry for $10; the stock having become worthless, or practically so, at the date of its sale on May 25, 1932. W.L. Perry transferred the note, as above stated, to the Consumers Lumber Supply Company in the purchase of certain machinery from that company by him. It appears that the company had gone out of business, and was in process of liquidation, with one E.J. Gallagher as its agent in charge of the property for sale. The agent, Gallagher, had agreed with W.L. Perry on a cash price for certain machinery, and according to his testimony an agent of W.L. Perry came for the machinery with a truck, which he loaded thereon, and then delivered the note and certificate of stock in question, indorsed as above recited, to Gallagher. The latter consulted the manager of the lumber company, who, on looking up the rating of Perry, accepted the note as cash on the faith of that rating.
According to Perry it was agreed that the note would be accepted without indorsement, and that he made the transfer indorsement above mentioned with the understanding that he was transferring the title to the paper only, and not indorsing the same.
After suit was filed, the case was continued by consent of the attorneys representing the plaintiff and the defendant, at several terms of the court; the defendant Peebles making a partial payment at each term, with the understanding that he would be given further time by continuing the case until the next term of court. When the case was finally tried, at the close of the evidence plaintiff requested a peremptory instruction, and the judge stated that he would like to take the matter under advisement. Whereupon, it was agreed between the attorneys for all the parties that the judge should take it under advisement, and decide questions of law and fact. This being done, the judge, at the next term of court, rendered a judgment in favor of the plaintiff, against both Perry and Peebles, from which judgment this appeal is prosecuted.
The appellant relies upon the case of Allen v. Smith Brand, 160 Miss. 303, 133 So. 599, while the appellee relies upon the case of Divelbiss v. Burns et al., 161 Miss. 724, 138 So. 346. In the case of Allen v. Smith, supra, it was held that the transfer of a note and mortgage after the same was due was not a general indorsement under section 2722, Code of 1930. The indorsement in that case read as follows: "For a valuable consideration I hereby transfer the within trust deed and note to Smith and Brand. This 2 — 12 — 24. (Signed) J.H. Allen." It was held in that case that this indorsement or transfer merely transferred the title to Smith and Brand, and that Allen was not liable thereon. The opinion in that case did not refer to section 2663 of the Code, which provides: "An instrument is payable on demand: (1) Where it is expressed to be payable on demand, or at sight, or on presentation; or (2) In which no time for payment is expressed. Where an instrument is issued, accepted, or endorsed when overdue, it is as regards the person so issuing, accepting, or indorsing it, payable on demand."
We do not now decide what effect this statute would have had on the opinion had it been cited or discussed, but it seems to have the effect of making the indorser after maturity of the paper liable as an indorser, and to require of the indorsee the presentation of a past-due paper within a reasonable time for payment, and, if not paid, notice to the indorser.
In our opinion, the present case comes within the decision of Divelbiss v. Burns, supra. Perry was a party to the paper indorsed, and indorsed it before, not after, maturity. Liability is fixed on Perry, as indorser, under section 2722 of the Code, which reads as follows: "Every indorser who indorses without qualification, warrants to all subsequent holders in due course: (1) The matters and things mentioned in subdivisions 1, 2 and 3 of the next preceding section; and (2) That the instrument is at the time of his indorsement valid and subsisting. And, in addition, he engages that on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it." There is no plea setting up any defense of failure of notice of dishonor of the paper when it was presented; the plea presenting only the questions shown in the pleadings above mentioned.
It is further insisted here that Perry was relieved from liability by the continuance of the case without his consent, giving further time for a valuable consideration to Peebles, during which time Peebles became insolvent; that Perry had not consented to the continuance of the case. The same firm of attorneys represented both Peebles and Perry, and in the circuit court were agents of both. When the attorneys consented to the continuance their act was within the scope of their authority, and bound their respective clients. Furthermore, there is evidence in the record that Perry was informed of the continuance, and made no objection thereto.
We therefore hold that the circuit judge was correct in rendering judgment for the plaintiff, appellee here, and the judgment is affirmed.
Affirmed.