Opinion
September Term, 1855
Wm. H. Taggard, for the appellants.
S.E. Lyon, for the respondent.
Although the jury have not found a general verdict in this case, the facts specially found are clearly sufficient to require a judgment to be rendered against Nicholas Miller, the maker of the note in suit. As to Leonard P. Miller, the endorser, the question is whether he can be charged, in the absence of a demand upon the maker for payment at the time when the note became due, and of notice of non-payment to him the endorser. It is contended, on the part of the plaintiff, that neither demand nor notice was necessary, upon the ground that the endorser had received from the maker security to indemnify him against his liability. The security consisted of a mortgage of personal chattels, executed by the maker to the endorser, and conditioned among other things to be void in case the note in question should be paid at maturity by the maker. The mortgage provides that the property mortgaged shall remain in the mortgagor's possession until a breach shall take place. It does not appear whether the property mortgaged was of value sufficient to afford an indemnity. Upon the cases decided in this state, the endorser in this case cannot be regarded as having waived his right to demand and notice. In Mechanics' Bank v. Griswold (7 Wend., 166), the endorser had taken a general assignment of all the property of the makers, and the court held him liable without demand or notice, saying that he had taken into his possession the whole of the maker's estate expressly to meet his responsibilities, and had effectually secured every object which the law presumes would be the consequence of notice of the default of the makers. In the subsequent case of Spencer v. Harvey (17 Wend., 489), demand and notice were held to be necessary notwithstanding a judgment had been confessed to the endorser to indemnify him against the payment of the note. The court said: "The mere precaution by an endorser of taking security from his principal has never been adjudged to operate as a dispensation of a regular demand and notice." There must be something more; such as the taking into his possession the funds or property of the principal, sufficient for the purpose of meeting the payment of the note; or he must have an assignment of all the property, real and personal, of the makers for that purpose. The question was considered in Kramer v. Sandford (4 Watts and Sergeant, 328), by Gibson, C.J., upon principle, and all the authorities were ably reviewed, and the court arrived at conclusions agreeing with the doctrine of the New-York cases above cited. They held that demand and notice were not necessary where the endorser had taken a general assignment of the maker's property, upon the ground, that in such a case, the endorser had obtained everything which notice was intended to enable him to obtain. That in other cases of security, the question was whether the endorser had, as between himself and the maker, become the party whose duty it was to take up the note; and that where no waiver of recourse to the maker by the endorser had taken place, there no implied waiver of notice existed. Assenting entirely to the reasoning and doctrine of this case, so far as they are involved in the case now before this court, I am of opinion that the endorser of the note in suit was entitled to notice, and that as to him the judgment of the supreme court should be reversed and judgment rendered upon the special verdict in his favor.
The security given in this case was designed as an indemnity against a contingent liability. It did not change the nature of the original contract, or amount to a performance of the condition precedent upon which that liability depended. I do not perceive how, upon the principle upon which this case was decided, an endorser could ever take an adequate security, without converting a conditional into an absolute contract for the payment of the money mentioned in the note. Where the fund is deposited by the maker and accepted by the endorser for the purpose of paying the demand, the case may be different.
The judgment should be reversed as to the endorser, and judgment on the special verdict rendered in his favor.
CRIPPEN, J., delivered an opinion to the same effect.
Judgment accordingly.