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GORDON V. THIRD NAT'L BANK OF CHATTANOOGA, 144 U. S. 97 (1892)

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U.S. Supreme Court

Gordon v. Third Nat'l Bank of Chattanooga, 144 U.S. 97 (1892)

Gordon v. Third National Bank of Chattanooga

No. 176

Submitted February 29, 1892

Decided March 21, 1892

144 U.S. 97

Syllabus

In an action brought in the Circuit Court of the United States in Alabama, the complaint described the plaintiff as a bank organized in accordance with the laws of the United States and as doing business in Tennessee, and the defendant as residing in the Alabama. The summons described the plaintiff as "a citizen of the State of Tennessee," and the defendant "as a citizen of the State of Alabama." The question of jurisdiction was raised for the first time in this Court. Held that although greater care should have been exercised, by plaintiffs in the averments, the diverse citizenship of the parties appeared affirmatively and with sufficient distinctness in the record.

A promissory note payable to the order of the maker, being endorsed by him, was endorsed and delivered to another for his accommodation. The latter endorsed it and borrowed money upon it, waiving demand and protest. The waiver was stamped upon the back of the note by mistake over both endorsements. Held that the liability of the maker was not affected thereby.

The evidence in this case does not tend to show a contract of extension for a valid consideration, and for a definite and certain time, binding upon the parties and changing the nature of the contract to the prejudice of the maker of the note.

The Court stated the case as follows:

This was an action by the Third National Bank of Chattanooga, Tennessee, against Eugene C. Gordon, upon two promissory notes executed by Gordon and made payable to his own order, and endorsed by him and also by D. G. Crudup & Co. Gordon pleaded the general issue and special pleas by setting up first that the notes were merely accommodation paper for the use and benefit of D. G. Crudup & Co., and that the bank, after notice of that fact and with Gordon's consent, for a valuable consideration, agreed with Crudup & Co. to extend the time of payment of the notes to September 2, 1887, and chanroblesvirtualawlibrary

Page 144 U. S. 98

thence to September 2, 1888, in consideration of a mortgage on certain lots in Chattanooga, together with some land company stock; second, that he did not endorse the notes in manner and form as the bank set forth in its declaration; third, that long after the maturity of the notes, which were executed without other consideration than that of accommodation paper for the use of Crudup & Co., of which the bank then and there had notice, Crudup & Co., by deed of general assignment for the benefit of all their creditors and for the payment of the notes, conveyed a large amount of personal and real property to trustees, with full and ample power to collect, settle, and dispose of the property and pay off all their indebtedness, including the notes, and that thereafter the bank, with notice aforesaid, and without the knowledge or consent of Gordon, agreed with Crudup & Co., in consideration, among other things, of enabling Crudup & Co. to effect a general compromise with all their creditors, to waive its right to have the payment of the notes made by the trustees under the general deed of assignment, notwithstanding the property conveyed was of sufficient value, and could have been disposed of by the trustees for an amount in excess of what would have been necessary to settle and discharge all of their indebtedness, including the notes sued on.

The complaint alleged the plaintiff to be

"a corporation duly and legally organized, in accordance with the laws of the government of the United States of America, under the style and name of 'The Third National Bank of Chattanooga,' in the State of Tennessee, doing business as bankers in the City of Chattanooga in the State of Tennessee,"

and averred that plaintiff

"claims of the defendant, E. C. Gordon, who resides in the County of Limestone, State of Alabama, in the Northern Division of the Northern District of the State of Alabama, the sum of five thousand dollars, with interest,"

etc. This complaint was filed February 16, 1888, and thereupon a summons issued, whereby the marshal of the district was

"commanded to summon E. C. Gordon, who is a citizen of the State of Alabama, to appear before the Hon. circuit court aforesaid at the place of holding said court at Huntsville, on the first

Page 144 U. S. 99

Monday of April next, to answer the complaint of the Third National Bank of Chattanooga, who is a citizen of the State of Tennessee."

There was evidence that the bank did "business at Chattanooga, Tennessee," and that the defendant "lived" or "resided" at Decatur, Alabama.

The notes sued on were as follows:

"$2,500.00 Chattanooga, Tenn. Feb'ry 15, 1887"

"Sixty days after date, I promise to pay to the order of myself twenty-five hundred dollars at 3rd Nat'n'l Bank, Chattanooga, Tenn. value received."

"E. C. GORDON"

Upon the back of this were the following words:

"Demand, protest, and notice of protest waived, and payment guaranteed within five days from date of maturity."

"E. C. GORDON"

"D. G. CRUDUP & Co."

"$2,500.00 Chattanooga, Tenn., Feb'ry 15, 1887"

"Ninety days after date, I promise to pay to the order of myself twenty-five hundred dollars at 3rd Nat'n'l Bank, Chattanooga, Tenn. value received."

"E. C. GORDON"

Upon the back of this note were endorsed the names "E. C. Gordon" and "D. G. Crudup & Co.," and below the endorsement "E. C. Gordon," and above the endorsement "D. G. Crudup & Co.," was stamped in printed letters the following words: "Demand, protest, and notice of protest waived, and payment guaranteed within five days from date of maturity."

It appeared from the testimony that the words on the back of the notes besides the signatures were stamped thereon when the notes fell due at the request of Crudup & Co., to save protest fees and costs; that Crudup & Co. agreed to the waiver and guaranty so expressed, but defendant had nothing to do with that agreement; that it was intended to stamp the words over the name of D. G. Crudup & Co. alone, but in chanroblesvirtualawlibrary

Page 144 U. S. 100

stamping one of the notes, the words were put on upside down (as the note showed), and that, in restamping, they were put over defendant's name also.

The defendant objected to the introduction of the notes in evidence, and also moved to exclude the first one, but the court overruled the objection and motion, and defendant excepted.

It further appeared that the notes were discounted by the bank in the due course of business, and that the bank had no notice that Gord