U.S. Supreme Court
Ray v. Smith, 84 U.S. 17 Wall. 411 411 (1873)
Ray v. Smith
84 U.S. (17 Wall.) 411
1. Although it may be conceded that notice of demand and nonpayment of a note need not be given to an endorser who has received funds from the maker, indisputably and only for the purpose of paying the note whenever presented (an endorser in such a case becoming liable as a principal debtor), yet as such a rule does not apply when the endorser having funds of the maker has them not in that way, but only from the profits of a business in conducting which he was a partner of the maker, and is simply authorized to apply the funds so in his hands to the payment chanroblesvirtualawlibrary
of notes at their maturity, and thus may have parted with them a certain time after the maturity -- in such a case it is error to take away from the jury the question whether the note was legally presented to the maker for payment and whether notice of dishonor was legally given to the endorser. The most that in such a case can properly be asked by the holder of the notes is that the evidence should be submitted to the jury to find whether it proved that the defendant had become the principal debtor by arrangement between him and the maker, with instructions that if it did, the plaintiff was entitled to recover, and that if it did not, the endorser could not be held liable without proof of reasonable demand upon the maker, and notice.
2. Though a party may have taken exception before a trial to the refusal of a court then to suppress a deposition, yet if he allow the deposition to be read on the trial without opposition, he cannot avail himself, in this Court, of his previous exception.
Smith, in November, 1866, sued Ray in the court below as the endorser of two negotiable notes, made by one Harkaway. The notes were both dated April 12, 1861, and were made payable at the Bank of Mobile, one on the 1st day of March, 1862, and the other on the 1st day of November, in the same year. Both the maker and the endorser were then, and continued to be, citizens of the State of Alabama, and the holder of the notes was and continued to be a citizen of the State of New York. When the notes fell due in 1862, they were not presented for payment, in consequence of the war of the rebellion then existing, but they were presented in 1866, a certain time after the close of the war, and were dishonored. Notice of the dishonor was then given to the endorser.
The plaintiff alleged in his declaration, as an excuse for the nonpresentation of the notes at the time when they fell due, the existence of the civil war and the residence of the holder in the State of New York and that of the maker and endorser in Alabama, regions then at war with each other, and alleged further that he had presented the notes and given notice of the dishonor within a reasonable time after the termination of the war, specifying the date of the presentation &c. The defendant set up that the date named chanroblesvirtualawlibrary
was not reasonable in point of time. And evidence was given as to when the war ended and intercourse was resumed, when the notes could have been presented, and when they were in fact presented.
A portion of the evidence (descriptive of the course of business out of which the claim arose) was derived from a deposition of the plaintiff, taken de bene esse, which before the trial the defendant had moved to suppress. The court on this motion refused to suppress it. An exception was taken to this refusal, but on the trial it was read without objection.
It appeared in evidence that the maker of the notes, and Ray, the endorser, were partners in a business which was actively conducted by Ray; that after the notes were endorsed to the plaintiff and before their maturity, Ray had in his hands of the profits of the business, belonging to the maker, a sum larger than the amount of the two notes, that this sum remained in his hands until after the notes matured, and that he was authorized to apply it to their payment, at their maturity. But it also appeared that he could not find the notes at their maturity, nor until the spring of 1866, at which time, as already said, they were presented to the maker for payment, and that before they were thus presented, the maker had instructed the defendant to apply the sum in his hands to the payment of other debts, which the defendant had done.
The court charged:
"If there were no evidence in this case that the maker of the notes in suit had provided the endorser with funds to discharge them at maturity, then the question whether the notes were legally presented for payment and the question whether legal notice of protest was given to the endorser would have had to be submitted to the jury. The evidence on this point is that Ray was provided by the maker of the notes with the means of indemnifying himself against his endorsement. He need not have parted with these means until the notes were paid and in his possession. He chose to do so, however, and cannot now complain of the want of demand on the maker or notice of
protest to himself. I therefore direct your verdict for the plaintiff for $1,124.50, with interest thereon from the 4th March, 1862, and for $1,124.50, with interest thereon from the 4th November, 1862."
To this charge the defendant excepted, and offered to state to the court the grounds of his exceptions; but the court refused any such statement.