Bank of Conway v. Stary

Plaintiff bank is the holder and payee of the note involved; defendant Stary is the maker thereof. Defendant Sutherland is an accommodation endorser in blank of the note before delivery. The note on its face bears the printed words, — "The makers and endorsers each guarantee the payment of this note and waive demand, protest, and notice of nonpayment, and consent to any extension of time of payment or renewal thereof without notice." Defendant Stary did not put in a defense and is in default. The defense of defendant Sutherland is that after the maturity of the note and while defendant Stary was wholly solvent defendant Sutherland demanded of the plaintiff that it proceed to collect the note against said defendant Stary; that plaintiff neglected and refused to proceed to collect from said defendant Stary and that by reason thereof defendant Sutherland has been wholly discharged from his obligation on the note. During *Page 415 the course of the trial various efforts and offers made by defendant Sutherland to establish his defense were refused by the trial court. Thereupon, upon the suggestion and consent of counsel, the trial court entertained a motion for judgment upon the pleadings and granted the same, taking into consideration also the evidence introduced. It is the contention of defendant Sutherland upon this appeal that he, as endorser upon the note, is entitled to the privileges of §§ 6675 to 6689, Comp. Laws 1913, relating to sureties, and particularly § 6683 which provides that a surety may require his creditor to proceed against the principal or to pursue any other remedy in his power which the surety can not himself pursue and which would lighten his burden; and if in such case the creditor neglects to do so, the surety is exonerated to the extent to which he is thereby prejudiced. Defendant's assertion is that by reason of these statutory provisions his answer set forth a defense of exoneration.

The contract of endorsement made by defendant is governed by the provisions of the Uniform Negotiable Instruments Act adopted without change by this state in 1899. Comp. Laws 1913, §§ 6886-7010; Laws 1899, chap. 113.

The question presented, therefore, is whether an accommodation endorser, governed and bound by the provisions of this Uniform Act, is entitled to exoneration as a surety by reason of proceedings had, under statutory provisions relating to sureties, and, particularly, § 6683, Comp. Laws 1913.

Fundamentals considerations are first involved concerning the purposes of such Uniform Act, as adopted without change in this jurisdiction, and concerning its status in connection with the cognate law upon principles of uniformity pursuant to the legislative purpose involved in its adoption.

It is now well known, as revealed by a host of authorities, that the legislative purpose in adopting this Uniform Act in the various states was to harmonize the law and to establish uniformity therein throughout the states of the Union upon the subject of negotiable instruments. See 5 Thompson Co. Uniform Laws, Anno. p. 8. In subserving this fundamental purpose and in promoting the plan of legislative uniformity among the states upon the subject matter, this Uniform Act has generally been considered by the courts as an act furnishing within *Page 416 itself a guide for the determination of all questions relating to negotiable instruments: That in giving consideration to its provisions it is unnecessary to make strained constructions in order to harmonize earlier statutes or judicial decisions. In effect, the Uniform Act is a codification of the law relating to negotiable instruments. In consequence, the Uniform Act must be treated and considered as a corporate body of law controlling all cases to which it is applicable. See Columbian Bkg. Co. v. Bowen,134 Wis. 218, 114 N.W. 451; National City Bank v. National Bank,300 Ill. 103, 22 A.L.R. 1153, 132 N.E. 832; First Nat. Bank v. Miller, 139 Wis. 126, 131 Am. St. Rep. 1040, 120 N.W. 820; Elsey v. People's Bank, 168 Ky. 701, 182 S.W. 873; See 5 Thompson Co. Uniform Laws Anno. p. 11.

This Uniform Act is now in force in every state of our Union excepting one; it is in force in some of our Territories; it has been adopted, in word or substance, in many foreign countries; it has received International recognition. The high juristic service performed by the National Conference of Commissioners on Uniform State Laws in drafting this Uniform Act and in aiding the legislative adoption of the principle of uniformity as applied to negotiable instruments has received practically universal recognition.

Accordingly, if the underlying principle of uniformity involved so universally recognized by legislative enactment and legislative purpose, may be conserved, it must be by judicial interpretation and construction consonant with principles of uniformity expressly recognized by the uniform legislative enactments. Otherwise, judicial interpretation and construction may destroy effectively the very purpose for which the Uniform Act has been adopted.

Consistent with the general thought and purpose, above expressed, this court has said, concerning this Uniform Act, that "It is indeed quite important that the interpretation by the courts of the various states of the provisions of the Negotiable Instruments Act shall be as uniform as is now the act itself." First Nat. Bank v. Meyer, 30 N.D. 388, 397, 152 N.W. 657; that "The Negotiable Instruments Act was adopted by the different states to secure uniformity on the important subjects covered by the act. This being so, not only should the rule of stare decisis apply with full force but great weight should be given to the harmonious decisions of other states construing provisions of the *Page 417 act. Scandinavian American Bank v. Westby, 41 N.D. 276, 295, 172 N.W. 665.

In the light of these considerations, it is obvious that if the provisions of this uniform act concerning negotiable instruments are to be interpreted and construed in the light of extraneous statutory provisions of the cognate law existing in the various states, then the very principle of uniformity sought to be attained will be obviated by diverse constructions and interpretations of the various states dependent upon the cognate law considered and made applicable to the language and provisions of the uniform act itself. Obviously, such course of procedure, if followed by the courts, will destroy the legislative purpose involved in the adoption of the act and will simply serve to establish a trap for the unwary by having an act, uniform in language but diverse in application. Upon such considerations, the question may now be approached concerning the right of an accommodation endorser to rely upon a statutory provision concerning sureties merely because his relation as accommodation endorser involves a consideration of the law of suretyship.

In the instant case the defendant, as an accommodation endorser, is bound by the provisions of the Uniform Negotiable Instruments Act. He does not seek to assert nor to prove any other contract existing with the plaintiff, the payee, other than such as the Negotiable Instruments Act has created. Accordingly, the defendant, by reason of his position as an accommodation endorser, seeks to read into the Negotiable Instruments Act the statutory provisions of law relating to sureties, upon the ground and for the reason that his position, under the pleadings and the evidence, is that of a surety.

Under the Negotiable Instruments Act the engagement of the defendant as endorser was to pay this note upon due presentment and after due notice of dishonor. Uniform Negotiable Instruments Act, § 66. This was a primary and independent obligation. The endorsement made by defendant was a general endorsement without restriction, condition or qualification. Defendant, by placing his signature upon the back of the note, without clearly indicating by appropriate words his intention to be bound in some other capacity, is deemed to be an endorser. Uniform Negotiable Instruments Act, § 63. The accommodation character of his endorsement did not change his obligation as an endorser to a holder for value. Uniform Negotiable Instruments Act, *Page 418 § 29. By endorsing his name in blank on the back of the note defendant assumed the stipulations contained in the body of the note. Thus he guaranteed the payment of the note, waived presentment and notice of dishonor, and consented to any extensions of time or renewal thereof without notice. Phillips v. Dippo, 93 Iowa 35, 57 Am. St. Rep. 254, 61 N.W. 216; Mooers v. Stalker, 194 Iowa, 1354, 191 N.W. 175; Scott v. Smith, 35 Idaho, 388, 206 P. 812; Owensboro Sav. Bank v. Haynes, 143 Ky. 534, 136 S.W. 1004; 5 Thompson Co. Uniform Laws Anno. p. 396. See Farmers M. State Bank v. Behrens Mfg. Co. 50 N.D. 850, 198 N.W. 467. As endorser defendant, under the terms of the uniform act, was entitled to be released from his obligation only as therein prescribed. Uniform Negotiable Instruments Act, §§ 119 and 120 (Comp. Laws, §§ 7004, 7005). Defendant does not seek release under these provisions but under foreign statutory provisions applicable to sureties.

It is clear that within the terms of the Negotiable Instruments Act defendant's position on the back of this note was that of an endorser; not that of a guarantor or of a surety. This position was governed by the uniform law applicable to endorsers. The fact that he assumed the engagement of a guarantor, as contained in the body of the note, did not restrict, qualify or condition his liability as endorser upon the back of the note. Jones County Trust Sav. Bank v. Kurt, 192 Iowa, 965, 182 N.W. 414; Elgin City Bkg. Co. v. Hall, 119 Tenn. 548, 108 S.W. 1068; Thompson Co. Uniform Laws Anno. p. 318.

Under the plain language of the Negotiable Instruments Act defendant's signature in blank upon the back of the note created for him the engagement of a general endorser. As such, pursuant to the terms of the act, he was not entitled to affect or release this engagement to pay the note by requiring the payee to proceed against the maker and upon the payee's neglect so to do, to be exonerated concerning such engagement, to the extent of the prejudice resulting. Such an engagement can be created for the defendant as an endorser only by reading into the Negotiable Instruments Act the statutory provision applicable to sureties and guarantors and disregarding his obligation as endorser. I am clearly of the opinion, for the reasons stated, that the defendant Sutherland was not entitled to rely upon or to invoke the statutory *Page 419 provisions relating to sureties in order thereby to release and discharge his contract as endorser. The judgment should be affirmed.