State Trust Co. v. Owen Paper Co.

Field, C. J.

This case was tried by the court without a jury, and comes before us on report. The court found for the plaintiff, and assessed the damages.

There was no variance between the note introduced in evidence and the note described in the pleadings. Taking the declaration and the replication together, they correctly describe the facts concerning the form of the note as they appeared when it was offered in evidence,* and b)the law of Massachusetts, which was the only law of which the court could take notice at the stage of the case when the objection of a variance was made, the indorsement of the plaintiff after action brought was imma*160terial. Austin v. Boyd, 24 Pick. 64. Pearson v. Stoddard, 9 Gray, 199. Brown v. Butler, 99 Mass. 179. Baldwin v. Dow, 130 Mass. 416.

The plaintiff put in evidence a paper signed by the defendant Sarah B. Cone, which was a waiver of demand, protest, and notice. By the law of Massachusetts, on the facts then appearing this defendant was an original promisor; but, under Pub. Sts. c. 77, § 15, to fix her liability she was entitled to have due demand made on the signer of the note, and due notice of such demand, and of its non-payment by him, unless she waived this right; and the paper was evidence that she had waived it. Upon the evidence introduced by the plaintiff it is manifest that the court, could not rule, as matter of law, in favor of the defendant. Besides, the defendant did not rest on this evidence, but after-wards introduced evidence, and therefore could not compel the court to rule upon the plaintiff’s evidence.

Some evidence of the law of New York was afterwards, introduced, we infer by the defendant, and the court found as follows : “ By the law of New York, where the note had its inception and was payable, a person who signs his name on the back of a negotiable note payable to the order of any party, and before the delivery of such note to the payee, is presumed to have signed with the intention of assuming the liability of a second indorser, and expecting the payee to indorse in full above his indorsement, and expecting to have recourse to the payee if compelled to pay the note, and that the payee cannot therefore enforce the note against such an indorser in the absence of evidence of a different understanding, but that this presumption is prima facie only, and may be rebutted or overcome by evidence showing that the indorser indorsed the note with the purpose of giving it credit with the payee, or intending to assume the position of indorser as toward the payee, or as surety or accommodation indorser for the maker with the payee, and that in any of these cases the payee may indorse the note without recourse and recover against such indorser, and that in the trial of causes in New York the indorsement of the payee without recourse may be put on at any time before judgment, or, being merely formal, will be assumed to be made. I also find that by the law of New York an indorser before delivery of a non-negotiable note is liable to the payee on the note as maker or guarantor.”

*161The report recites that these findings as to the law of New York were not objected to by either party, and the evidence on which these findings were made is not before us.

The plaintiff, in rebuttal, put in evidence the answers of the defendant Sarah B. Cone to interrogatories filed by it, and also evidence that the indorsement of the plaintiff put on after suit brought was in “ the handwriting of one J. Q. Adams, the secretary of the plaintiff company.” The court found as follows: “ I find upon the defendant’s answers to the interrogatories to her, hereto annexed, and the said paper A (waiver of demand and notice), that the said defendant Sarah B. Cone signed her name on the back of the note in suit at her husband’s request and to accommodate him either personally or as treasurer of the said Owen Paper Company, and that she intended that her husband should use the note and intended to give her credit to any one who might loan money on it. I do not find that she had any affirmative intention to assume merely the position of indorser after the plaintiff, nor had she any special affirmative intention as to this plaintiff particularly, in any way beyond that above stated, i. e. her intention to give her credit to any one who might loan money on the note.”

The court also found as follows: “ I find that if the note is negotiable, which I do not decide, — no evidence as to the law of New York was put in by either party on this point, — the plaintiff was entitled by the law of New York to indorse it without recourse and to hold the defendant liable as indorser; and if the note is not negotiable, then I find the defendant is liable thereon by the law of New York to the plaintiff as guarantor, and on the whole case that the plaintiff is entitled to recover from the defendant the amount of the note and interest.” The defendant objected to the findings as. to her liability, as not warranted by the evidence and the law of New York.

The report was amended, with the consent of the presiding judge, by a stipulation of the parties to the effect “ that the law of New York regarding the negotiability of a promissory note is as stated in the case of Hodges v. Shuler, 22 N. Y. 114.”

We assume, in favor of this defendant, without deciding it, that whether this is a negotiable promissory note, so far as the rights of the parties to it are concerned, is to be determined by *162the law of New York, and that by that law the note should be considered as negotiable.

The defendant made twenty requests for rulings. The principal contention of the defendant is that the contract was to be governed by. the law of New York, but this was the rule adopted by the court. All rulings requested on this subject have therefore become immaterial.. The only requests which we think require to be noticed are the requests for rulings “ that the legal effect of said waiver [waiver of demand and notice] was to excuse the making of demand and giving notice of dishonor, and beyond that it is evidence of nothing ” ; and “ that there is no evidence of the" indorsement of the State Trust Co. except evidence that it was written by the secretary, and there is no proof that he had any special authority to make the indorsement.” We think that the paper A, which was signed by this defendant, and was directed to the State Trust Compan}’, and in which she states that she is an indorser and waives demand, protest, and notice, was some evidence against her that she understood that she was such an indorser as by due demand and notice could be held liable on the note to the State Trust Company. The signing of such a paper was open to explanation, undoubtedly, but the explanation might not be satisfactory.

The court having found “ that in the trial of causes in New York the indorsement of the payee without recourse may be put on at any time before judgment, or, being merely formal, will be assumed to be made,” it was immaterial whether the secretary of the company had special authority to make the indorsement. It is not worth while to consider whether as secretary he had any such authority by virtue of his office, because the company by insisting upon the indorsement at the trial ratified what he had done.

The form of the note itself was some evidence that it was to be used in borrowing money of the plaintiff, and the whole evidence was sufficient to warrant the finding of the court in favor of the plaintiff. The defendant Sarah B. Cone was president of the Owen Paper Company, and had held that office since June, 1864, and with her husband owned nearly all the stock of the company. The note not only promises to pay to the order of the plaintiff, a trust company, the sum of twenty-five thousand dollars, but it recites that “ 25 shares Owen Paper *163Co. stock ” have been pledged to the plaintiff as security, “ with authority to sell the same on non-performance of this promise, in such manner as they [the plaintiff], in their discretion, may deem proper, without notice, . . . and to apply the proceeds thereon,” etc.; and authority is given to the plaintiff to purchase at the sale, if at public auction, and it is agreed that the securities, or any substitutes therefor or additions thereto, are to be held as collateral, and be applicable to any “ other note or claim held against us by said company,” etc. It is plain that the court could have found from the fact of this defendant having indorsed a note of this form before it was delivered to the payee, who is the plaintiff, that she expected it would be used to obtain a loan-of money from the plaintiff, and understood that her name was required as additional security to the plaintiff that the note would be paid. There should be judgment on the finding.

So ordered.

The note offered in evidence bore, in addition to the indorsements set forth in the declaration, an indorsement purporting to be by the plaintiff, “ without recourse,” written above the names of the defendants Cone.