The condition of the liability of the indorser of a promissory note is, that if, upon due demand, the note is not paid by the maker, the holder shall give him notice thereof, in order that he may take measures for his own security or protection.
The use of due diligence, by the holder, to bring such notice home to the indorser, stands, by law, in the place of actual notice, even though it be ineffectual, and fails to bring home knowledge to the indorser.
In all cases, then, in which the indorser fails to receive notice (he having done nothing to waive or dispense with it), the question of liability becomes one of diligence. Has the holder used reasonable diligence to give the indorser notice? *Page 189
That is a question partly of fact and partly of law, and must be determined according to the circumstances of each case.
What will constitute reasonable diligence, in every supposable set of circumstances, cannot be decided by any unvarying rule. Certain efforts, when proved to have been made, have been passed upon by the courts, and, prior even to adjudication, been so accepted by mercantile usage and acquiescence, that they may be stated as rules for the guidance of all holders of bills, and the instruction of all indorsers, and, it will be seen, that they adapt themselves to the changes in the condition of things, and to the conveniencies and necessities of business.
Thus, in the earlier history of the subject, it was necessary to carry the notice, or send it by some messenger, so as to be able to prove its delivery. When communication was established by regular post, under such governmental or official responsibility, that a presumption of safe carriage was warranted, and the usages of business men to take their correspondence from such officials, in due course, were recognized, then, reasonable diligence was held satisfied by the immediate dispatch of notice by the post, properly addressed, to the indorser.
So, delivery of notice, at the residence or usual place of business, is held reasonable diligence, because the habits of business, and of life, make it unreasonable to require the holder to pursue the person to whatever place he may, at the time, happen to be, and, also, because, presumptively, and according to the ordinary experience of men, a notice so left will come to his hands.
And so, also, when the residence is unknown, then diligence, in the endeavor to find the person, or to learn his residence, or place of business, is deemed all that it is reasonable to require, and that will stand in the place of notice.
Every relaxation of the rule, that actual notice shall be given, is founded on the idea, that reasonable convenience in respect to the mode of giving the notice, and reasonable diligence in the endeavor to bring it home to the indorser, *Page 190 should stand instead thereof, or be deemed equivalent to actual notice; and, therefore, it shall avail to the holder whether it is effective in bringing notice home to the indorser or not.
But, immediately out of this relaxation grows another correlative right of the indorser to prescribe the place to which such notice may be sent, when he makes his indorsement. He enters into the contract, presumptively, with knowledge that he may receive personal notice, or that the notice may be sent to his residence or place of business. He knows what contingencies may happen under which notices, so left, may fail to reach him in due season. He may know of arrangements of his own, which make it important that, in order to reach him in due season, the notice should be forwarded or delivered at a particular place.
Now, it is settled that, if he designate such place, the holder may give notice at that place. This is so settled, because it is reasonable diligence on the part of the holder to deliver the notice at the place where the indorser has appointed to receive it, and because, to hold that such notice is not sufficient, is to permit the indorser to mislead the holder, and practically to defraud him.
The designation of the place by underwriting, at the time of his indorsement, is, therefore, an invitation to the holder to deliver a notice addressed to him as indorser at that place, and concludes him so that he may not deny that, for all the purposes and conditions of the indorsement, that shall be deemed his residence or place of business.
If he has actually removed, and that fact is known to the holder, another question would arise, but in the first instance it is clear that a notice at that place should be deemed sufficient to bind him.
Why then should not the obligation of the holder, who accepts an indorsement with such a designation, and the obligation of the indorser, who makes the designation, be reciprocal?
I think they are, and that such designation should be deemed a qualification of the indorsement, and import that notice shall be personal or by delivery at the place designated. *Page 191
If this be so, then the decision of this case does not depend upon the particular construction of our statute of 1855, but upon a broader inquiry. Thus, before our statute, if the indorser resided in the same town or city with the party seeking to charge him, the notice must be given by actual delivery to him or at his residence or place of business; and a delivery, if not personal, would be sufficient at the place designated, and in my opinion must, in order to charge him, be delivered there.
If they did not reside in the same town or city, then a notice sent by mail — and, in order to that, deposited in the post-office — addressed to him at the city or town in which he resides was sufficient; and, if there be more than one post-office in the same township, then addressed to the post-office at which the indorser usually receives his letters.
Now our statute has substituted a deposit of the notice in the post-office, in the same city or town in which presentment for payment is made, "directed to the indorser at such city or town" for the actual carriage or sending the notice by a messenger to the residence, in certain cases and among them, "whenever the residence or place of business of such indorser shall be in such city or town."
I apprehend that all that was intended by this statute (in its bearing upon this case) is, that, in view of the perfection of our postal system and the general certainty that men of business will receive letters directed to them coming into our post-offices, such deposit of notice shall be accounted reasonable and sufficient diligence to notify an indorser as well when he resides in the same town as when he resides in another; and that the statute has no bearing whatever upon the right of the indorser to designate the place to which the notice shall be addressed, the right of the holder to act in pursuance of that designation, the binding effect of such a designation on the indorser, or the obligation of the holder who accepts an indorsement so qualified.
And, therefore, as well when the parties do not reside in the same city or town as when (according to our statute) they do, or in short whenever notice is sent by mail or deposited *Page 192 in the post-office, the notice must be directed to the indorser, not only at the city or town, but to the specific place designated by the underwriting.
In our cities and large towns, where there are often many persons of the same name, such underwriting is very important as a descriptive designation of the indorser, and not only appoints the place where the indorser desires to have the notice come, but tends to identify the person who is entitled to the benefit of the notice.
I think, therefore, that a compliance with what is said to be the letter of the statute, by writing the name of the indorser and the name of the city, is not satisfying the requirement that reasonable diligence should be used, and that a just interpretation of the statute requires that the words "directed to the indorser at such city or town" includes as a part of such "direction" conformity to the prescription which the special indorsement imports.
To the suggestion that the holder ought not to be compelled to take the risk of the handwriting of the indorser, and that if he direct the notice to the designated place, it may turn out that the indorser has no residence or place of business there and did not write nor authorize such designation, it will suffice to say that no party is bound to accept such an indorsement; he acts voluntarily in accepting the note or bill and in giving faith to the indorsement. If he takes it he necessarily assures himself (so far as he deems it necessary or prudent) of the genuineness of all the signatures on which he relies, and yet the signature of a supposed indorser may not be genuine; the holder is at that risk. So in reference to the authenticity of any qualification of the indorsement. He acts voluntarily and may rely upon it or not at his election, and ought to be bound by it.
I think the judgment should be affirmed.