University Press, John Wilson & Son, Inc. v. Williams

Barrett, J. :

The action is brought upon two promissory notes, made by Stone & Kimball, a domestic corporation, to its own order, and indorsed by it and by the defendant. When the note matured, it was held by a New York bank whose notary protested it and sent notice of dishonor to the plaintiff, who was a subsequent indorser. The latter’s treasurer, White, who resided at Cambridge, Massachusetts, then mailed a similar notice to the defendant in the care of Stone & Kimball, at the latter’s business address in the city of New York. The defendant, however, neither resided, in the city of New York, nor had a place of business there. He resided in Washington, D. C.; and has resided there since 1881, with the exception of the years 1892 and 1893, when he resided in England. He came to New York occasionally, stopping at various hotels, but had no place here where he received mail matter, except when he was stopping at a hotel. He never in fact received any notice of dishonor.

The question is, was there due diligence to ascertain the defendant’s residence ? Upon undisputed facts, this is a question of law. The notary who protested the note also mailed notices of dishonor to the defendant at “New York, N. Y..,” and “Boston, Mass.,” but he made no inquiry and did nothing whatever to ascertain the defendant’s residence or place of business. He simply mailed notices of dishonor to him at haphazard; and neither of these notices was, as we have seen, addressed to his residence or place of business. The notice- given to the plaintiff by the notary was, however, sufficient; and upon its receipt the plaintiff was entitled to the same time to notify the defendant as the bank had had to notify it. It was not- necessary that the notice should come to the defendant from the bank; and the notary’s insufficient notice to the defendant would have been harmless had the plaintiff’s notice to him been sufficient. The rule is that the notice suffices if it be given, after the dishonor, by one who is, on its payment and return to him, entitled to reimbursement from the preceding indorser. (Chit. Bills, 494.) There is the further rule that where, at the time of the dishonor, the holder is ignorant of the proper address of the party to be notified, it will be sufficient if the notice is given on the day succeeding that on which such holder, after exercising reasonable diligence', is in a position to give notice. (4 Am. & Eng. Ency. of Law [2d ed.], 436, and cases there cited.) This further rule is equally applicable to one who, upon taking the note up, becdmes entitled to reimbursement from the preceding indorser.

The difficulty here is, that the' plaintiff used no greater diligence to ascertain the defendant’s residence or place of business than did the notary. Like the latter, it trusted to chance. Being ignorant of the defendant’s proper address, its officers were bound to make reasonable inquiries in endeavoring to ascertain it. They could not allow themselves to remain “ in a state of passive and contented ignorance.” (Chit. Bills, 492, 493, quoting an observation of Lord Ellenborough in Bateman v. Joseph, 2 Camapb. 461.) Their duty was, at least, immediately to apply to the other parties to the note for information. (Id.) Mr. Daniels (citing numerous cases) says that “ in seeking to ascertain the whereabouts of the indorser or drawer, in Order to communicate notice, inquiry should be made of the-maker or acceptor ” (2 Daniels Neg. Inst. [4th ed.] § 1116); and he adds: “ It is desirable that this rule should be strictly observed, as well for the sake of uniformity as for the reason that it secures diligence.” An exception to the rule is where, ‘Mrom previous answers of parties likely to know, the holder had received any information sufficiently reliable.” (Id. § 1117.)

Mr. White concedes that he had here no definite or reliable information. This is his testimony upon the subject: “ I understood that General Williams was more or less coming and going. He was in Washington at times and in New York at various different times, and he was abroad a great deal, and at this particular time £ think he was staying at a place called Hartsdale with Mr. H. I. Kimball, the president of the Stone & Kimball Co. It was either at Hartsdale or at the Albermarle in New York. I understood it was his ,custom to stop with Mr. Kimball when he was in New York. And I mailed it to him at 139 Fifth Avenue.”

A note to Mr. Kimball, or to the Stone & Kimball Company, asking the required information, would have been a reasonable inquiry. It would have been as easy to write such a note to that company as to send such a notice to the defendant in its care. Mr. White could also have written the defendant’s attorney, a Mr. Whitford. He knew that the latter was the defendant’s attorney in New York city, for he testified to a conversation with the defendant and this attorney, upon the subject of these notes, prior to their maturity.

His own and his company’s non-residence did not absolve him from making these inquiries. Inquiry cannot well be called reasonable which is limited to the residence of the foreign holder. It is surely not due diligence to inquire outside the pale of possible information. Nor can the probable futility of inquiry at the holder’s residence absolve him from any inquiry at all. It cannot even inconvenience him to make inquiries by letter of an accessible maker or of other accessible persons who, from their connection with the transaction or parties, are likely to be informed. (Daniels Neg. Inst. § 1115.) As already suggested, too, the law extends the holder’s time to give the indorser notice while he is making such inquires and exercising reasonable diligence to procure the proper information. As no inquiry was here made or diligence shown, it is clear that the plaintiff must fail on this branch of the case.

It is, however, contended- that there was a waiver of the notice. But that question is not in the case. The plaintiff relied upon demand and notice of non-payment. That is what it pleaded and what it attempted to prove. The case was tried upon the issue of diligence raised by the defendant’s denial of notice; and the proof on both sides related solely to that issue. It was only after the defendant had rested that the plaintiff in rebuttal introduced the testimony upon which it now claims waiver. This testimony fob-lowed its rebutting evidence on the question of diligence. Indeed, it seems- to have got into the case merely as a part of the conversation relating to this actual issue. When both sides had rested the learned trial justice at once observed: “ If you will both make a motion for a direction, I will look at the question of notice.” The counsel assented, each saying: “ I make such motion.” The justice then said : “ Both sides make the motion and both sides may hand me in anything on the subject and I will look at the matter.” Clearly the subject and matter referred was “ the question of notice,” which the- learned justice had just said he would look at.. This could not well have been otherwise, for if the plaintiff had relied upon thé ■ waiver there was'a question of fact for the jury. The defendant upon his original cross-examination had denied any promise to pay, made before maturity. The learned justice did not ask the counsel to move for a direction in order that he might solve.the question of of fact as to whether such a promise was so made. There was no question of fact upon the issue of diligence, as the evidence on that subject was undisputed. Had the learned justice suggested that both sides should move for a direction, and that he would then look at the questions of notice and waiver, the.defendant’s counsel could have objected, first, that the question of waiver was not in the case; and, second, that if it were deemed in the case, he had a right to go to the jury upon it.

It is entirely obvious, therefore, that no such question was presented to the learned justice, and that his record direction was simply a ruling that, as matter of law, diligence had been made out. His opinion is not part of the record;. and, if it were, it is open to the criticism, not only that it discusses, a question .which was not submitted to him by the motion for a direction which he himself had invited and limited, but that it entirely overlooked the defendant’s contradiction of the testimony upon which the opinion as to waiver was expressed. . The learned justice discusses the question of diligence and notice and then says: “ It also appears in the case without contradiction, * * * that Mr. White, the treasurer of the plaintiff, had a conversation with the defendant and Mr. Whitford, his attorney, in reference to said notes at the office of the Stone & Kim-ball Co., and that both then and there assured Mr. White that he need not be worried about the failure (of the company) as these notes would be paid by Mr. Williams, * * * who was abundantly able to meet them.” Mr. White’s precise testimony was this: “ I think they both (defendant and Whitford) assured me that these notes would be paid by General Williams, and I had no cause to worry or get. excited.” Mr. Williams’ testimony was: “ It is not the fact that I saw him (White) before the notes were protested. * * * Q. Didn’t you at that time tell Mr. White before the notes became due that the notes would be paid by you ? A. No.”

It is, therefore, impossible to sustain this direction. It was erroneous upon the question of diligence and notice ; and no other question was pleaded, presented for decision, or^so far as appears on the record — decided.

The judgment and order must be reversed, and a new trial ordered, with costs to the appellant to abide the event.

Van Brunt, P. J., and Rumsey, J., concurred; O’Brien and Ingraham, JJ., dissented.