William Wait.

A treatise upon some of the general principles of the law, whether of a legal, or of an equitable nature, including their relations and application to actions and defenses in general, whether in courts of common law, or courts of equity; and equally adapted to courts governed by codes (Volume 1) online

. (page 71 of 93)
Online LibraryWilliam WaitA treatise upon some of the general principles of the law, whether of a legal, or of an equitable nature, including their relations and application to actions and defenses in general, whether in courts of common law, or courts of equity; and equally adapted to courts governed by codes (Volume 1) → online text (page 71 of 93)
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Smith) 337. Such a contract or note authorizes the person who
is entitled to receive the goods, to demand them in parcels. lb.
But a refusal to deliver goods to the value of twenty dollars,
which had been packed up in boxes for removal, after the notice
to the party to call for his pay at the vendor's original location,
does not constitute a breach of the contract. lb.

A note, payable in specific articles, may be demanded in par-
cels ; but where an article has been made to order for a customer,
-such article cannot be properly demanded in payment of the
note. Vance v. Bloomer, 20 Wend. 196.

Second. When a chattel note is given, and no time or place of
payment is specified, the holder of the note must make a demand
of the articles at the maker's place of business or sale, before an
action will lie upon the note. lb.; Lobdell v. Hopkins, 5 Cow.
516; Durkee v. Marshall, 7 Wend. 312; Cook v. FerralV s
Admrs., 13 id. 285 ; Counsel v. Vulture Mining Co., etc., 5
Daly, 74.

Where a chattel note specifies a time of payment, but does
not mention any place for it, the note is payable at the residence
of the creditor, if the articles are portable. Goodwin v. Hol-
hrook, 4 Wend. 377. As we have seen, ante, the general rule is,
that the store of the merchant, etc., is the place of payment,
where the contract is silent as to place of payment. But this
rule ceases where the contract is modified by collateral circum-
stances which show that a diSerent place of payment was
intended. When the goods are a subject of general commerce,
and are purchased in large quantities for reshipment, and the
purchaser resides at the place of reshipment, and has at such
place a store-house and dock for that purpose, his place of busi-
ness is ordinarily the place of delivery. Bronson v. Gleason, 7
Barb. 472. Where a manufacturer of salt at Liverpool executed
a writing as follows : "I have this day agreed with Bronson &
Crocker, of Oswego, to sell them one boat load of salt per week,
and delioer the same to them, in good order, equal to four hun-
dred barrels each week, from this time to the first of November
next," etc. ; it was held that, upon the reasonable construction of


the agreement, in connection with the surrounding circumstances,
the salt was to be delivered at Oswego. lb.

Where a note is payable in specific articles, which are to be
delivered by the maker at the residence of the payee, by a time
named, but a timely selection of the articles is to be made by
the payee, who makes no selection, though prior to the time for
payment he instructs the maker not to send any of the articles
until he gives notice of what articles he wants, the maker is not
thereby discharged from his liability on the contract. Oilbert v.
Danforth, 6 N. Y, (2 Seld.) 585. The payee, by such instruc-
tions and failure to select, does not lose his right of selection,
unless the maker, before such right is exercised, has paid the
amount of the note in articles of his own selection. lb. Where
such a note remained unpaid for two years after it became due,
and the payee then named the articles which he required in
payment, and demanded them of the maker, it was held that a
neglect or refusal by such maker, to comply with the demand
in a reasonable time, rendered him liable to pay the amount in
money. lb.

When a chattel note is payable at a particular place, other than
the residence of the promisee, it is the duty of the promisor, after
making the delivery at that place, to notify the promisee of such
delivery, without delay. Newcomh v. Cramer, 9 Barb. 402.

Third. Where such a note is payable on demand, a special
demand is necessary before an action can be maintained upon
it. So a note which is given by one who keeps a saw-mill and
lumber yard, for a specified sum, "payable in lumber, at cash
price, when called for," without mentioning a day or place of
payment, requires a demand at the mill yard, before an action
can be maintained. Rice v. Churchill, 2 Denio, 145. A demand
at the mill yard is sufficient, though neither the maker nor any
one authorized to make the payment, is found there. lb. If,
upon such demand, the maker be absent, it may be made of any
one in charge ; and if there be no such person, it may be made
publicly. lb. The maker of such an engagement is bound to be
at the place of payment at all reasonable hours, prepared to
perform the agreement. lb. When a note is made payable in
" sawing" lumber at a saw-mill, at a certain time and place, and
at the time fixed the maker is absent from the place, and has no
one present to do the work, and the payee is in no manner
responsible for his absence, the note becomes a money demand.
Schnier v. Fay, 12 Kans. 184.


Fourth. When a chattel note specifies a time and place of
payment, it is the duty of the maker to pay the note at such
time and place without any previous demand ; and a neglect or
refusal to do so will render him liable to pay the amount in
money. On a contract for services paid for " out of the store"
of a third person, an action may be maintained without proof of
a demand of payment at such store. Braydon v. Poland^ 51
Me. 323. It will be a good defense to show that the goods were
ready for delivery at the store mentioned. lb. See Loclilin v.
Moore, 57 N. Y. (12 Sick.) 360 ; 5 Lans. 307. Where a note is
payable in ponderous articles, at a day certain, but no place of
payment is specified, the maker of the note ought, if he desires
to make a tender, to seek the payee or holder of the note before
the day of payment, and ascertain where he will have the arti-
cles delivered ; and if a reasonable place is named, he is bound
to deliver them at that place. Burns v. Graham, 4 Cow. 452. If
the note is payable generally, or at a place specified, the articles
ought not to be tendered in bulk, mixed and undistinguishable
from others of the same kind ; but they should be separated and
distinguished, so that the payee may know what to take. lb.

When portable articles are to be delivered in payment of a
chattel note, on or before a specified day, but no place of pay-
ment is specified, the residence of the creditor is the place of
payment. La Farge v. Rickert, 5 Wend. 187 ; Goodwin v. Hol-
hrook, 4 id. 377. But when such a note is payable on demand,
or is payable in articles which are manufactured, etc., by the
maker, the note is payable at the maker's place of business, etc.
Ante, 578.

Where a note which is not negotiable is sued on by any person
other than the payee, the possession of the note in court, at the
trial, by the plaintiff, is not prima facie evidence that the note
was transferred to the plaintiff before the action was commenced,
as is the rule in relation to negotiable paper. Barrick v. Austin,
21 Barb. 241. Notes not negotiable are subject to all equities
which could have been enforced against the payee. Lee v. Swift,
1 Denio, 565 ; Rogers v. Morton, 12 Wend. 484 ; Barrick v. Aus-
tin, 21 Barb. 241.




Section 1. In general. The subject of guaranties in relation
to promises to answer for the debt, default or miscarriage of an-
other will be discussed elsewhere.

In all cases of guaranty there must be a principal, and a guar-
antor or surety. And it is a general rule that the liability of the
surety is merely co-extensive with that of the principal. Though
there are exceptions to this rule, in the case of infancy, and in
other instances in which the principal is not bound by the origi-
nal contract. But, whenever a principal is discharged from his
obligation, by payment, accord and satisfaction, release, or in
any other manner, the surety or guarantor is also discharged.
This result flows from the nature of the contract. A guarantor
merely undertakes to pay the debt of another in case he does
not pay it, and whenever the principal debt is paid or discharged,
the surety is released from his liability. A renewal of a debt,
by taking a new note from the principal, discharges the surety
or guarantor, since the debt which he guaranteed is canceled.

A guaranty is a special contract, and the guarantor is not in
any sense a party to the note. Lamorieux v. Hewit, 5 Wend.
307 ; Mlis v. Brown, 6 Barb. 282 ; Miller v. Gaston, 2 Hill, 188,

A contract of guaranty, though indorsed upon a negotiable
note and drawn in general terms warranting its collection, is not
of itself negotiable ; because the statute which makes promissory
notes negotiable, is not extended to any other instrument relat-
ing to the note. Lamorieux v. Hewlt, 5 Wend. 307 ; post. See
Smith v. Starr, 4 Hun, 123 ; 6 S. C. (T. & C.) 387.

Before the enactment of the Code, an action could not have
been maintained upon a guaranty in the name of any other per-
son than that of the person to whom it was given. lb.

But a contract of guaranty, although not negotiable, is never-
theless assignable, when it is so drawn as to be available in the
hands of any person who may hold the note upon which it is

Where a general guaranty is written upon a negotiable promis-
sory note, and the note is transferred, the sale and delivery of
the note, with the guaranty upon it, furnishes prima facie evi-
dence of the sale of the contract of guaranty. And the posses-


sion of the note and the guaranty is prima facie evidence of a
right in the holder to the guaranty, and will authorize him to
maintain an action thereon, unless it be shown that the contract
of guaranty was not transferred at the time the note was trans-
ferred. Cooper V. DedricTc, 22 Barb. 516 ; and see McLaren v.
Watson's ExWs, 26 Wend. 425 ; S. C, 9 id. 557. But
when a subsequent holder of a promissory note sues upon a
guaranty indorsed thereon, claiming that the guaranty passed
to him on the transfer of the note, it is competent for the
guarantor to show that it was not the intention of the parties
that the guaranty should accompany the note on the transfer
of the latter to the plaintiff, but that, on the contrary, it was
expressly agreed that he should take the note at his own risk.
Gallagher v. White, 31 Barb. 92. S. made a note payable to W.,
or bearer, W. transferred the note to B., in part payment for a
piano, at the same time guaranteeing its collection by an indorse-
ment upon the back thereof. S. failed to pay the note at maturity,
and W. took it up from B. W. subsequently transferred the note
to the plaintiflf, who expressly agreed to take the same at his own
risk. Through inadvertence, however, the guaranty was not
erased at the time of the transfer ; it was held that the guaranty
was a contract between W. and B,, and that when W. paid the
amount of the note to B. and took it up, the guaranty was extin-
guished, having performed its office, and that the plaintiff could
not maintain an action against W. upon such guaranty. lb.

Where a guaranty warrants the payment and collection of a
note to the payee or holder, or bearer, and it is indorsed upon a
negotiable promissory note, such guaranty is negotiable, and
an action could have been maintained in the name of the owner
of the note, upon such guaranty, even before the Code. KetcJicll
V. Burns, 24 Wend. 456 ; Miller v. Gaston, 2 Hill, 188. No no-
tice of dishonor or non-payment is necessary in the case of a
guaranty, as is required by the rules relating to an indorsement.
Brown v. Ourtlss, 2 Comst. 225 ; Allen v. Rlghtmere, 20 Johns.
365. A guarantor and the principal debtor may be sued jointly,
if the principal and the guarantor are both bound by the same
instrument. Code, § 120 ; Carman v. Plass, 23 N. Y. (9 Smith)
286. See Cridler v. Curry, 66 Barb. 336 ; 44 How. 345 ; Field v.
Van Cott, 5 Daly, 308 ; 15 Abb. (N. S.) 349.

But it has been held by the supreme court, that where a guar-
anty and the principal debt are written on different papers, the
principal and the surety cannot be sued together. De Bidder v.


ScJiermerhorn, 10 Barb. 638 ; Allen v. Fosgate, 11 How. 218 ;
Barton v. Speis, 5 Hun, 60.

The terms of a guaranty must be complied with before the
guarantor can be rendered liable upon the contract. Henderson
V. Marmn, 31 Barb. 297. And where a guaranty for the pay-
ment of goods to a specified sum was given, on a credit of six
months, and the goods were furnished, but the vendor subse-
quently extended the time of jyiyment for a part of the amount,
and shortened the time as to the 6ther portion of the debt, and
took the note of the principal therefor, it was held that the surety
was discharged. lb.

Where the person to whom a guaranty is given is bound to do
some act before there is any liability on the part of the guarantor,
such person must show that he has performed the act, or he can-
not maintain an action against the guarantor. Eddy v. Stanton,
21 Wend. 255 ; Taylor v. Bullen, 6 Cow. 624 ; Nelson v. Bost-
wick, 5 Hill, 37. In case of a guaranty, the obligation to prose-
cute the principal debtor within a reasonable time, and with due
diligence, is a condition precedent to the liability of the guaran-
tor. OallagJier v. White, 31 Barb. 92 ; Craig v. Barkis, 40 N.
Y. (1 Hand) 181. A request to prosecute the principal debtor,
when he is insolvent at the time of the request, and so remains,
is not sufficient to discharge the surety. Field v. Cutis, 4 Lans.

Guarantees are sometimes expressed in the form of letters of
request. Such letters are general or special. They are general
when addressed to any or to all persons, without naming any
one in particular. They are special when addressed to one per-
son or firm in particular, by name. When addressed to all
persons, a letter is in effect a request made to any person to
whom it may be presented, and any individual may accept and
act upon the proposition contained in it, and when he does so,
that which was before indefinite and at large, becomes definite
and fixed ; a contract immediately springs up between the person
making the advance and the writer of the letter, and it is thence-
forward the same thing in legal effect as though the name of the
former had been inserted from the beginning. Birckhead, v.
.Brown, 5 Hill, 642, 643, per Bkonson, J.; S. C, 2 Denio, 375 ;
Union Bank v. Coster, 1 Sandf. 563 ; S. C, 3 Comst. 203. A
general letter of credit authorizes any person to whom it is pre-
sented to act upon the proposition therein contained ; and when
any person does act thereon, a contract arises between him and


tlie maker of the instrument, in the same manner as though it
had been addressed to him by name. Union Bank v. Coster^ 3
Comst. 203 ; S. C, 1 Sandf. 563 ; ante, 81, 98.

But where a letter of credit is special, and is addressed to a
particular person or firm, no other person than the one to whom
it is addressed ^n maintain an action upon it, although he may-
have advanced the money upon it. Birckhead v. Brown, 5 Hill,
634 ; S. C, 2 Denio, 375. Such letters are not negotiable. lb.

There must be a consideration for such letters as well as for
any other contracts. But where a letter of credit is issued, the
request which it contains is sufficient consideration if the money
is advanced on it. tfnion Bank v. Coster, 3 Comst. 203 ; S. C,
1 Sandf. 663, and see ante, 81, 98.



Section 1. lu geueraL The negotiability of bills and notes con-
stitutes a most important part of the instruments. It is this
quality which principally distinguishes a bill of exchange or
promissory note from ordinary contracts. By the general rules
of the common law, choses in action were not assignable. But
bills of exchange were an exception, and were assignable at com-
mon law. Promissory notes, however, were not negotiable under
the rules of the common law, but they now are, and for a long
time they have been assignable by virtue of statutes enacted for
that purpose. The term "assignable," as it has been just em-
ployed, is synonymous with the word "negotiable."

Negotiable bills and notes are payable to the bearer of them,
or to the order of the payee named therein. At any rate they
must have terms of negotiability to render them negotiable.
And, when they are negotiable within the rules of law, they may
be transferred from hand to hand so as to give the indorsee or
holder a right of action in his own name, as against any or all of
the antecedent parties to the instrument.

There are many cases in which a chose in action is assignable,
so as to authorize an action in the name of the assignee, if he is
the real party in interest ; but this fact does not by any means
render the right of action which is so assigned, a negotiable

Where a bill or note is payable to a person named, or to hearer,
Vol. I. — 74


a transfer of the instrument may be made by a mere delivery
without any writing. And where a note is payable to B, or
bearer, it may be negotiated by delivery only, even though
indorsed by B. Wllbour v. Turner, 5 Pick. 526 ; Dole v. Weeks,
4 Mass. 451. But where it is made payable to a specified person,
or his order, it must be indorsed by the payee to render it
negotiable. Harrop v. Fisher, 10 C. B. (N. S.) 196 ; Hestom v.
Williamson, 2 Bibb, 83 ; Russell v. Swan, 16 Mass. 314. The
payee of a note may transfer it by an indorsement in pencil
marks. Classon v. Stearns, 4 Vt. 11.

A bill or note payable to the order of the payee may be
assigned without indorsement ; but it thus assigned, instead of
being transferred by a proper indorsement, the assignee will take
the paper subject to all equities, in the same manner as though
the instrument were not negotiable, or as though it were over
due. Billings v. Jane, 11 Barb. 620 ; Hedges v. Sealy, 9 id.
214 ; Houghton v. Dodge, 5 Bosw. 326 ; White v. Brown, 14
How. 282 ; Haskell v. Mitchell, 53 Me. 468 ; Whistler v. Foster,
14 C. B. (N. S.) 248. If a note payable to bearer be indorsed by
the payee, he will be liable as an indorser. Dams v. Wilson,
31 Tex. 136.

The transfer of a bill or note is a contract, and there must be
capacity and assent, to render the transfer valid. Ante, 82,
Assent, etc.

Where a note is payable to a corporation, or its order, and the
note is indorsed by the president of the corporation, and it is
then delivered to the indorsee, it is necessary for the latter to
prove the authority of the president to indorse the note, so as to
transfer the title, when he sues on it, and the indorsement is de-
nied'in the pleadings. Marine Bank v. Clements, 3 Bosw. 600;
31 N. Y. (4 Tiif.) 33. A general resolution sufiiciently broad to
cover the transaction will be sufficient evidence of the president's
authority ; it is not necessary to show an authority for that par-
ticular transfer. Elwell v. Dodge, 33 Barb. 336 ; see Belden v.
Meeker, 2 Lans. 470 ; 47 N. Y. (2 Sick.) 307; Nelson v. Eaton,
26 N. Y. (12 Smith) 410. The contract of an infant is voidable,
and not absolutely void. He may, therefore, indorse a bill or
note so as to transfer the title, though he would not be estopped
from avoiding the liability of an indorser, by pleading his
infancy. Nightingale v. Withington, 15 Mass. 272; Sehel v.
Tucker, 8 B.'& S. 833.

By the rules of the common law, bills and notes belonging to


the wife at the time of the marriage, or at any subsequent time,
belonged to her husband, and he was the proper person to indorse
them. But the statute law of the various States has abrogated these
common-law rules. And a married woman now has as absolute a
title to her property, including bills and notes, as she would have
if she had remained a single Avoman. See Laws of N. Y. 1848,
chap. 200, and as amended, 1849, chap. 375 ; Laws of 1860, chap.
90 ; as amended, 1862, chap. 172. As the law now stands, a mar-
ried woman is the proper person to indorse a bill or note which be-
longs to her, and which is payable to her order. And when it is
her property, and it is payable to herself, or bearer, she is the
proper person to transfer it by delivery. In short, all bills and
notes which belong to her should be indorsed or transferred by
her in the same manner as though she were an unmarried woman.
See Married Women; Husband and Wife.

On the death of the holder or payee of negotiable bills or notes,
his executor or administrator becomes vested with the title, and
he has the right and power to transfer them by an indorsement,
or by a delivery, when that is sufficient. RaioUnson v. Stone^
3 Wils. 1 ; S. C, 2 Strange^ 1260; and see 2 Burr. 1225. Au
administrator may indorse and transfer a note payable to his in-
testate, and the indorsee may maintain an action on the note in
his own name. Cahoon v. Moore, 11 Vt. 604 ; Griswold v. Bar-
num, 5 id. 269 ; Morse v. Clayton, 13 Sm. & Marsh. 373 ; Cryst
V. Cryst, 1 Smith (Ind.), 370. Such indorsement is valid, and
may be enforced in any other State. Graw v. Hannah, 6 Jones
(Law), 94. A transfer of a note due to an estate by an administra-
tor, in payment of his own debt, gives to the assignee with notice
no right of recovery. Scott v. Searles, 7 Sm. & Marsh. 498.

Where a bill or note belongs to a person, and it is in his pos-
session at the time of his death, no person but his executor or
administrator can transfer the title to it to a third person* lb. ;
Lounshury v. Depeio, 28 Barb. 44 ; Heldenlieimer v. Wilson, 31
id. 636 ; Edwards v. Campbell, 23 id. 423. Executors and
administrators hold the bills and notes of the testator, or intestate,
in a representative capacity ; and consequently, each of them
represents the deceased, and the act of each is binding upon the
estate when he transfers such bills or notes. A transfer by one
of several executors or administrators is as valid as a transfer by
all of them. Bogert v. Hertell, 4 Hill, 492 ; S. C, 9 Paige, 52 ;
and see Meakings v. Cromwell, 1 Seld. 136 ; Murray v. Blatcli-
ford, 1 Wend. 583. But the right to indorse a bill or note for


the purpose of transferring it does not include the power to in
dorse notes generally so as to bind the estate. And where an
executor or administrator assumes to bind the estate by giving a
note as executor or administrator, he must be careful to employ
language which shows that the note is payable out of the assets
of the estate, or that he makes the note in a representative
capacity ; or he will be personally liable to pay it. CMlds v.
Monins, 2 Brod. & Bing. 460 ; Powell v. Graham, 7 Taunt. 580 ;
King V. Thorn, 1 Term, 487. Administrators who have given a
note for the debt of their intestate cannot be made personally
responsible for its payment, unless it is shown that they have
assets, or that forbearance was the consideration of the note.
Bank of Troy v. Topping, 9 Wend. 273. A note given by an
executor or administrator is 'prima facie evidence of assets,
though the presumption may be rebutted, and it may be shown
that there was a deficiency of assets. Bank of Troy v. Topping,
13 Wend. 557 ; see Sims v. Stillwell, 3 How. (Miss.) 176 ; Rucker
V. Wadlington, 5 J. J. Marsh. 238. One who signs an order "A B,
administrator," with nothing to show or designate the deceased
person or estate, will be personally liable as drawer. Tryon v.
Oxley, 3 Iowa, 289. Transfers of bills and notes by corporations,
or to them, are of frequent occurrence. An indorsement of a note
by the holder, in these words : " Pay to E. O., cashier, or order,"
made upon the purchase of it by the bank of which E. O., was
cashier, is a legal transfer of the note to the bank. Watervliet
Bank v. Wliite, 1 Denio, 608. An officer of a corporation, to
whose order, as such, a note executed to it is payable, and who
indorses the note, adding to his name his official character, and
negotiating it on behalf of the corporation, is not personally re-
sponsible as indorser. The effect of such an indorsement is merely
to transfer the paper. Babcock v. Beman, 11 N. Y. (1 Kern.)
200; "S. C, 1 E. D. Smith, 593 ; Mott v. Hicks, 1 Cow. 513. A
bill drawn payable to an individual as cashier, is in judgment of
law, payable to the bank of which he is an officer. Bank of
New York v. Bank of Ohio, 29 N. y. (2 Tiff.) 619. An assignee
of an insolvent estate, who indorses a note as "assignor" in the
transfer of a note belonging to the estate, is not personally
liable. Bowne v. Douglass, 38 Barb. 312. An indorsement of a
bill or note usually operates as a transfer of the instrument, and
it also constitutes an agreement by the indorser to pay the instru-

Online LibraryWilliam WaitA treatise upon some of the general principles of the law, whether of a legal, or of an equitable nature, including their relations and application to actions and defenses in general, whether in courts of common law, or courts of equity; and equally adapted to courts governed by codes (Volume 1) → online text (page 71 of 93)