STUBBS V. COLT.
417
STUBBS,
Ex'x,
'lI. COLT.
(Oircuit Oourt, D. Oonnecticut. March 26,1887.) 1. NEGOTI!L"'(\Llll INSTRUMENTS--DISIl:ONOR OF NOTE-NOTICE TO INDORSER.
In Georgia (act of February 28, 1676, 4) notice of the of a promis!!orynote need not be given to the indorser unless the note is made for the purpose of negotiatioh, or is intended to be negotiated at a chartered bank. ' Where the maker of an accommodation note in qeorgia sends it to the pavee' in who indor!!es it for the accommodation of the maker, and slmde it back to in Georgia!; the liability of, the accommodation indorser does not attach until the note is negotiated to a bona jiM holder; and the place where the note is thus negotiated is. in contemplation of law, the place where the 'indorsement was made, snd the law of that place will govern the contract of indotsement. 1 '. ' :
2.SAME-AcoolntODA.TION I:l!IDORSEMENT-CONFLICT OJl' LA.ws.
, John S. for plaiptitr. lIe:nry q. Robinaon. for defElildant. SHIPMAN,J. This is at law by the indo:rsee and holder oC negotiable"promissory note' against the indorser. The defendant has murred to ,the complaint. The complaint alleged that S. P. Goodwin, . ,; . pay of being then a resident of Savannah, ,citizen ofsaill"l'tate, p1adehis promissory note for the sum 0(83,000; payable, ,Oil de,rnand after date, to the order of the fendant, at ;the office of the Citizens'Loan Company, Savannah, Georgia, day of for value received; that said S. P. Goodwin, on the J.88B,sent said note 'hymail to thedefendant, then a resident of the town of Farmington, in the state of Connecticut, and a citizen of said . state, who re,ceived the same in due course ofmliil on the eighteenth of 1883; that defendant at said Farmington, on said eighteenthlday of October, i8&3. indorsed said note, and sent the same by mail to tht' saidS. P. Goodwin at saId who received said note in due course of mail; that said note wasao indorsed by the defendant for the accommodation, use, and benefit of the said S. P. Goodwin; that the said S. P. Goodwin, after receiving said note so indorsed, thereupon, for value I:eceived, transferred and delivered the same to the said Citizens' Loan Company at Savannah, Georgia, and received the proceeds thereof; that said Citizens' Loan Company remained the owner of said note until the nineteenth day of January, 1884, when the said company, for value received, transferred and delivered tbe same to the plaintiff, who still owns said note; that payment of said note has been demanded, but it remains unpaid. The defendant demJl,rred (1) because said complaint cOntains no allegation that the defendant was notified of any demand upon said note, of its protest for or of its non-payment, or that the holders looked to him, the defendant, for payment; (2) because it l!:lee note at end of case.
At Law.,
a
v.30F.no.6-27
418
FEDERAL !mPORTER.
tains no allegation of any demand of the maker of the note, or of a mand of anybody connected with it, in the time required by law. Two questions arise upon this demurrer: (1) Did the law of Georgia, at the time of the indorsement of the note in suit; require notice of the indorser of the demand ofpayznellt, and of the non-payment, of said note, at itsniaturity,and that the holders looked to the indorser for payment? the law of GeoJ;gia did not require such notice, is the contract of indorsement to be governed, under the facts stated in the complaint, by the law of Connecticut, which requires such notice-to the indorser, otbythe law of Georgia.? . The first section of the act of Georgia of December 26, 1826, provided as fo:u.ows: . the passage of,',this: act, 14e practice heretofore required of making a demand of the makers of promissory notes and other instruments, for the payment and performance of the same, and their giving notice of such demand, within a reasonable time, to the indorsers of said promissory notes and other instruments, shall cease.andQerome entirely sary to bind said indorsers; and, when any person whatever indorses a promissory note or. other instrument., he shall be held, taken, and considered as security t,o the same, and as in all respects bound as security, until said promissory note'or 6tber instrument is paid oft and discharged. and shall be lia9le to be sued in the same manner and in the same action with the principal or maker of said promissory notes. Qr,Qtller instruments, any law, practice, or usage to tbe90ntrary.notwitbst8nding: prOVided, always, that nothing berein cpptained shall extend to any promissory notes which sball be given for the .be negotiated; at any chartered bank, purpose'of negotiation, or or Which may be.deposited in any chartered bank for collection: and provided, also, that nothing contained iIi this act shall be construed so as to prevent .the indorser from defining his liability in the indorsement," changed in the Code of Georgia of . .' "When bill!! of exchange and PromissQry notes are made for the .purpose of negotiation, or intended to be negotiated, at any chartered bank, and the saJDe are not, paid at maturity, notice of the non-payment thereof, and of the protest of the same for non-payment or non-i\cceptance; must be given to the within a reasonable time, or the indorsers will not be held liable thereon; but in no ·oLher case, and upon no other bills or notes, shall notice or protest be held necessary to charge the indorser,"
1863, which provided that- .
'The
of this' section ..
This provision was modified by section 4 of the. act approved Februar, 28, J876, as follows: .. . . 'fIt shall not be necessary to prot6lJt, as now required by law, in order to bind indorsers, in the following cases, ,to-wit: (1) When a paper is made payable on its face ata bank or broker's office; (2) when it is discounted ata bank or broker's office; (3) when it is left at a bank or broker's office for Qrillection, and in all such of grace shall be allowed." . , '. . . . . 'ui . I
". Without undertaking. to decide what effect ,the provisions of the law of 1876, in regard to upon previous legislation upon that subject, it seems to be. clear that notice of the non-payment of a promissory note need not be given to the indorser unless the note is made for
STU:aBS V. COLT.
the purpose of negotiation, or is intended to be negotiated, at a chartered bank.. ,This stateofth,e law of Georgia is with consid l'able blindness, in the Code of 1882,which,'however, it is said, has never been enacted by the of the state. The remaining question is whether the indorsement of the defendant is to be gqyerned by the law. of Connecticut or Georgia; , The note was ;accommodationpaper 'made to the order of the defendant, sent to hiQl by mail, indorsed by him in Connecticut, and returned by mail to the maker in Georgia, and by, him delivered to the company which discounted It is that an indorsement constitutes a new contract, which is to be governed by'the law Of the place whereit is made, thqugh the note was made or is to be paid elsewhere. The question is confined to the case of accommodation paper having been indorsed for the purpt:lse of its being discounted, and the paper so indorsed having been de:livered ·totliemaker inahother- state for the purpose'of negotiation, and negotiated by him in that state, and is: In which state was the indorsement made,-the state where the name was written, or the state where the note was negotiated? ' The theory of the law oDthe subject of tlle place of the indorsement of accomtnodation paperisgiven inWden Blair, 21 Wall. 241; Lawrence v. Bassett, 5 Allen, 140; Cook v. Litchfield, 9 N. Y. 279; Young v. Harris, 14 B. Mon. 447; and in Mou v. Wright, 4 Biss. 53,..,.-a,nd is to the effect that the accommodation indorsement does not become operative \lntil tl;le paper is negotiated. So long as the note remained in Colt's or in Goodwin's hands, the liability of the indorser did not arise, but commenced when the note was negotiatedto a bona fide bolder. The note was sent to Georgia for the purpose of negotiation, and Goodwin, the maker, was thus constituted the agent of Colt "to initiate a liability, not only of himself,ibnt also of t4e defendant." Tilden v. Blair, supra. The place wheretpe liability upon the indorsement commenced is the place where the indorsement was made. This statement of the law is given in various modes of expression in the decisions which have been cited. The turning point is the fact that the accommodation paper only becomes a vlllid promise to pay money, and binding upon the indorser, when it is delivered to the person who gives a valuable consideration for it, and that, consequently, the place where the indorsement becomes effective is the place where, legally speaking, it was made. The court, in TiJ,den v,; Blair, regards the person to whom the paper is sent for negotiation as, by that act, the agent ofthe indorser to give the note life, and create the liability. The law is thus stated in 1 Daniel, Neg. Inst. § 868: "Where a. note is indorsed for accommodation in one state, and delivered in another, the indorsement is governed by the law of the latter; for the accornu;lOdation indorser makes that party to whom he lends his signatq.re his agent for putting the instrument into circulation, and his own contract with those to whom it is negotiated must consequently be judged on the principles of agency, which refer it to the place where the circulation commences.;»
v.
is overruled) with liberty to plead anew.
420
FEDERAIi REPORTER.
,NOTE. CONFLIOTOF LAWS. The general ru'le is that a negotiable instrument is governed by the laws (If the statein whWl it lspaynble. Webster v. Howe Machine Co., (Oonn.) 8 At!. Rep. 482; Shoe Leather Nat. Bank v. Wood, (Mas]!.) 8 N. E. Rep. 753, and note. Where no place' of payment is expressed,. it is governed by leaJ loci con.tf'dct'U8. Hart v. Wills, (Iowa,) 2 N. W. Rep. 619; Griswold v. Goldinll:, (Ky.) 8 :8. W.Re\). 535. . ." A receipt signed ,in New Hampshire for money received by the borrower's agent in Massachusetts; the receipt, being delivered to the lender in the latter state, is a Hill v. Cllase, (Mass.) 9 N. E. Rep. SO. Where' an 'indorsement is written on 8, note by the payee thereof in one state, and a sale llDd· delivery of the note' is made. in another· state, the. contract of indorsementrilust be rep:arded as made copsummll,ted in the place where the sale and deliverY· occurred, rather than where it was written. Briggs v. IJhtham, (Kan.) l3Pae. Rep. 393. : . , "
FOURTH
NA.T..
BANK OF THE CI'fV·OF NEW YORK ". AMERICAN
:MILI.8
CO. and others. (Oircuit Gourt, 8. D. N6W York. March 9, 1887.)
.1.
,"
FAC10:R8 .un>
l3Il0KERS-DELCREDERE (lOIDriBBION-LIEN-SsT·On. Rehearing denied. See 29 Fed. Rep. 611. "
,
.
." Memorandum on Motion for Rehearing. "David Willcox, for complainant. Alexander 'Thain, for defedtlants Mary·J. Graefl'eand William H. Garner. Samuel' ·W. Bower,' for defendarttB' the American Mills Co., Albert J. Graeffe, and William H; Bowen. .r" ,
, COXE, J.. I have re-exainined cause in the .light I Of the supplemental submitted by see no reMon to change the views heretbfore e:xpressed. . The arguments preseilted at the final hearihgare nthvreasserted, with, greater emphasis, but not with greater for the comp1!l-il1ant's position was then most concisely stated. Nojn'ew theory is advancedj' no additional proposition of law is suggested. ;; The former' decisionwaB'reached after considerable time and thought had been devoted to the subject,aud after' all the arguments now presented hlidbeen fully cousidered. With every disposition to aid the complaimiIit,' the. conviction that it was without relief could not be resisted. The complainant is not satisfied withthedecisionj but, as I understand the moving papers, it iE\ not conteuded that anything involving the substance of the controversy has been overlooked, The trial oourt may have taken an erroneous view of the law, but: the remedy for B,uch error is a,q appeal. The easels. hot brought within the rule which authorizes a If were ina position to inthe, st. rU.les of equity a.ga inst, the deiendan.t.s; if it were able , to [for its benefit alone a,u..the, ;rights which belong to all the creditors, and to each class of if it could obtain a preference by virtue of a statute designed, to pteventpreferences, and divest a lien