Merchs. Nat'l Bank of Santa Monica v. Bentel
Before: Shaw
Synopsis
Promissory Note—Liability of Indorser—Necessity of Presentment and Demand.—Presentment to the maker, accompanied with a demand for payment, is essential to fix the liability of an indorser of a promissory note upon his indorsement.
Id.—Demand of Payment—Time for Making.—A demand of payment more than four months after the apparent maturity of a promissory note is too late to be of any effect to charge an indorser upon his indorsement.
Id.—Indorsement of Note—Change by Oral Agreement.—An indorsement by the payee of a promissory note is a contract in writing, and its effect is controlled by the law and cannot be changed by the oral agreement of the parties. Therefore an allegation in a complaint that an indorsement was intended and accepted as a guaranty must be disregarded.
Id.—Action on Note—Indorsement or Guaranty—Sufficiency of Complaint—Absence of Allegations as to Presentment.—In an action to recover the balance due on a promissory note, a complaint which alleges the payment of a certain sum thereon and the substitution and delivery of the demand note of a third person, bearing the general indorsement of the defendant, for the remainder, and that the same was intended and accepted as a guaranty of payment, fails to state a cause of action upon the indorsement or the alleged guaranty, when there is no allegation of presentment to the maker and demand for payment within the time required by law, or allegation that presentment was waived or excused.
Id.—Substitution or Notes—Suitioiency of Complaint as to Original Debt.—Such complaint states a cause of action upon the original debt, since the substitution of the third-party note, if not taken as payment, merely extends the time of payment of the debt until the maturity of such note.
Id.—Payment—Whether Taking of Note Constitutes.—Taking a note, either of the debtor or of a third person, for a prior existing debt, is not payment, unless there is an express agreement to that effect. Upon failure to pay such note, the creditor may ignore it and sue upon the original debt.
Id.—Demand Note—Maturity in One Tear—Section 3135 of Civil Code.—Section 3135 of the Civil Code is to be taken as extending the maturity of a note payable on demand only for the purpose of prescribing a time within which the note may be presented in order to fix the liability of the indorser, and does not extend the time of payment or prevent the running of the statute of limitations so far as thq action upon the note itself against the maker is concerned.
Id.—Limitation of Actions—Amended Complaint—New Cause of Action.—Where a complaint states a cause of action against the defendant only upon his indorsement of the note of a third person, or upon an alleged guaranty of payment by him, an amended complaint, which is sufficient only upon the theory that it is a suit upon the defendant’s note to the plaintiff, states an entirely new cause of action as to which the statute of limitations runs until the filing of the amended complaint.
SHAW, J.
The plaintiff appeals from a judgment given against it upon sustaining a demurrer to the complaint. This is the second appeal in the action. Upon a former trial judgment was given for the plaintiff, and upon appeal by the defendant, the judgment was reversed and the cause remanded for a new trial. (See
Merchants Nat. Bank
v,
Bentel,
15 Cal.
[475]
App. 170, [113 Pac. 708].) The present appeal is from a judgment given after the cause was remanded.
The grounds of demurrer assigned were that the complaint did not state facts sufficient to constitute a cause of action, that the action was barred by section 337 of the Code of Civil Procedure, and that the complaint was uncertain and ambiguous in certain specified particulars.
The facts alleged are as follows: 1. On August 23, 1906, the defendant borrowed of plaintiff five thousand dollars and gave to plaintiff his promissory note of that date, thereby promising to pay said sum to plaintiff one day after said date; 2. “The defendant remained indebted to plaintiff according to the terms” of said note until .January 24, 1907. He then paid the plaintiff one thousand dollars and the interest on said note, leaving due thereon a balance of four thousand dollars. At the same time he substituted for said note and delivered to plaintiff instead thereof a promissory note of one W. H. Barlow, payable to said defendant on demand with nine per cent interest per annum at Barlow & Bragdon’s offices, dated July 8, 1906, for eight thousand dollars, of which four thousand dollars then remained unpaid. He indorsed this note at the time of the delivery by a general indorsement, merely writing his name on the back thereof; 3. There was at that time no agreement or understanding that the note of Barlow should be accepted in payment of the said indebtedness of the defendant to plaintiff. It was then understood and agreed that this said indebtedness should continue and that he would pay the same to plaintiff. His indorsement was intended by him and accepted by plaintiff as and for a guaranty to plaintiff that the Barlow note would be paid in satisfaction of defendant’s debt to plaintiff; 4. On November 27, 1907, at the office of Barlow, “plaintiff demanded of said Barlow that he pay said note, and thereafter on the same day notified defendant that said note was not paid and demanded that he pay the same”; and, 5. No part of said sum of four thousand dollars due from defendant to plaintiff has been paid, except the interest up to September 13, 1907.
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