Crosett v. Whelan

By the Court, Crockett, J.: The defendants are sued as guarantors of a promissory note made by one Dolan, of which the plaintiff claims to be the bona fide owner and holder for value, having become such, as he alleges, before maturity of the note, and without notice of any defense thereto. The guarantee of the defendants was made simply by indorsing their firm name on the back of the note before it was delivered by Dolan. The note was payable to one Sullivan, who indorsed the same without recourse, and in that form it came to the plaintiff’s hands.

The answer sets up as a defense :

1. That the plaintiff is not the owner of the note;

2. That he did not receive it before maturity, or at any other time for value;

3. That one Horan is the holder and owner of the note, and that he placed it in the hands of plaintiff for collection only;

4. That before the execution of said note the firm of Sullivan & Cashman (of which firm the payee of the note was [202]a member) had obtained a judgment for a large sum against Holán, on which an execution had issued and been levied on his real and personal property; that Sullivan, on behalf of his firm, agreed with the defendants and several other persons that if they would guarantee the payment of four promissory notes, to be made by Holán, for seven hundred and fifty dollars each, payable in three, six, nine, and twelve months, they would suspend all further proceedings under the judgment, and release the levy of the execution until after the maturity of the last of said notes; that for the purpose of befriending Holán, and to enable him to proceed with his business, the defendants agreed to become bound as guarantors for the payment of one of said notes, which is the note sued upon in this action; that before indorsing their firm name on said note as guarantors it was expressly agreed between them and the said Sullivan that if any steps should be taken to enforce the judgment and execution against Holán, or his property, before the maturity of the last of said notes, the note now in suit should be surrendered to the defendants; that they indorsed the note as guarantors on this condition only; that, in violation of the agreement, Sullivan and Cashman very soon thereafter proceeded to sell the real estate under said judgment and execution; that Horan was present at the agreement between Sullivan and the defendants, and had full notice thereof, and that after-wards Sullivan transferred the note to Horan; that the defendants were accommodation guarantors, and received no value therefor.