Stanley v. McElrath
Before: Paterson
Synopsis
Payment — Negotiable Paper. — The payment of money is not necessary to the extinguishment of an obligation. A debt may be paid by the-giving of a note, if it is offered and accepted as payment.
Id.—Recovery by Accommodation Indorser against Maker.—Where an accommodation indorser has paid the note of the defendant for whom he became indorser by executing his own note to the holder, who accepted such new note as payment and extinguishment of the first note, such indorser may maintain an action to recover the amount of snch first note from the defendant as for money paid to his use,, though his, own note was not paid at the time of trial.
Negotiable Paper—Sufficiency of Notice to Charge Indorser — Delivery of Notice — Taking Letter from Mail-bag. — Where the notice of protest of negotiable paper is sent by the notary in due time, and is actually delivered at the residence of the indorser on the next day to a person of discretion, apparently acting for him, it is sufficient; and the fact that the letter was taken from the mail-hag in violation of a regulation of the postal department, if such be the fact, is immaterial.
Id. —Waiver of Protest—Nights of Indorser—Action against Maker. — An indorser may waive his rights to notice of protest, not only for the purpose of charging himself with liability, but also without prejudice to his right of action as an accommodation indorser against the maker in case he pays the note. He cannot be regarded as a volunteer in making such payment, or as creating a new liability by his waiver of the condition of notice of dishonor which is provided for his benefit alone, and of the absence of which no other person can complain.
Judicial Notice — Former Adjudication—Finding against Evidence — Counterclaim—Failure to Find upon Issue not Proved.—The • court cannot take judicial notice that a counterclaim pleaded in the answer had been formerly adjudicated in a separate action thereon, brought by the defendant against the plaintiff, or dispense with formal proof of such adjudication, and if no evidence is introduced to show it, a finding of such former separate adjudication is not supported by the evidence; hut if no evidence is offered in support of the counterclaim, the finding of the former adjudication is immaterial, and a failure to find upon the merits of the counterclaim is without prejudice to the defendant.
Interest — Action for Money Paid. — Where a note hearing interest at ten per cent is paid by an accommodation indorser by giving his own note in lieu thereof, it is error to allow a continuance of ten per cent on the principal of such note in favor of the indorser in an action against the maker for money paid to his use; hut he can only recover legal interest on the whole amount of principal and interest due on the note at the date of its payment.
Paterson, J. — This action was brought to recover from defendant the sum of $6,136.50, with interest thereon from March 28, 1883. It is alleged, in the amended complaint, that C. M. Hitchcock, plaintiff’s testator, indorsed a promissory note, made by defendant, payable to said Hitchcock, for the sum of four thousand five hundred dollars, solely for the accommodation of defendant; that defendant assigned the note to the London and San Francisco Bank, Limited, and received therefor the sum of four thousand five hundred dollars; that defendant paid, on account of the interest due thereon, the sum of $231.25, but never paid any portion of the principal; that the note was duly protested, and notice thereof given to the indorser; that Hitchcock paid the sums of $6,132.50, the amount due on the note, and four dollars, costs of protest, to the bank, on March 28, 1883; and that defendant has never reimbursed him for any part thereof. The defendant denied that the note was indorsed for his accommodation in any greater sum'than $3,631.28, the balance of said note being for money he had paid out for the use and benefit of said Hitchcock at his special instance and request; denied that the four-[455]thousand-five-hundred-dollar note was protested, or notice of dishonor given; and denied that plaintiff had ever paid the same, or any part thereof. By way of counterclaim, defendant alleged that plaintiff was indebted to him in the sum of four thousand dollars for services as attorney and counselor, performed at his special instance and request.
The court found that the note was made and assigned as alleged; that §231.25 only had been paid on account of interest, and nothing on account of the principal; and that the offset to the note, and the counterclaim set up by defendant, had both been adjudicated against defendant in a former action. The court found certain facts, — which will be noted further along,—showing demand, refusal to pay, protest, and notice thereof to Hitchcock, and payment by him to the bank. The court found also that Hitchcock paid the defendant’s note by giving his own note for the sum due thereon, including cost of protest, and that it was accepted and received by the bank, and an entry made in its books to the effect that the note had been paid. At the time of the trial, the note thus given by Hitchcock had not been paid; and appellant claims that, there having been no payment in money, an action for money paid out cannot be maintained.
The payment of money is not necessary to the ex-tinguishment of an obligation. A debt may be paid by the giving of a note, if it be offered and accepted as payment. ( Weston v. Wiley, 78 Ind. 54; 2 Daniel on Negotiable Instruments, 232.) The evidence shows very clearly that the Hitchcock note was offered by him and received by the bank upon the express understanding that it was a payment in full of the McElrath note.
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