Tomlinson Carriage Co. v. Kinsella

Hinman, C. J.

This was a bill to foreclose a mortgage originally given to Holcomb & Birdsey, and assigned by them to the petitioners. The defense to it rested entirely upon the statute regulating the sale of spirituous liquors. It was claimed that the note secured by the mortgage was given, in part at least, for liquors sold to the respondent, and was therefore void, under the express provisions of the twenty-seventh section of that law. But the superior court did not find this fact. And we think there are no circumstances detailed in the finding from which it can fairly be inferred that it ought to have been found. In the dealings of the respondent with Holcomb & Birdsey, he had at different times received from them as a purchaser a considerable quantity of liquors, but the account against him for other articles which were lawfully sold, was larger than the amount of the note, and there was an unreseinded agreement between them, made before there were any payment on the account, that the payments which should be made should be applied to the liquor account, and consequently not to the other portion of it, until the liquors were paid for. Now it is true that this was an unlawful agreement, and therefore void as a contract, just as the purchase and payment for the liquors on delivery would have been. But it shows nevertheless the intention of the parties, at the time the payments were made, to apply them exclusively to the liquor account, and excludes the idea that there was any intention to pay any portion of the lawful account. If, during the running of this account, a cask of liquor had been bought by the respondent and paid for at the time, we presume it would not be claimed that the subsequent lawful account between them to the amount of the money so paid, would be extinguished by an application which the law would make, directly contrary to the intention of all parties ; and after the lawful account was settled by a note, surely no one would claim that such note was void, or that the money paid for the liquor ought to be applied in satisfaction of it. The party receiving money as the consideration of an illegal sale, may under the statute be liable to refund it. But to apply it by law as payment to other lawful debts is, in effect, *273 to make a new contract for the parties against their wishes and intentions, and diffei’ent from that which the law raises from the circumstance that the money may be recovered back under the statute. See Sanford v. Clark, 29 Conn., 457 .

We are also of opinion that had the note been void, in consequence of its having been given for liquors, still, under the proviso to the twenty-seventh section of the act, it would, under the circumstances of this case, be a valid security in the hands of the petitioners, as bona-fide holders of the note, who have paid value for it. This of course depends upon whether it was past due at the time the petitioners took it. In the case of Bissell v. Gowdy, 31 Conn., 47 , we held that if a negotiable note, given for liquor, was assigned for value after due, it was not protected in the hands of the assignee by this proviso.

We are clearly of opinion, however, that this note was not past due; and it is therefore valid in the petitioners’ hands, whatever might have been its condition in the hands of the payees. It was payable on demand, and such paper in this country has often been held to be payable in a reasonable time, so that, to subject an indorser, the demand upon the maker, and the notice of the non-payment, must be made and given in what has thus been termed a reasonable time. It has never been attempted however to fix this time with any degree of precision, except in reference to the circumstances of each particular case. But these circumstances only go to show the intention of the parties in respect to the time of payment, and, therefore, they amount only to evidence of their agreement in respect to it. The cases have probably gone too far to admit of any other time for the payment of such a note than such as the circumstances show to be reasonable, by showing the intention, expectation or understanding of the parties, and thus showing the agreed time. But we think we may well hesitate to follow the cases to the extravagant length of holding that a reasonable time is a question of law, depending on the particular circumstances of each case. If there is such a time, and it is a question of law, that is, if the time is fixed by law, it would seem that it ought to be known to the courts; *274 and yet no court to our knowledge has attempted to fix it or declare what it is. But if it is a question of fact, depending upon the agreement and understanding of the parties, it would seem that it should be determined, like all other facts, by a jury, or by the court, where the issue is closed to the court, the court finding it in this case simply as a fact. In this case the court has found that, at the time the note was given, it was agreed between the parties to it that it might lie as long as the payees were satisfied with the security and the interest was paid. And this agreement was made known to the petitioners at the time of their purchase of it. And there was no proof that any demand of either principal or interest had ever been made. We have no doubt that, under this agreement, the note could not be considered as past due until it appeared that the payees were dissatisfied with the security ; and so long as they suffered it to lie without making any demand, this of course did not appear. We should also come to the same result from the circumstances detailed in the finding. The note was on interest, and most of the cases allude to this circumstance as very strong evidence of an understanding that it should remain a continuing security for some considerable time. There was moreover the other fact, that the mortgage was given some days after the note bears date. These circumstances show, irrespective of the agreement, that the parties intended it to lie for an indefinite period. And in such a case there can be no more reasonable time than that expressed upon the face of the instrument, that is, when demanded; or, in other words, when the payees, either for the reason that they have become dissatisfied with their security, or for some other cause, should choose to call for their money. In England it seems to be settled that such a note is payable according to the literal terms of the instrument itself. The word “ demand ” is Synonymous with “ request,” when used in such an instrument, and the promise, therefore, if put in other language, would be to pay when requested to do so. It was therefore held in Brooks v. Mitchell, 9 Mees. & Wels., 15, that such a note can not be treated as overdue, so as to affect an indorsee with any equities against the indorser, merely *275 because it was indorsed a number of years after its date, and for several years no interest had been paid on it; and it was said to be a continuing security. And so Liftledale, J., in Borough v. White, 4 Barn. & Cress., 325, remarking on such a note, said that “ it was intended as a continuing security, and would not be treated as overdue without evidence of payment having been demanded and refused.” While this is the English law, we know that the general current of cases in this country is to the effect that such a note, negotiated a long time after made, is to be regarded as past due and dishonored. Our own court so considered it in Nevins v. Townsend, 6 Conn., 5 , when indorsed eight months after given, though the case turned upon another point. So in Castle v. Candee, 16 Conn., 224 , the court held that a non-negotiable note, payable on demand and indorsed by a third person, imported a promise by such person that the note should be good and collectible by the use of due diligence for a reasonable time, and that parol evidence was admissible to show that the parties expected it to lie, in order to show that it had not lain an unreasonable time. The same doctrine was applied in Lockwood v. Crawford, 18 Conn., 361 , to negotiable paper. And again, in Culver v. Parish, 21 Conn., 408 , it was said, citing Lockwood, v. Crawford , that payment must be demanded and notice of dishonor given in a reasonable time. But whether there can be any such reasonable time, disconnected from the circumstances calculated to show what the parties intended and expected, as seems to be supposed in very many cases, we need not now determine. We have alluded to the English doctrine because it seems to conform to the plain language of the instrument itself, and to present a clear and definite rule to govern in all such cases, and leads, as we think, to a correct as well as certain result; while what is called a reasonable time, not connected with circumstances, is too vague and indefinite to control the rights of parties growing out of important mercantile instruments of this sort. But whether we shall continue longer to search after what no court has as yet been able to discover, or shall recur to the clear and precise terms of the contract itself, it will be for the court hereafter *276 to determine, when the question shall be so presented as to render it necessary to decide it.

We are satisfied that there was no error in the disposition of this case, or in the judgment and decree complained of.

In this opinion the other judges concurred.