Hayes v. Werner

Carpenter, J.

. This is a suit by the indorsee against the indorser of a promissory note. The note was payable on demand to the order of the defendant with interest payable semi-annually. The- defendant at the time of or before indorsing the note took security of the makers, which he now holds. Payment of the note was not demanded of the makers at the expiration of four months, and no notice of non-payment was ever given to the defendant. The makers subsequently became insolvent. When demand was made of *252 the defendant, he, not knowing that payment had not been demanded of the makers, promised to pay the note. He also presented a claim against the bankrupt estate of the makers for the amount of the note.

The defence is, that the holder lost his claim against the indorser by neglecting to make demand of the makers at the expiration of four months, the time when demand notes fall due by the terms of the statute. The plaintiff claims that under the circumstances of the case no such demand was necessary.

Demand of the maker at maturity, and notice of non-payment to the indorser, are essential to the liability of the latter in cases of notes payable on demand, as well as in cases of notes payable on time. By our statute the time for making such demand is at the end of four months. After the expiration of four months, therefore, the liability of the defendant ceased, unless there was a waiver of demand and notice.

The note in terms was made payable “with interest semiannually.” That is an unmistakable indication that all parties contemplated and intended a loan for at least the period of six months, and that the note should continue for that length of time as security therefor. The defendant therefore-could not have expected or intended that the note should be paid at the end of four months; and if not to be paid, then a demand of payment must have been an idle ceremony, which the law does not require. Indeed, if a demand had been made and payment enforced it would have- defeated the manifest intention of the parties. By endorsing the note and delivering it to the plaintiff the defendant virtually agreed that demand need not be made at the time fixed by statute. Such an agreement is presumptively a waiver; and in the absence of any evidence to the contrary may reasonably be regarded as such. Not only is there no evidence to the contrary, but the facts appearing in the case strongly fortify this presumption.

The circumstance that the indorser took security is evidence to prove an intention to waive demand and notice. It is true this court held in Holland v. Turner, 10 Conn., 308 , *253 that the taking of security by the indorser did not dispense with demand and notice. It is a little remarkable however that neither the court nor the counsel who argued that case refer to. the case of Prentiss v. Danielson, 5 Conn., 175 , in which the court, by Hosmer, C. J., expressly says that “if an. indorser receives security to meet a particular indorsement, he waives a demand and notice in respect of that indorsement.” In that case the maker had assigned all his property to the indorser, which distinguishes it from the case of Sol-land v. Turner . We think therefore that the law is as enunciated in the later case. But while security is not in itself a waiver, it may nevertheless be evidence of a waiver, and may be considered as a circumstance to be weighed in connection with other circumstances, from all of which an intention to waive may be inferred. In Holland v. Turner the security was taken after the indorsement, and the court held that the subsequent security did not change the character of the undertaking and convert a conditional contract into an absolute one. The court significantly asks, “Is there any reason why his.subsequently having taken a security should deprive him of a right to which he was entitled when the indorsement was made?” In this case the security was previously taken and was an existing fact when the indorsement was made. Now such security will not ordinarily change or qualify the legal contract of indorsement; but the fact that he has security shows that he had no occasion to insist upon demand and notice in order that he might secure himself upon the maturity of the note. It therefore supports the presumption of a waiver arising from the terms of the note.

One forcible reason suggested in Holland v. Turner is, that from the fact that no notice was given, the indorser would have a right to presume that the note was paid by the maker, and might thus be induced to part with his security. But that reason is without force in the present case, for it appears that he still retains the security. Moreover, assuming that he intended what the note fairly imports, that it should run six months or more, he could not have presumed from the absence of notice at the end of four months that his liability was discharged.

*254 In view of the fact that he had such security when he indorsed the note and now retains it, we are unahle to see that the demand contended for would have been of any real advantage to him. If so, there was no inducement for him to insist upon it, and a waiver will be more readily presumed.

In June, 1872, more than a year after the note was given, the defendant promised the plaintiff that he would pay it. Had the defendant then known that no demand was made such promise would have been a waiver of the plaintiff’s laches and the promise would have been binding. The defendant did know that no notice was given, and that the note was not paid; but it is expressly found that he did not know that no demand was made. Upon these facts the law is so, if nothing else appears, that the promise to pay was not a waiver. But it is further found that “he had no reason to believe that any demand had been made of the makers, and he did not care to know whether any demand had or had not been made, for the reason that in his view it was immaterial as to his liability to pay the note whether any demand had been made of the makers by the plaintiff.”

Thus it would seem that a demand was a matter of entire indifference to him. The subject seems to have been in his mind, but he regarded it of so little importance that he did not care to inquire whether there had been a demand, and promised payment without reference to the subject at all.

This indifference is nearly equivalent to knowledge. It is perhaps a fair inference from these facts that the promise would have been made as it was, even if he had known that no demand was made. If there was negligence he seemed willing to waive it and pay the demand. Now if there is any difficulty in regarding that as a present waiver, we think we may with propriety regard it as strong evidence of a previous waiver.

He did not care to know whether a demand had been made —in his view it was immaterial. Why? Because he was fully secured, because a demand would have been contrary to the intention of the parties, and because he had agreed that no demand need be made.

*255 Thus it will be seen that every act of this defendant from the first down to the time when he interposed this defense, indicates an intention to waive a demand. The theory of a waiver is entirely consistent with justice- and the equities of the case, and gives effect to the manifest intention of the parties, and we cannot see that it violates any legal principle.

We advise judgment for the plaintiff.

In this opinion the other judges concurred.