Swift, Ch. J.
No one principle of the common law is better settled than this j that the indorsee of a negotiable note must make demand of payment of the maker, when it becomes due, and give immediate notice of non-payment, to entitle him to recover of the indorser. The only contradictory decision is De Berdt v. Atkinson, 2 H. Bla. 336. where it is said, that a known insolvency of the maker of the note will excuse demand and notice : but this case has since been overruled in England, and in this country ; and the contrary doctrine established.
This rule of law is founded in good reason, and results from the nature of the contract, it is the duty of the indorsee to use due diligence to collect the note : he ought- to make [128]*128demand of payment from the maker, when it falls due; tor otherwise, it cannot be known but that it would have been paid. If riot paid, he ought to give immediate notice to the indorser, to give him an opportunity to withdraw his fund:-; from the hands of the maker, or to pursue his remedy on the note.
It is agreed, that if there be not a known insolvency, at the time of making the note, and continuing till it becomes due, demand and notice are necessary : but it does not follow from the insolvency of the maker of the note, that he will not pay it at the time ; or that the indorser cannot collect it, it he has seasonable notice of the non-payment. The maker of the note may have resources at command, though insolvent r, or he may have friends by which he would be able to pay, when demanded ; or special circumstances might exist, which would induce him to pay the indorser. As then insolvency is not conclusive evidence that the note will not he paid, the indorser is entitled to seasonable notice of the non payment, to enable him to have recourse to his legal remedy.
If the rule is adopted, that a known insolvency shall excuse from giving notice, this might lead to disputes ; as it would often he a fact difficult to he ascertained; hut if notice he required, this could easily be given, and easily proved j and frequent litigation might thereby be prevented.
The only case that bears any analogy to this, is that the want of funds in the hands of the drawee of a bill shall excuse from giving notice to the drawer of non-acceptancc. But if the drawer has no funds in the hands of the drawee, lie can never sustain a loss for want of notice, as he has no funds to withdraw, and can bring no action : it would, therefore, be useless to give him notice. In the case, however, of an indorsed note, the indorser has a remedy on the note, which makes the case entirely different from that of a bill of exchange where the drawer has no funds in the hands of the drawee.
I would not advise a new trial.
In this opinion Trumbull, Edmond, Smith, Brainard, Baldwin and Goddard, Js. concurred.
Hosmkk, J.
The notice in this case was an entire nullity. It was given the day before the note fell due, and before demand made of the maker; of consequence, before there [129]*129had been any default. Wiffin v. Roberts, 1 Esp. Rep. 262. Jackson v. Richards, 3 Caines 344. Jones v. Fates, 4 Mass. Rep. 345.
It is. as a genera! rale, admitted, ihal a flee legal demand made on the maker, reasonable notice of non-payment must be given to the indorser. The reason is obvious. The contract of the indorser is not absolute, but conditional. It is merely this : “ If you use due diligence in demanding the money, and the maker refuses to pay it, and you, will give me reasonable notice of this, I will pay yon.” If the stipulation requiring notice were utterly useless, it might, with propriety, be disregarded. But if the maker of the note is insolvent, this cannot with truth be asserted. It would be in opposition to known possibilities, and repeated decisions. “ It is no excuse,” said Lord Mansfield, “ for not demand nig payment on a note or bill, or giving not ice, that the maker or acceptor has become bankrupt, as many ways may remain of obtaining payment, by the assistance of friends, or otherwise.” Doug. 515. 1 Term Rep. 408. 2 H. Black. 612. 11 East 117. “ The insolvency of the maker renders me indorser’s remedy less valuable $ it does not necessarily render it worthless.” Sandford v. Dillaway, 10 Mass. Rep. 54.
It was contended in the argunscnl, that as Scor'd was a known insolvent, and the defendant indorsed his note merely to give it credit and currency, the indorser must be considered as having waived notice, and become co-debtor with him. This conclusion is most unwarrantable.. If the defendant bad intended to bceome absolutely bound, he would have, given anote with Scovil, or, in some explicit shape, would have assumed the payment of the debt. But an in dorsement of a note does not import an absolute engagement. it is a collateral contract and conditional agreement : from its nature and frequency, perfectly intelligible : and always implying the same obligation. There is nothing in tiie form of the indorsement; nothing in the established usage of merchants : nothing in the demands of justice, which distinguishes the case under discussion from ordinary cases. The defendant appears in the well known character of an indorser ; and in that character he must be treated, or the court cannot escape the imputation of making, instead of constrain", the contract.
[130]*130It has been urged, that this case is analogous to those where the drawer of a bill has no effects in the hands of his drawee. In those cases, he is not entitled to notice. I answer, that there is no analogy. His drawing the bill is a fraud ; he knows it will be dishonoured ; and in the last resort, he is answerable, without the possibility of recourse to any other person. 1 Term Rep. 405. 2 Term Rep. 713. But in relation to an indorser for the accommodation of another, the very reverse is true. He has committed no fraud ; he cannot know- that the maker of the note will not pay it: and he has a deep interest in notice of non-payment, that lie may call on him for satisfaction or security.
It is highly to be desired, that there should be a certain rule in these cases, which, in the event of the most hopeless bankruptcy, may be productive of benefit. But to render-notice unnecessary in the event of insolvency, is opening a door to expensive litigation, and much possible injustice Even in the instance of bills drawn on one who has no funda of the drawer in his hands, it has been the subject of regret « that the old rule requiring notice to be given, in all cases⅜ to the drawer, of non-acceptance of bis bill, was so far broken in upon.” “ But,” says Lord Ellenborovgh, “ I shall anxiously resist the further extension of the exemption.” 7 East 362.
There has been some inconsistency of decision concerning the liability of an indorser under the facts of this case ; bid the law is now well established. In the year 1794, a case occurred in the English court of common pleas, precise!} like the one under discussion. The court adjudged, that “ the defendant meant to guarantee the payment of the note” absolutely. De Berdt v. Atkinson, 2 H. Black. 336.
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Swift, Ch. J.
No one principle of the common law is better settled than this j that the indorsee of a negotiable note must make demand of payment of the maker, when it becomes due, and give immediate notice of non-payment, to entitle him to recover of the indorser. The only contradictory decision is De Berdt v. Atkinson, 2 H. Bla. 336. where it is said, that a known insolvency of the maker of the note will excuse demand and notice : but this case has since been overruled in England, and in this country ; and the contrary doctrine established.
This rule of law is founded in good reason, and results from the nature of the contract, it is the duty of the indorsee to use due diligence to collect the note : he ought- to make [128]*128demand of payment from the maker, when it falls due; tor otherwise, it cannot be known but that it would have been paid. If riot paid, he ought to give immediate notice to the indorser, to give him an opportunity to withdraw his fund:-; from the hands of the maker, or to pursue his remedy on the note.
It is agreed, that if there be not a known insolvency, at the time of making the note, and continuing till it becomes due, demand and notice are necessary : but it does not follow from the insolvency of the maker of the note, that he will not pay it at the time ; or that the indorser cannot collect it, it he has seasonable notice of the non-payment. The maker of the note may have resources at command, though insolvent r, or he may have friends by which he would be able to pay, when demanded ; or special circumstances might exist, which would induce him to pay the indorser. As then insolvency is not conclusive evidence that the note will not he paid, the indorser is entitled to seasonable notice of the non payment, to enable him to have recourse to his legal remedy.
If the rule is adopted, that a known insolvency shall excuse from giving notice, this might lead to disputes ; as it would often he a fact difficult to he ascertained; hut if notice he required, this could easily be given, and easily proved j and frequent litigation might thereby be prevented.
The only case that bears any analogy to this, is that the want of funds in the hands of the drawee of a bill shall excuse from giving notice to the drawer of non-acceptancc. But if the drawer has no funds in the hands of the drawee, lie can never sustain a loss for want of notice, as he has no funds to withdraw, and can bring no action : it would, therefore, be useless to give him notice. In the case, however, of an indorsed note, the indorser has a remedy on the note, which makes the case entirely different from that of a bill of exchange where the drawer has no funds in the hands of the drawee.
I would not advise a new trial.
In this opinion Trumbull, Edmond, Smith, Brainard, Baldwin and Goddard, Js. concurred.
Hosmkk, J.
The notice in this case was an entire nullity. It was given the day before the note fell due, and before demand made of the maker; of consequence, before there [129]*129had been any default. Wiffin v. Roberts, 1 Esp. Rep. 262. Jackson v. Richards, 3 Caines 344. Jones v. Fates, 4 Mass. Rep. 345.
It is. as a genera! rale, admitted, ihal a flee legal demand made on the maker, reasonable notice of non-payment must be given to the indorser. The reason is obvious. The contract of the indorser is not absolute, but conditional. It is merely this : “ If you use due diligence in demanding the money, and the maker refuses to pay it, and you, will give me reasonable notice of this, I will pay yon.” If the stipulation requiring notice were utterly useless, it might, with propriety, be disregarded. But if the maker of the note is insolvent, this cannot with truth be asserted. It would be in opposition to known possibilities, and repeated decisions. “ It is no excuse,” said Lord Mansfield, “ for not demand nig payment on a note or bill, or giving not ice, that the maker or acceptor has become bankrupt, as many ways may remain of obtaining payment, by the assistance of friends, or otherwise.” Doug. 515. 1 Term Rep. 408. 2 H. Black. 612. 11 East 117. “ The insolvency of the maker renders me indorser’s remedy less valuable $ it does not necessarily render it worthless.” Sandford v. Dillaway, 10 Mass. Rep. 54.
It was contended in the argunscnl, that as Scor'd was a known insolvent, and the defendant indorsed his note merely to give it credit and currency, the indorser must be considered as having waived notice, and become co-debtor with him. This conclusion is most unwarrantable.. If the defendant bad intended to bceome absolutely bound, he would have, given anote with Scovil, or, in some explicit shape, would have assumed the payment of the debt. But an in dorsement of a note does not import an absolute engagement. it is a collateral contract and conditional agreement : from its nature and frequency, perfectly intelligible : and always implying the same obligation. There is nothing in tiie form of the indorsement; nothing in the established usage of merchants : nothing in the demands of justice, which distinguishes the case under discussion from ordinary cases. The defendant appears in the well known character of an indorser ; and in that character he must be treated, or the court cannot escape the imputation of making, instead of constrain", the contract.
[130]*130It has been urged, that this case is analogous to those where the drawer of a bill has no effects in the hands of his drawee. In those cases, he is not entitled to notice. I answer, that there is no analogy. His drawing the bill is a fraud ; he knows it will be dishonoured ; and in the last resort, he is answerable, without the possibility of recourse to any other person. 1 Term Rep. 405. 2 Term Rep. 713. But in relation to an indorser for the accommodation of another, the very reverse is true. He has committed no fraud ; he cannot know- that the maker of the note will not pay it: and he has a deep interest in notice of non-payment, that lie may call on him for satisfaction or security.
It is highly to be desired, that there should be a certain rule in these cases, which, in the event of the most hopeless bankruptcy, may be productive of benefit. But to render-notice unnecessary in the event of insolvency, is opening a door to expensive litigation, and much possible injustice Even in the instance of bills drawn on one who has no funda of the drawer in his hands, it has been the subject of regret « that the old rule requiring notice to be given, in all cases⅜ to the drawer, of non-acceptance of bis bill, was so far broken in upon.” “ But,” says Lord Ellenborovgh, “ I shall anxiously resist the further extension of the exemption.” 7 East 362.
There has been some inconsistency of decision concerning the liability of an indorser under the facts of this case ; bid the law is now well established. In the year 1794, a case occurred in the English court of common pleas, precise!} like the one under discussion. The court adjudged, that “ the defendant meant to guarantee the payment of the note” absolutely. De Berdt v. Atkinson, 2 H. Black. 336. In the succeeding year, Butter, J., one of the judges of the above mentioned courts again expressed the same opinion. Corney v. Da Costa, 1 Esp. Rep. 302. But in the year next sue reeding, the same court of common picas reversed their former decision x and on this subject the English courts have made no subsequent determination. Nicholson v. Gouthit, 2. H. Black. 609. “ The difficulty,” said the Lord Chief Jus tice, íÉ arises from the mode which the parties have chosen in which the guaranty shall take place, by the indorsement of a note. The question, then, is, whether, when the guaranty is taken in that shape, all the legal consequences do not follow* [131]*131.... jo as to limit its generality l Upon consideration, I cannot say, that they do not follow | and they require a demand on the maker, and notice to the indorser, within a reasonable time.
In the states of New-Yark, Massachusetts and North-Carolina, the same question has been decided in a similar manner, Jackson v. Richards, 2 Caines, 343. Sandford v. Dillaway, 10 Mass Rep. 52. Pons’s executors v. Kelly, 2 Hayw. 45. In the case of Jackson v. Richards, Kent, Ch. J. said, “ When a person signs a note in the character of indorser, the presumption is, that he is to receive all the privileges of that character.” And in the case determined in Massachusetts, the court observe, « The indorser of a promissory note contracts, that he will pay the contents, provided the maker does not pay it, when regularly demanded of him, and seasonable notice of his refusal or neglect to the indorser. This dc-mand and notice he has a right to insist upon, for this reason, that upon payment by him, he may have his remedy over against the maker. And although the insolvency of the maker renders his remedy less valuable, it does not necessarily render it worthless.” I entirely concur in the reasons '-signed in both cases.
Coui.ii, .1.
According to the rule in the case of Be Berdt v. Atkinson, and that in Corney v. De Costa, which I consider as substantially the same, the evidence of the mak--r*s insolvency was improperly rejected. And I do not con-Isider those cases as over-ruled, or at all shaken, by that of Nicholson v. Gouthit, dr by any of the later English cases, ■\ cited at the bar. The grounds of determination, in the latter ⅜| cases, were essentially different, from those, which governed if die former; and were evidently so considered by the judges, ⅞ who decided them. And I cannot say, that I am actually | dissatisfied with the rule in Be Berdt v. Atkinson: For under the circumstances of that case, (which are substantially the same as those of the present,) the indorser may, perhaps, be regarded as a co-debtor, and his liability, according to the understanding of the parties, as primary. But, as a different rule has been adopted, by respectable authorities, in this country ; and as it is much more important, that a uniform rule be established, than that it he settled either way, rather than the other ; I am not inclined to dissent from the [132]*132opinion of the Court. I will add, that Hie latter rule has, perhaps, one practical advantage over the former : It is more simple, and definite ; and its application, of course, less open to doubt and controversy, as being less dependent upon the particular circumstances of individual cases.
New trial not to be granted.