J. B. Wilson Co. v. Finley Farms Co.

We think the court correctly held that the special circumstances of the case bring it within the terms of the Negotiable Instruments Act. The notes were made by the Finley Farms Company, a corporation, as such, and for its benefit, and the appellees Williford, Shock, and Finley were each accommodation indorsers, without receiving value therefor. When the notes became due according to their terms no presentment to and demand for payment was made to the Finley Farms Company or any of its officials, and no notice was given to any of the indorsers, and no special circumstances appear tending to excuse omission of or delay in due demand for payment or the giving of notice of dishonor. The Negotiable Instruments Act expressly requires that due notice be given an indorser of a note of its dishonor by nonpayment, and that failure to notify him thereof will discharge him from all liability. Article 6001a89, Rev. Stat., or article 6001 — 89, Vernon's Ann.Civ.St. Supp. 1922. The exception provided is found in article 6001a115 (article 6001 — 115), reading:

"Notice of dishonor is not required to be given to an indorser in either of the following cases:

"1. Where the drawee is a fictitious person or a person not having capacity to contract, and the indorser was aware of the fact at the time he indorsed the instrument;

"2. Where the indorser is the person to whom the instrument is presented for payment;

"3. Where the instrument was made or accepted for his accommodation."

And the special circumstances do not bring the case within any of the subdivisions.

The third subdivision is not applicable, because the notes were not made for the accommodation of the indorsers or either of them, but by the Finley Farms Company, a corporation, as such, and for its direct and immediate benefit. As to Finley and Williford the second subdivision is not made applicable, because no presentment was ever made or notice given to them. Further, Finley was not an officer, or even stockholder, at the time of the execution of the notes or at the time of their maturity. And, although notice was given to Mr. Shock, at the time and in the manner shown, as to two of the notes, yet there is no substantial evidence to warrant the conclusion that he "is the person" to whom the creditor would make formal demand "for payment," or to impute notice to him that the company could not and would not pay the notes, and that the payee of the notes must look to him as indorser for payment. In certain circumstances an officer, as C. A. Shock in fact was, indorsing a corporation note may occupy the position of "the person to whom the instrument is presented for payment," within the intention of the second subdivision. Whitney v. Chadsey, 216 Mich. 604, 185 N.W. 826; Electric Mfg. Co. v. Hodge, 181 Mo. App. 232, 167 S.W. 1186; Paper Board Co. v. Van Buren, 182 Wis. 640, 197 N.W. 338. The circumstances, as appears in each case above, must show that the instrument was seasonably presented, that the officer indorsing the note was the proper person to whom the creditor would make formal presentment of his demand for payment, and that he was authorized to pay the note, or that he was in active charge of the company's affairs, and, in virtue of such position, knew that the company had no funds with which to pay such note when it matured, and could not and would not pay same. In such latter case, as stated, "notice to the indorser of what he already knew would be a vain and useless thing." But, in the absence of such special circumstances, the exception of the statute would not be met. Farmers' Mechanics' Nat. Bank of Fort Worth v. Head (Tex.Civ.App.) 268 S.W. 992.

In the present case the evidence was to the extent merely that Williford and Shock were the officers of the company, and there were no other officials besides them; and, as a consequence of there being "no one else on whom presentment could be made," presentment would have to be made on one or the other of such officers. It was some time after the maturity of the notes that notice was given to Mr. Shock as to two of the notes. The notes were never presented to the president, Williford. Whether Mr. Shock or Mr. Williford, the president, was the proper person to whom the notes should have been presented for payment when due does not appear. The president, who signed the notes for the company, may have been, as presumably he was, being its chief executive officer, the proper and only person to draw checks or to pay over the money for the company in payment of the notes. The company may or may not have had on hand, for aught the record shows, the funds with which to pay the notes if the notes had been duly presented to the president. Consequently the bare fact that Shock was both secretary and treasurer would not be sufficient ground to relieve him of notice, although the demand was made upon him, if the president, who signed the notes, was the proper and only officer, as presumed he was, to whom the notes should have been presented for payment. And even had the notes been duly and timely presented to Shock, and they were not, still the circumstances leave the situation too doubtful to properly say that the notice as required by law was not necessary or essential.

The judgment is affirmed.