
    The Second National Bank of Cleveland v. McGuire.
    1. That all the property of the maker of a promissory note has been assigned to an indorser of such note, for the benefit of all the maker’s creditors equally, does not dispense with the necessity of demand and notice, when that property is not sufficient to meet all the maker’s liabilities.
    2. A waiver of demand and notice by the indorsor must be by words or acts that clearly show that such was the intention.
    3. M. was indorser upon a series of notes made by 0., who had assigned all his property, for the benefit of all his creditors equally, to M. After the assignment, M. told the bank, holder of the notes, to bring them to him as they matured, and he would pay them, or waive protest on them. This was done upon all the notes but the last. At twelve o’clock of the day this one became due, the baulk clerk presented it to M. for payment, who said he would not pay it or waive protest on it, because the signature was not his, but a forgery: Eelcl, The. necessity of demand and notice was not dispensed with.
    
      Error to the District Court of Cuyahoga county.
    This action was brought in the Superior Court of Cleveland upon the following note discounted by the bank : “$500. “ Cleveland, 0., September 16, 1878.
    “ Three months after date, I promise to pay to the order of P. F. McGuire, five hundred dollars, at 184 Ontario street. Yalue received. James Carr.
    “ Indorsed on the back : P. F. McGuire.”
    No defense appears to have been made by the maker, Carr.
    At the time the plaintiff discounted this note it held several other notes made by the defendant, Carr, and indorsed by the said McGuire.
    Subsequent to the discounting of the note in suit, and before its maturity, and before the maturity of the other notes above referred to, the defendant Carr made a general assignment, for the benefit of his creditors, of all of his property to the defendant McGuire.
    McGuire’s place of business -was on Ontario street, alongside of, and next to, Carr’s place of business.
    Upon the trial, one Proudfoot, clerk of the bank, testified as follows:
    Subsequent to the assignment made by said Carr to the said McGuire, and while said plaintiff was the owner and holder of said note, and of several others made by said Carr, and indorsed by said McGuire, he, the said McGuire, told him, the witness, that said Carr had assigned to him, the said McGuire, and that he need not present to Carr for payment the notes the plaintiff' held, which were made by the said Carr, and indorsed by him, the said McGuire, but, to bring to him, McGuire, all of said notes, as they respectively became due, and he would either pay or waive protest on them. That, in accordance with said direction, he did present to the said McGuire all of said notes, respectively, as they severally matured and became payable, and said McGuire did either pay them when so presented to him, or waive in writing demand of payment, and notice of non-payment, of all of said notes, except the one sued upon in this action. The time of the maturity of the note in suit was at a later date than the maturity of any of the other of said notes made by Carr and indorsed by McGuire.
    About twelve o’clock M., on the day of the maturity of the note sued upon in this action, he presented the said note to said P. E. McGuire for payment, at the place of business of said McGuire, on Ontario street, in said city of Cleveland, which was next door to No. 134 Ontario street, the former place of business of said defendant, James Carr, where said note was made payable, and which was then closed; that he then and there requested said McGuire to pay said note, in reply to which request he, the said McGuire, answered that he would not pay the note, nor waive protest on it, because the signature on its back was not his, the said McGuire’s signature, but was a forgery. Upon this subject, McGuire, the defendant, states that he never received any notice of a demand being made on said defendant, Carr, for the payment of said note, or of a demand being made at 134 Ontario street, where the same was payable, for payment; nor did he ever receive any notice whatever, of the non-payment of said note, except this: that, on the day of the maturity of said note, John Proudfoot, collecting clerk of plaintiff', at about twelve o’clock M., of that day, called on him, at his store, and showed him said note, and asked the witness to pay or to waive protest on said note, which -witness then and there refused to do, and so expressly told said Proudfoot, because said indorsement on the back of the note was a forgery and he would never pay the note.
    Another defense of McGuire’s was that the note was a forgery. '
    It does not seem to be denied that no demand was made upon the maker, Carr, and unless that demand is to be held waived by circumstances in evidence, the bank must fail in its action against McGuire the indorser.
    Among other things, the hank claims that all Carr’s property had been assigned to McGuire, aud, thereupon, no demand or notice of dishonor to the indorser was necessary. It however appears that Carr’s assets were insufficient to pay his liabilities.
    The court charged the jury as follows : “ The next question for you to consider is, whether or not sufficient demand upon the maker had been made for the payment of the note when it matured, and due notice thereof given to the indorser. It is not claimed by the plaintiff that any actual demaud was made upon Carr, the maker, on the day on which the note matured. It is claimed by the plaintiff that this demand and notice was waived. It is conceded by both parties that, after the making of this note and before its maturity, Carr, the maker, became insolvent; that he made a general assignment of all his property to the defendant, McGuire, for the benefit of his creditors, and that McGuire accepted of the trust under the insolvent debtor law of the state. It is also claimed by the plaintiff that Carr’s place of business, where the note was made payable, was closed. It is claimed by the plaintiff- that after McGuire accepted of the assignment from Carr, he notified the plaintiff-that certain notes which it held, made by Carr and indorsed by him, McGuire, it need not present to CaiT, but present them to him, and that the plaintiff-, acting upon this request, did present to him indorsed notes, some of which he paid, and upon others waived demand and notice in writing, and that it presented, in the same manner this note, aud that he declined either to pay it or waive demand and notice in writing, on the ground that it was not his indorsement, and that this conduct of his amounted to a waiver of the otherwise strict demand upon the maker and notice to indorser, which, as a general rule, the law requires.
    
      “ The defendant denies that he made any general waiver of demand and notice, and as to this particular note gave the plaintiff’s agent, who called upon him, distinct notice that he would waive nothing whatever.
    “ You will inquire into the testimony, and ascertain what are the facts. If the defendant, McGuire, by his conduct and acts, gave the plaintiff to understand they need make no demand ou Carr, the maker, for the notes of Carr, indorsed by him, which it held, and should look to him for the payment of the same, and that this direction was not corrected and the bank notified that he stood upon his liability as indorser alone, then I say to you that the plaintiff would be excused from making a demand upon the maker, and of giving him, McGuire, notice of the maker’s refusing to pay, or if McGuire misled the plaintiff by his conduct so as to prevent them from making a demand upon the maker, which they otherwise would have made, he can not claim excuse from payment because plaintiff failed to make the demand.
    “If, upon this evidence, however, you do not find that McGuire either waived demand and notice, or did not, by Ms conduct, mislead the plaintiff, and so prevent a demand upon the maker and notice to himself, I say to you (and because requested by the plaintiff, and so I understand the law to be) that if, before the maturity of this note, McGuire, the defendant, as assignee in insolvency, had received a transfer from Carr, the maker, of all his, Carr’s, piroperty, and that, on the day of the maturity of the note, the plaintiff made a demand on him, McGuire, for the payment of the note, that would be, in law, a sufficient demand and notice to charge him as indorser.”
    The jury found in favor of the bank and against McGuire in the amount of the note. McGuire then filed a petition in error in the district court, which reversed the judgment of the superior court. Whereupon the bank filed this petition in error to reverse the judgment of the district court.
    
      W. J. Boardman, for plaintiff in error:
    There was no necessity for demand and notice. Britt v. Levett, 13 East, 213; 1 Parsons on Notes and Bills (ed. 1867), 562, 566, 567, 569; 7 Wend. 166; Bond v. Farnham. 
      5 Mass. 170; Barton v. Baker, 1 Serg. & Rawle, 334; Watkins v. Crouch, 5 Leigh. 538.
    
      Tyler & Denison and Hamilton & Denison, for defendant in error:
    Formerly it was held by some of the American courts, as well as those of other nations, that the mere insolvency of the maker, known to the indorser, relieved the holder of negotiable paper from the ordinary requirements of demand and notice, in order to hold the indorser (1 Mo. 743; 1 Tenn. 260; 2 Brev. 185, etc.); but the current of modern authority is set very strongly the other way, both in this country and in England. Mechanics Bank v. Griswold, 7 Wend. 165; Sanford v. Dillarray, 10 Mass. 52; Shaw v. Reed, 12 Pick. 132; Lawrence v. Langley, 14 N. H. 70; Watkins v. Crouch, 50 Leigh. (Va.), 522; Esdaile v. Sowerky, 11 East, 117, and numerous eases outside of the decisions of Ohio upon that subject. And it has been substantially held, in this state, that insolvency constitutes no excuse for want of demand, or notice to indorser. Develing v. Ferris, 18 Ohio, 179. The same doctrine is held by 1 Parsons, in his Treatise of Notes and Bills (2d ed.), 446, in Story on Promissory Notes, § 286, and in Redfield and Bigelow’s Leading Cases upon Bills of Exchange and Promissory Notes, 461.
    Nor does the fact that the indorser has received funds from the maker of a note, to indemnify him against his liability, furnish excuse for want of demand and notice to such iudorser, unless such indemnity be full, adequate, and complete. Partied indemnity will not excuse such want of demand and notice on the part of the holder, and the indorser still be held liable upon the note. Story on Promissory Notes, § 287; 1 Parsons on Notes and Bills (2d ed.), 568, and on; Redfield and Bigelow’s Leading Cases on Bills of Exchange and Promissory Notes, 462, 463, and all the text-writers who treat of the law merchant. See also the cases of Bunsen v. Napier, 1 Yerger (Tenn.), 199; Durham v. Price, 5 Yerger (Tenn.), 300; Seacord v. Miller, 3 Hernan (N. Y.), 55.
    So, also, the authorities are direct and clear to the effect that a general assignment, by the maker of a note, to his indorser, for the benefit of creditors generally, before the maturity of the note (or after, for that matter), will not relieve the holder from the necessity of due demand and notice of uon-payment, in order to bind the indorser. See cases of Creamer v. Perry, 17 Pick. 332; Haskell v. Boardman, 8 Allen, 38; Moses v. Ela, 43 N. H. 557; Wilson v. Senier, 14 Wis. 380, as well as that of Watkins v. Crouch, 5 Leigh. (Va.), 522; 2 Hammond, 548; 14 Ohio, 495.
   Wright, J.

It is not necessary to consider the question of forgery in this case, as the jury did not seem to give it much consideration, and perhaps, with good ground for so doing.

But it is claimed by McGuire’s counsel, that the Superior Court erred in its charge to the jury, and, therefore, the district court were right in reversing the judgment, and the district court should be affirmed here.

The part of the charge complained of is this: “ If, upon this evidence, however, you do not find that McGuire either waived demand and notice, or did not, by his conduct, mislead the plaintiff, .and so prevent a demaud upon the maker and notice to himself, I say to you (and because requested by the plaintiff, and so I understand the law to be), that if, before the maturity of this note, McGuire, the defendant, as assignee in insolvency, had received a transfer from Carr, the maker, of all his, Carr’s, property, and that, on the day of the maturity of the note, the plaintiff made a demand on him, McGuire, for the payment of the note, that would be in law a sufficient demand and notice to charge him, as indorser.”

The counsel for the bank seem to claim that this assignment of all Carr’s property to his indorser, McGuire, iustead of making the demand on the latter a sufficient demand, was rather an excuse for not making any demand at all. They say, “ McGuire, having obtained an assignment to himself of all the maker’s property, the holder was thereby released from making demand upon the maker of the note, for the reason that such a demand would have been useless, and also for the reason that McGuire knew that a demand would be useless.”

It has been often said that an assignment of all the maker’s property to an indorser, dispensed with demand and.notice, but exactly what the rule is, is a matter of some doubt, as will be seen by reference to the learned notes, in Redfield & Bigelow’s Leading Cases on Bills and Notes, and see Barton v. Baker, 458; 1 Pars. Notes and Bills, 560-575, and the notes thereto. In this case we deem it enough to say, that unless the assignment was sufficient to protect the indorser, demand and notice is not dispensed with. The ground of this rule is, that as the indorser is secured by the property in his hands, there is no occasion for demand and notice. Kent states that the fact that the indorser is “protected,” occasions the waiver of his legal rights, 3 Kent. 113. The evidence shows that Carr’s assets were not sufficient to meet his liabilities, and the charge thereupon was erroneous. The assignment did not make the demand on McGuire a sufficient demaud, nor did it dispense with the necessity of demand. It has already been held by this court in Beard v. Westerman, 32 Ohio St. 29, that “ demand and notice are not necessary as against an indorser, who, at the date of the maturity of the note, has sufficient property of the maker in his posession held as security against his liability.”

But, on behalf of the bank, it is claimed that, conceding this charge to be error, yet the verdict upon the whole was right, inasmuch as McGuire had waived demand and notice, or rather that he had led the bank to suppose he had dispensed with them.

The evidence on this point we understand to be this. There were several of these notes, and McGnire had told the bank they need not present them to Carr, but they should bring them to him as they became due, and he would either pay them or waive protest. This he did until the day of payment of the note in controversy. At noon of that day the clerk came to McGuire with this note, and McGuire said “ he would not pay the note nor waive protest upon it, because the signature on its back was not his, the said McGuire’s, signature, but was a forgery.” This is the clerk’s statement. McGuire’s, which is in effect the same, is: lie says the clerk asked him “to pay or to waive protest on said note, which he (McGuire) then and there refused to do, aud so expressly told Proudfoot, because said indorsement on the back of the note was'a forgery, and he would never pay the“note.”

Ve understand the upshot of this conversation to be that McGuire intended to take back all he had said and done in the matter of waiving protest, and intended the bank so to understand. Under his agreement he had been pursuing a certain line of conduct, waiving protest (which iucludes demand, notice, and all steps necessary to charge the indorser) upon the notes as they came along, but now there is one which is forged, or he thinks it is forged, or says it is forged. Thereupon he repudiates on the spot all existing arrangements, waivers, and understandings, and tells the bank to pursue its legal remedies, whatever they they are. This is the way the evidence strikes a majority of the court.

It is said, with a great deal of force, that McGuire stood in two characters — that of assignee and that of indorser; and that in his character of assignee, he did not intend to insist on demand, knowing it to be useless. But we think he did not intend to waive anything or dispense writh anything, either as assignee or indorser.

If the demand had been made at the close of bank hours, non constat but that the note might have been paid. Perhaps the supposition is far fetched. We concede it to be so. But the indorser had the right to have that done which would exclude the possibility of any supposition, reasonable or unreasonable. He had to the last minute of the last hour of the last day, aud if no one by that time stepped in to meet the demand of payment, he was liable. Bat liow does a demand three or four hours before this time show that no payment could or would be made at this time? This maybe said to be technical. So is the law with regard to demand and notice. It must be complied with, and it is no excuse to show that there wras no use in complying with it.

The law on this subject is strict and well defined, and a waiver of the steps to charge the indorser must be clear and beyond dispute. The bank had plenty of time to take these steps after the indorser had retracted his previous agreement, and to fasten a waiver on him now, it must be upon acts or words that are not doubtful. Parsons well says (1 Bills & Notes, 465):

“"We are unwilling to close this topic of excuse for non-presentment without remarking that the rule requiring presentment is so stringent, and rests upon reasons which require so rigid an adherence to the rule, that it is not safe or prudent to rely upon any of these excuses, except perhaps an express waiver in writing upon the paper itself.”

Judgment of the district court is affirmed.  