
    McClelland v. Bishop.
    1. The joint note of husband and wife is the valid obligation of the husband alone, although the wife is not liable at law thereon.
    2. Where such a note is payable at a future time, but at no particular place, and the husband, after making the same, abandons his place of residence, and deserts to some place unknown to the holders, which they cannot after diligent inquiry ascertain, when it falls due, they are excused from making, a personal demand upon him.
    3. In such a case, a personal demand on the wife, with due notice of nonpayment to the indorser, is the exercise of due diligence, and the indorser is liable, though there was no personal demand on the husband.
    4. Where there is a series of negotiable notes in the usual form, for distinct sums of money, payable at distinct and specified times in the future, with a mortgage to secure each, according to its tenor and effect, which contains a stipulation that if default be made in the payment of any one, “then each and all should fall due, and this mortgage to become absolute as to all said notes remaining unpaid at the happening of such default.” Held, that such stipulation relates to the remedy by foreclosure or other proceedings under the mortgage, and upon such default the mortgage may be foreclosed for the whole debt. It is a stipulation for the advantage of the mortgagee, and of full force as to a remedy on the mortgage, but does not operate to vary or extinguish the obligations expressed on the face of the notes themselves for general purposes.
    6. For the purpose of demand and notice to charge indorsers, such notes are to be deemed due according to their terms, irrespective of such stipulation in the mortgage.
    7. The foreclosure of such a mortgage after default of payment of the first notes of the series, and payment thereof out of the proceeds of sale, is not a bar to an action to charge an indorser on one of the series subsequently falling due, who has had due notice of demand and nonpayment.
    
      ERROR to the District Court of Muskingum county.
    The plaintiffs, as indorsees, sued Eishop, as indorser of a note made by Nancy M. Wiley and J. A. Wiley, of which the following is a copy :
    “$200. Zanesville, Ohio, Jany. 10, 1876.
    “ Five years after date we promise to pay to the order of Henry A. Eishop two hundred dollars, at six per cent, annually. Yalue received. Naijoy M. Wiley.
    J. A. Wiley.”
    The petition alleges an indorsement by Bishop to one Morgan, who indorsed it to plaintiffs before due, for a valuable consideration — that when due, January 13, 1881, it was duly presented to said Nancy M. Wiley, at Guernsey county, Ohio, for payment, which was refused — that said J. A. Wiley was not in said county at the time, but was believed to be at Cincinnati, Hamilton county, Ohio, at so great a distance from said Nancy M. Wiley and from plaintiffs, that it was impossible to make demand on him, of all of which said Bishop had due notice.
    To this three defenses were pleaded:
    1st. That at the time of the execution and delivery of said note, Nancy M. Wiley was the wife of J. A. Wiley, and therefore the note, as to her, was null and void, all of which the plaintiffs knew, when they became its owners, and when they made demand on her for its payment, and that they neglected and failed to make any demand on said J. A. Wiley.
    2nd. That the contract out of which this note arose, embraced four other notes of like amounts, payable in one, two, three, and four years, this being the last of the series payable in five years, to secure which, said makers gave a mortgage on certain real estate, which mortgage contained a stipulation, “ that if default should be made in the payment of any of the foregoing notes, then each and all of said notes should fall due upon the happening of any such default, and this mortgage to become absolute as to all of said notes remaining unpaid at the period of such default.”
    It is then alleged that the note due January 13, 1878 (the second of the series), fell due, and that default in its payment was made, whereby all of the series became due — that on the 12th of Januál’y, one day before such maturity, plaintiffs took an assignment of said notes and mortgage, and that no demand was made for payment of the note which fell due on the 13th, or of the other three notes, though all then became due, nor was any notice of non-payment given until January 13, 1879, when the third note fell due.
    3d. The third defense adopts the allegations of the second, and adds, that all of said notes were given for the purchase money of real estate described in the mortgage, which became due, as one gross sum after January 13, 1878, by reason of the default in the payment of the second note, as before stated, and that on February 8, 1879,' after failure to pay the third notes, the plaintiffs- commenced proceedings to foreclose said mortgage, on said second and third notes, and such proceedings were had, that a decree was rendered, finding the amount due said plaintiff on the said two notes, and ordering a sale of the mortgaged premises, which were afterwards sold, the sale confirmed and the amount of the decree and all costs were paid, by reason of which the note sued on and all right of action thereon, was merged, and is satisfied by said order.
    4th. Denies the amount due and claims a greater credit than is indorsed.
    The plaintiffs demurred to the first defense, but the same was overruled, and they replied, alleging liability of both makers of said note. They admit the makers were husband and wife, but allege as an excuse for failure to make demand on the husband:
    “ Because, several years before the maturity of the note sued upon, thé said J. A. Wiley abandoned and deserted his wife and family, to wit, the said Nancy M. Wiley, and when last heard from was believed to be in Cincinnati, as in the petition alleged ; but plaintiffs did not know on the 13th day of January, 1881, nor could they learn, after diligent inquiry, where the said J. A. Wiley was to be found, nor where his place of residence or business was, nor whether he was in Cincinnati, or in what part thereof ; and these plaintiffs, therefore, say that they were under no obligations to make demand of payment of the said J. A. Wiley.”
    To this reply a demurrer was sustained and plaintiff excepted. On demurrer by plaintiff to the second and third defenses, they were held bad, but as the reply to the first was held bad also, judgment was rendered against plaintiffs, which was affirmed by the district court.
    The issue of fact raised by the further defense was not determined. As the defendant had judgment in his favor, on his demurrer to the reply to the first defense, that issue became immaterial.
    
      Hollingsworth■ & McDermott, for plaintiffs in error:
    I. As to the sufficiency of demand of payment of one of two joint makers, to bind an indorser. Harris v. OlarTc, 10 Ohio, 5 ; Eastman ,v. Potter, 4 Yt. 313.
    II. Is demand of payment of Mrs. Wiley sufficient, she being a married woman ? If it be true that a married woman is liable on her promissory note only in equitj1', and consequently that, as to her, it is not negotiable paper, still if she be a party to the note, the indorser has pointed her out as the party of whom demánd may be made; and if the note be null and void as to the wife — that is, she being properly not a party to the note, the fact that she has signed it jointly with her husband vests her with an agency which would authorize the holder to make that demand of her which the law requires. But the question of coverture can properly have no place in considering this defense. Each indorsement, it is well settled, constitutes a contract by itself; and the indorser guarantees the validity of the note and its payment at all hazards. The contract of indorsement is to be regarded as a new contract, and the question is.not the competency of the makers, but the competency of the' parties to this new contract, which competency is not disputed in the case at bar. Aymar v. Sheldon, 12 Wend. 439. Approved and followed in Case v. Heffner, 10 Ohio, 180, where this question is thoroughly discussed.
    It is a new and independent contract. Trimble v. Thorne, 16 Johns. 152 ; Allen v. Walker, 2 M. & W. 317 ; Young v. Bryan, 6 Wheat. 146 ; Slocum v. Pomery, 6 Cranch, 221; Lambert v. Oakes, 1 Ld. Raym. 443; 2 Parsons Bills and Notes, 23.
    The indorser is the indorsee’s drawer. 1 Burr. 665. Bishop guaranteed Mrs. Wiley’s competency, and is now estopped to deny it. We had a right to rely on his guarantee and demand payment of her. “ An indorsement is said to imply that all previous parties could do validly what they did ; and that the present indorser has power to make a valid indorsement.” 1 Parsons on Contracts, star page 264. “ It admits the signature and capacity to sign of every prior party.” 2 Parsons Notes and Bills, 25; Smith Merc. Law, 294 ; Cochran v. Atchison, 14 C. L. J. 414; Williams v. Tishomingo San. Ins., 10 C. L. J. 496 ; Weakly v. Bell, 9 Watts, 273 ; Dal-rymyle v. Hillenbrand, 62 N. T. 5 ; Dewey v. Warrener, 71 111. 198 (22 Am. Rep. 91); Bank v. Fearing, 16 Pick. 533; Turnbull v. Boyer, 40 N. Y. 456 ; Yeazie v. Willis, 6 Gray,. 90 ; Bemsen v. Graves, 41 N. Y. 471; Critchlew v. Berry, 2 Cranch, 182 ; Edwards v. Dick, 4 Barn. & Aid. 212. And this though the former indorser or maker be incapacitated by infancy or coverture. 2 Parsons Notes and Bills, 25, and numerous cases; Ballengall v. Gloster, 3 East, 481; Haley v. Lane, 2 Atk. 181; Smith v. Knox, 3 Esp. 46; Bass v. dive, 4 M. & S. 15 ; Brown v. Mott, 7 Johns. 360 ; Erwvn v. Downs, 15 N. Y. 575.
    Wiley having absconded the demand was sufficient. 17 Minn. 209 ; 10 Am. Rep. 161; 15 Am. Dee. 640 ; 1 Parsons on Contracts, 274; 13 Am. Dee. 345 ; 3 Ohio, 309.
    
      Evans & Evans, for defendant in error:
    I. The rule is well defined, that where there are several promisors of a note, who are not partners, it is necessary that the note should be presented to all, or that due diligence be exercised to make such presentation, before the liability of an indorser can accrue. Parsons on Notes and Bills, 362. True, there is an exception to this rule in Ohio, but how far does this exception extend, and does it reach the case under consideration? In the case of Harris v. Clarke, 10 Ohio, 5, the court held that a demand upon one of three joint and several promisors is sufficient: but we have been unable to find any reported case in which it has been held that a demand upon one of several joint promisors was sufficient; on the contrary we find in the case Greenough v. Smead, 3 Ohio St. 416, 423, that Judge Ranney, in delivering the opinion of the court, substantially lays-down the rule that in the case of joint makers, a demand should be made of each, in order to charge an indorser, and further say that they feel no hesitation in saying that the rule adopted in the case of Harris v. Clark, 10 Ohio, 5, should be confined to the precise state of facts upon which the decision was made.
    A demand upon one of several partners is clearly sufficient, and the court in that case considered the several “ makers of a joint and several promissory note in the light of partners in that particular transaction.” But certainly that principle could have no application after the abandonment of his wife, and joint obligor on the note, by J. A. Wiley. But demand upon the wife was no demand whatever. Avery v. Van-Sickle, 35 Ohio St. 270.
    II. The mortgage and notes constituted, and were intended to constitute, one agreement or contract, and should be so construed- and considered (Chitty on Contracts, *23), and it is a proposition of law, so clear, certainly, as to require no citation of authorities to sustain it, “ That parties who are competent to contract, and who do contract, are, together with their privies, bound by the terms of the contract.” In the case at bar, the contract specifically provides, that in the event of default of payment of any one of the notes given under and constituting a part of the contract, all the notes remaining unpaid should then become due and payable. Now it is conceded that the note, which, by its face, fell due January 13, 1818, was at that time, together with the mortgage, and all the other unpaid notes of the said series of notes, secured by the said mortgage, in the hands of the plaintiffs, and they were: necessarily cognizant of the terms of the contract, and, as privies of the payee, bound thereby. It is also conceded that said note, falling due January 13,1878, remained unpaid until February 8, 1879, and that no demand was made, or notice of non-payment given to this defendant, for a long period of time, to wit: until January 13, 1879. This defendant, under those circumstances, had the right to believe that the note falling due January 13, 1878, had been paid at maturity, and to govern himself accordingly, and he was discharged from any and all liability on said note.
    If the proposition be true, that all the notes remaining unpaid on the 13th day of January, 1878, became due on default of payment of the note, which, by its face, fell due on that day, as provided in the contract, then it is clear that the failure of the plaintiffs, as holders of the mortgage and of the notes thus falling due, to make demand of payment of said notes, and give notice of the non-payment of the same to this defendant, as indorser, operated as a discharge from his liability as such indorser. Smith Merc. Law, 246, 247; Chitty on Bills, 259, and note “ I ” on p. 260; 10 Ohio, 5; Story on Bills, §§ 324, 325; 1 Parsons Notes and Bills, 442; Mallon v. Stevens, et. al., Am. Law Record, May, 1881, page, 702 ; Blake v. Lawrence, 4 Esq. 147; 4 Ad. & El. N. S. 519; Carlon v. Kenealy, 12 M. & W. 139.
    III. As to bar see Althof v. Fox, Am. L. Rec. December, 1880, p. 380; Burritt v. Belfy, Am. L. Rec., August, 1881.
   JOHNSON, C. J.

I. The error assigned is, that the courts below erred in rendering a judgment in favor of Bishop, on the facts stated in the petition, the first defense and the reply thereto.

These facts are that plaintiffs are the indorsees for value, and before due, of a joint negotiable note of husband and wife, of which fact they had knowledge, that several years before it became due, the husband abandoned and deserted the wife ; that when last heard from, he was believed to be in Cincinnati; but plaintiffs did not know, on the day the note matured, Jan-nary 13, 1881, nor could they learn after diligent inquiry, where he was to be found nor where his residence or place of business was, and hence they were under no obligations to make demand on him.

The demand on the wife in Guernsey county, and her refusal to pay, and due notice thereof, is admitted, so the question is, was the indorser discharged by the failure to make demand on the husband 2

This question may be considered : first, as unaffected by the coverture of Nancy M. Wiley, that is, treating the note as the valid joint obligation of both makers, and second, as affected by such coverture, and therefore the valid obligation of the husband alone.

First. If this note be regarded as the valid obligation of both.

The general rule is, that in case of a joint note, when the makers are not partners, demand must be made upon both, to charge an indorser.

In this state, in Harris v. Clark, 10 Ohio, 5, it was .held that a demand on one of three joint and several makers, with notice, was sufficient. In this case no excuse was offered for a failure to make demand on'the other makers. Hitchcock, J., said:

If we were to hold a demand must be made upon all the makers, in order to charge the indorser, such decision would operate to discharge many, if not all, indorsers of notes of a character similar to the one now under consideration. It will be seen that the note is not payable at any particular place; if it were, a demand at the place would be sufficient. But as it is, a personal demand was necessary. Now, suppose the makers resided in different states, or in different and distant parts of the same state, how could demand be made of all, so as to charge an indorser ? It must be made on the day the note falls due, or, where days of grace are allowed, upon the last day of grace. Will it be said that demand can be made at different and distant places on the same day through the agency of letters of attorney ? 1 believe such a practice lias not been beard of. At least, we have found nothing like it in the books.”
“But it is said that an indorser is to be considered in the light of security ; that his undertaking to pay- is only in the event of a failure of the maker ; and that although one of the makers may’- refuse, still another, if requested, might pay. There is force in this reasoning. When, however, it is considered that an indorser is immediately notified of the fact of non-payment, and that the object of this notice is that he may procure an indemnity from those whose note he has indorsed, it is not perceived that he is in any great danger of loss in consequence of a failure to make demand of all the makers. He can at once procure his indemnity, if it can be had, or he may himself pay off the note, and immediately proceed against the makers.”

If this be sound in a case of a joint and several note, where no excuse is offered for the failure of the holder to máke demand on all, a fortiori it must be so, when the holder, after diligent inquiry, cannot find one of the makers. • •

This note was dated at Zanesville, Ohio ; whether the makers then resided there does not appear. It had no place of payment. When due, the wife resided in Guernsey county. Several years before maturity, Wiley abandoned and deserted his wife. When the note became due, the plaintiffs did not know, nor after diligent inquiry could they learn his whereabouts or residence. It was impossible to present it to both makers on the same day. The admitted facts show due diligence, and when this is shown, in case of a note payable at no particular place, and when the maker has abandoned his residence and gone to parts unknown, it is a sufficient excuse for non-presentment to him. 1 Parsons on N. & B. 442, 448, note (d.)

Second. The fact that one of the makers was a married woman cannot vary this rule. If, as is claimed, the note was void as to her, still it was the note of the husband and the same rule would apply. The excuse for failure to make a personal demand on him is equally good whether it be regarded as his individual note or as a valid joint note.

By the demand on the wife at her residence in Guernsey county, and notice to the indorser, the latter had all the benefit of such notice. The law merchant does not require impossibilities. All that it requires is due diligence to find the maker. The demurrer to the reply admits such diligence. The indorsement by Bishop implied that the makers were both competent to contract. It admitted the signature and capacity of Nancy M. Wiley to make the note. As against the indorser this is to be regarded as the valid joint note of both makers, and the fact that Mrs. Wiley was the wife of her co-maker, of which plaintiffs had knowledge, can make no difference as to the liability of the indorser to the indorsee. He stood as the drawer of a new bill.

II. This conclusion would reverse the judgment, unless the court below erred in sustaining a demurrer of plaintiff to the second and third defenses. If either of these was a bar to the action on this note! then this judgment for defendant should be affirmed, though for a different reason than was given by the court.

The second defense is, that this fifth note of the series, which, by its terms, fell due Janua/ry 13, 1881, became, in fact, due January 13, 1878, by reason of a stipulation contained in the mortgage made to secure the series, that if default be made in the payment of any of the prior notes, then all should fall due and the mortgage was to become absolute as to all of said notes remaining unpaid.”

The notes themselves are, on their face, subject to no such stipulation. They purport to be so many independent obligations, whose maturity depends on the terms therein stated, to wit, payable in one, two, three, four and five years. These notes are of themselves complete. 'They give no right of action thereon until after due. Por the general purj>oses for which negotiable paper is made, their effect must be determined by their expressed terms. They pass by indorsement before due to bona fide indorsees for value, independent of the mortgage, and the holder’s rights and remedies thereon are unaffected by the mortgage, unless he has notice of some valid defense thereto, arising out of the mortgage. If these plaintiffs bad become holders of these notes without knowledge of the mortgage or without an assignment thereof to them, their equitable interest in the mortgage would have given them no right to sue at law on all the notes upon default as to one note. Having an equity merely in the mortgage this stipulation would not be a covenant in their favor, but only in favor of the mortgagee.

Thus a covenant in a mortgage to trustees to secure bondholders, that upon default to ¡>ay interest, the bonds shall become due, if not inserted in the bonds, can only be taken advantage of by the trustees for the foreclosure of the mortgage. Mallory v. West Shore R. R., 35 N. Y. Sup. Ct. 174.

The bona fide holder of these notes for value, acquired all the rights of indorsees, and could, at their election, sue at law. By taking an assignment of the mortgage made to secure them, they acquired a right in equity to foreclose according to its terms. It was therein stipulated that upon default in paying any note all should become due, “ and this mortgage is to become absolute as to all said notes remaining unpaid.” This clause is for the advantage of the mortgagee or his assignee. It should be construed with reference to the subject matter and its evident purpose, namely, to provide but for one suit in foreclosm’e. In thus limiting its purpose, we give it full force, without rendering null the express stipulations of the notes. The terms of each contract can stand without rendering the other nugatory. If this stipulation was contained in the notes as well as in the mortgage, then both could be enforced without either destroying the other, but if this stipulation in the mortgage varies the obligations of the notes, except for purposes of foreclosure and other equitable relief, then we defeat the obligation as expressed in the notes.

This cannot be a sound conclusion. In Noell v. Garnes, 68 Mo. 649, where this conclusion is reached, the court basis its judgment on the ground that instruments executed at the same time, with regard to the same transaction, are, in the eye of the law, one, and must be read and construed together as such. 2 Smith Lead. Gas. 259. This admitted principle is illustrated in many ways, and by numerous cases, but no where is it applied to nullify one contract, by another made at the same time, relating to the same transaction, where the stipulations of each relate to different things, and both can stand together, and each be applied to its proper subject-matter.

Thus in Morgan v. Martin, 32 Mo. 438, there was a deed of trust to secure certain notes. It contained a provision somewhat similar to the one at bar, and the question was as to the discharge of a surety. It was said the deed was merely collateral, and was not intended to operate as an extinguishment of the contract expressed in the notes, and did not enlarge or diminish the liabilities thereon. It is said, “ the notes could not, on the happening of such a contingency, mature for general purposes.”

An attempt is made in 68 Mo. to limit this principle to cases where the mortgage is given subsequently to the notes, but obviously this distinction does not rest upon sound reasoning. In this conflict between 32nd and 68th Mo. we think the former rests upon firmer ground

While it is true that all separate writings, made at the same time, and relating to the same transaction, are in the eye of the law as if embodied in one, yet it is not true, that when, in one contract, evidenced by a single paper, or in several, relating to the same transaction, containing stipulations relating to matters in their nature separate, either should be construed so as to extinguish the other. If the construction claimed for the mortgage be given, it would extinguish the terms of the notes. As well might the stipulations of the note extinguish those in the mortgage. The stipulation in the mortgage should be construed as providing a remedy on the mortgage, and that so far as foreclosure proceedings are concerned, the notes, for that purpose are due, but for general purposes, the obligations on the notes, are to be determined í>y their own expressed terms. In this way both contracts can stand and be fully enforced according to the manifest intention of the parties.

III. The third defense is, that after the second and third notes became due, and before the fourth and fifth matured, the plaintiffs foreclosed on those then due, and sold the property, out of which they were paid, whereby all right of action on the fourth and fifth notes is gone.

This claim rests upon the idea that by reason of this clause in the mortgage, all the notes became due, and the several notes became one entire demand, and that this action to foreclose for part, was a bar to an action for the remaining part of this'single demand.

This assumes that all the notes became due for all purposes, as well as for the purposes of foreclosure merely. This demand became entire for the purposes of a remedy on the mortgage merely, and if this was a second proceeding to foreclose to pay the later notes, the point would perhaps be well taken, but as it is an action at law on the note, it is not.

Even if all the notes had been embraced in the foreclosure proceeding, and the property proved insufficient to pay all, it would be no bar to this action at law on the note.

Judgment reversed, the demurrer to plaintiffs reply is overruled and cause remanded for further proceedings.  