
    
      William W. Gray vs. James P. Bell.
    
    The indorser of a note past due, is not liable until payment has been demanded of the maker and notice of refusal given to the indorser.
    What is reasonable diligence in making demand and giving notice, where a note is past due when indorsed, must always be left as a question of fact to the jury.
    The above rules apply as well to notes payable to bearer, as to notes payable to order.
    
      Before Butler, J. at Sumter, October, extra Term, 1845.
    This was an action of assumpsit against the defendant as the indorser of a promissory note for two hundred and fifty dollars, drawn by R. R. Spann, on the 27th December, 1842, payable, three months after date, to the defendant or bearer. The defendant’s indorsement was in blank, but under it was a special indorsement by one John F. Ballard to the plaintiff, which bore date 11th October, 1843. There were counts in the declaration against the defendant as the indorser of a promissory note, as the drawer of a bill of exchange, for money had and received, for money paid, and for goods sold and delivered. On the trial, John F. Ballard was offered as a witness for the plaintiff. He testified that “ Bell gave him authority to get the note in Charleston, where it had been traded by Bell. He did so, and Bell told him to trade it off and he would give him fifty dollars. He offered it to Gray, with Bell’s name on it, for a wagon, gear and tobacco, and represented the note to be good ; but Gray was allowed to make some inquiry. Gray was a North Carolinian, trading tobacco. The witness passed the note to Gray, and indorsed it the 11th October, 1843. At the time, Gray started to go to Spann’s, but he was then in the Western Country. Gray went to North Carolina; came back in February, 1844, but could not get his money, and immediately commenced suit against all the parties, and this Bell knew. Spann was insolvent at the time. Spann’s residence was about three miles, and Bell’s about a mile and a half, from Providence, Sumter District, where the trade took place.” The record of the action against Spann was offered in evidence. The writ was lodged with the sheriff on the 20th February, 1844. Here the plaintiff closed, and the defendant moved for a non-suit.
    His Honor, the presiding Judge, ruled that the defendant was not liable as an indorser of a promissory note, but that by putting his name on the back of such a note, he was to be regarded as the drawer of a bill of exchange, in favor of the payee at sight. It was the same as drawing on Spann for so much money as was then due. The plaintiff, therefore, should have presented the bill for payment, as soon as the circumstances attending the situation of the parties would allow. He should have used reasonable diligence in making a demand on the diawer or maker of the note, and on failure to have the demand paid or accepted, he should have given immediate notice to the defendant or drawer of the bill. The most obvious way of making the demand, was to call at Spann’s residence immediately, or to have left the note with an agent to make a personal demand on his return from the West. It would seem that the plaintiff did neither, but waited until he came here from North Carolina, four months after he received the paper, and then commenced suit against all the parties, which was to be regarded as the first demand and notice. Under these circumstances, he thought the plaintiff had been guilty of laches, and had thereby taken the bill in absolute payment of the commodities for which he took it. In that point of view, he thought he could not recover on the count for goods sold and delivered — and granted the motion for a non-suit.
    The plaintiff appealed, and now moved the court to set aside the non-suit and grant a new trial, on the grounds,
    1. Because the presiding Judge' ruled that the indorsement of a note payable to bearer, and passed after due, was a bill of exchange drawn by the payee upon the maker, at sight.
    
      2. Because his Honor ruled that the plaintiff was bound to use the same diligence as to demand and notice, as if the note was passed before due.
    
      3. Because his Honor ruled that suit brought to the first term after the indorsement, with the knowledge of the indorser, was not sufficient demand and notice to the indorser.
    4. Because it is submitted that whether the note was received by plaintiff as payment, was a fact to be decided by the jury, and the question should have been submitted to them.
    
      J M. DeiSaussure, for the motion,
    did not deny that the defendant was to be regarded as the drawer of a bill of exchange payable at sight, Tuten vs. Ryan, 1 Sp. 240, but submitted that the bill was to be regarded as already accepted; Poole vs. Tolleson, 1 McC. 202; 1 Mill, 69.
    Upon the question of due diligence, he submitted that under all the circumstances of the case — Spann being insolvent, and out of the State at the time, and the plaintiff being a resident of North Carolina, the plaintiff had not been guilty of such laches as to defeat him of his right of action on the note. Ch. on Bills, 302; 2 H. Bl. 565; 7 Taunt. 162, 397; 1 Rich. 397; 1 Hill, 56; IT. R. 405; 1 Bail. 322.
    On the count for goods sold and delivered, the plaintiff was entitled to go to the jury. The transfer of the note did not absolutely extinguish the demand for the price of the wagon, <$-c. At any rate, the question of payment was one for the jury, and not for the court.
    
      J. 8. G. Richardson, contra.
    The defendant is to be regarded, not as the indorser of a note, but as the drawer of a bill of exchange. In T%iten vs. Ryan, Mr. J. O’Neal! says, “ Where a note is payable to A or bearer, and he writes his name on the back of it, he does not become liable as indorser, but a bill directing the maker to pay the contents to the holder, may be written above his name, and he will then be liable as the drawer of a bill of exchange.” Eccles vs. Ballard, 2 McC. 388. Regarding the defendant, under these authorities, as the drawer of a bill, the next question is, when was the bill payable'? As the transfer took place on the 11th October, 1843, after the note became due, it must be regarded as payable on demand or at sight. “Where no time of payment is expressed, a bill is payable on demand.” Byles on Bills, 122 ; 8 Johns. R. 189, 374. “A bill negotiated after day of payment, is like a bill payable at sight.” Dehers vs. Harriott, Show. 164. In 2 Conn. R. 419, Swift, J. says, “ The in-dorsement of a bill or note after due, is equivalent to drawing a new bill payable at sight; and demand must be made by the indorsee of the. drawee of the bill or maker of the note, and notice given to the indorser, as in cases of bills payable at sight.” The next question in order is, what are the rules of diligence applicable to a bill payable on demand or at sight ? These rules are collected by the elementary writers, and shew, beyond question, that proper diligence has not been used by the plaintiff. Bayl. on Bills, 225 — 6, 262; Byles on Bills, 123 — 4.
    But it is said that Spann was out of the State, and that he was insolvent, and these circumstances, it is supposed, make a difference. It is well settled they do not. As Spann was absent on a visit to the West, and had no place of business, the note should have been presented for payment at his residence. Bayl. on Bills, 200. “ The insolvency of the maker does not dispense with a demand and notice.” Alhoood vs. Haseldon, 2 Bail. 460.
    But suppose the defendant is to be regarded as the indor-ser of a note past due, yet is it not clear that reasonable diligence has not been used? Stockman vs. Riley, 2 McC. 399. In Nash vs. Harrington, 2 Aikens. 9, it was held, that where a note was indorsed long after it was due, a presentment seven days after the indorsement was too late, the holder and maker residing in the same place.
    But who are to decide what is reasonabe diligence, the court or the jury? “What is reasonable time, when the facts are ascertained, is a question of law to be determined by the court.” 1 Cowen, 397; Tindql vs. Brown, 1 T. R. 167.
    Having arrived at the conclusion that the plaintiff cannot recover on the note, the last question is, is he entitled to go to the jury for the price of the wagon, <fcc ? There are two reasons why he is not. 1st. Where a note is given for a prior debt, it is, prima facie, not payment, but where, as in this case, the note of a third person is given for an article purchased at the time, it is, at least prima facie, an exchange of property, and no demand exists for the price of the article. Whitbeck vs. Vanness, 11 Johns. R. 409; Reiv vs. Barber, 3 Cow. 272. 2d. The defendant, by his laches, having adopted the note, and, in mercantile phrase, made it his own, cannot resort to the consideration for which it was transferred. Bridges vs. Berry, 3 Taunt. 130; 1 Cowen, 711.
   Curia, per Butler, J.

It is unimportant in this case whether the defendant be regarded as the drawer of a bill of exchange on the original maker, or the indorser oí the note after it was due. The rights and liabilities of the parties would be essentially the same, whether regarded as one or the other. The paper being past due, and, in mercantile contemplation, dishonored, it was not subject to the same rules that would be applicable to anote indorsed before it was due. The invariable presumption of the law should be, that where one indorses a note when past due, he does so on the knowledge that payment has been demanded and refused by the maker. The indorsee takes the note, under such circumstances, as much on the credit oí the indorser, as upon that of the maker. When the paper is transferred by such indorsement, the indorser, in effect, says to his indorsee, this note was not paid to me when demanded, and I now give you the right and authority to collect it for the payment of your debt; but if you cannot collect it, by such reasonable diligence as you may employ, then I am to be regarded as incurring the liability of a new party, or additional maker of the note; my liability is postponed, and depends on your ability to collect the money from the original maker. The obligation is to become absolute on the failure of collection, and can only be discharged upon the ground that the holder or indorsee has not done all that was incumbent on him, in procuring collection. The most obvious understanding between the parties is, that the indorsee should, on his part, proceed de novo to make a demand of the maker, and unless the in-dorser is informed, by notice, that such demand has not been complied with, he has every reason to suppose that he is not to be looked to on his indorsement. Demand and notice, therefore, must be regarded as a part of the duty imposed on the indorsee, before he can resort to the liability of the indorser as a new maker of the note. This demand and notice should be made and given in a reasonable time, which will vary according to the situation and circumstances of the parties. The indorsee is to be regarded, in some measure, as the agent of the indorser to collect and apply the money in discharge of his demand. Having taken the paper as a conditional substitute for his own demand against his immediate debtor, both interest and duty concur in requiring him to proceed with proper diligence against the party primarily liable. This diligence does not admit of such exact definition as always to be a question of law, but must, it would seem from our decisions, be left, under all the circumstances of the case, to the decision of a jury. The kind of diligence that should be observed and pursued by an indorsee, in respect to the collection of a note indorsed before due, is well settled by certain and acknowledged rules, and is such as always to make it a question of law for the court. These general principles have not been always observed in our own decisions. The distinction between notes indorsed before or after due, has been, in some instances, confounded. In the case of Chadwick vs. Jeffers, 1 Rich. 397, they are, however, recognised, if not authoritatively ruled. This decision goes far to modify the previous cases, and I am willing to acquiesce in its correctness, believing that it will bring our law to the true and generally acknowledged commercial doctrine on the subject. The doctrine is this — that an indorser of a promissory note, whether to bearer or order, after it is past due, is an additional maker, with a postponed liability, depending on the diligence of his indorsee, which must always be left as a question of fact to the jury.

Taking this view of the case, which I am willing to regard as the one to govern it, the order of non-suit made on the circuit should be set aside. For the purpose of having the case tried according to these principles, the case is sent back for a new trial.

Richardson, O’Neall, Evans, Wardlaw and Frost,. ÍJ. dbncurred.  