Story Case

Edward Jamison made a deposit of several checks with his bank, the Maple Avenue Bank, and the amount was credited to his account. On the next day, he was notified that one of the checks had been refused by the drawee bank, and that he would be held liable as in-dorser. The Maple Avenue Bank did not charge it against his account, but demanded an additional payment of the amount. Jamison denied that he was responsible in any way, and refused to make the payment or to allow his account to be charged. The bank brought suit, on the indorsement by Jamison; he replied that it should be required first to proceed against the drawer of the check. It appeared that, in fact, the drawer was wholly solvent, but that his account had been drawn out on the particular day when this check had been presented. Jamison said, very reasonably, that to allow this recovery would be only a waste of time, since he would then be obliged to seek recourse of the drawer, whereas the Maple Avenue Bank might as well apply in the first instance to the drawer. Is this a sufficient defense?

Ruling Court Case. Start Vs. Tupper, Volume 87 Vermont Reports, Page 19; Volume 130 American State Reports, Page 1015

Tupper was holder of a check, dated August 20, and payable to his order. The check was drawn upon a bank in a distant town. On the twenty-second of August, Tupper indorsed the check to Start. Start held it for six days before sending it forward for collection. It was presented and protested for want of funds on September 4. August twenty-fourth was the last day on which payment would or could have been made by the bank. Start then notified Tupper, and brought this action against the latter, as indorsee.

Tupper contended that his liability as indorser depended upon Start's using due diligence in presenting this check for payment. He contended further that due diligence was not exercised, because of the unreasonable delay.

Mr. Justice Munson said: "The agreed statement shows a failure to forward in due course, and this is decisive of the case presented. The consideration on which the holder of a check, drawn without funds, is permitted to excuse his right as against the drawer, is not applicable to an indorser. The drawer is the one ultimately liable, and prompt presentment and notice of non-payment may enable the indorser to secure himself by taking prompt action against the drawer. The indorser's liability is impliedly conditioned on this being done, and a failure therein will discharge him, even though presentment in due course would have been unavailing." Judgment was given for Tupper.

Ruling Law. Story Case Answer

The indorser of a check incurs substantially the same liability as an indorser of an ordinary bill of exchange. He impliedly warrants that the instrument is genuine, that the parties to it are competent, and that he has title to it. In addition to this, he promises his indorsee and every subsequent indorser that he will pay it, if, upon presentment and notice, the maker does not. A holder of an instrument must present it within a reasonable time, or he loses his recourse against his indorsee, whether or not any damage results to him because of the delay.

There has been, in fact, a dishonor of the check, in the Story Case, so that Jamison has become liable. His argument would, as a practical matter, govern in the ordinary case and the bank would be willing to take the shortest road. But if it choose not to do so, Jamison can not resist. Since there was prompt presentment and dishonor, the indorser is liable. Judgment should be given for the Maple Avenue Bank.