Friday, October 26, 2012

O'Dess v. Gunter case brief

An Indorsement


O'Dess v. Gunter

258 Mich. 667, 242 N.W. 804

FACTS
-P sued D on a promissory note.
-D argued that he was an indorser and received no notice of dishonor for a 4 year period.

ISSUE
-Was the D make a promise to pay (was he a maker), or was he merely an indorser?
-Is the D liable for the note?

HOLDING
-D was an indorser. He made no promise to pay, therefore he is not a maker.
-No, he is not liable because he did not get notice of dishonor for 3 years and, as an indorser, he was entitled to notice of dishonor.

RULES
-For one to be a maker of a note, the note must show that the individual makes an unconditional promise to pay.
-
A person who places his signature upon an instrument, if that person is not a maker, drawer, or acceptor, is said to be an indorser, UNLESS he clearly indicates by appropriate words that he intends to be bound in some other capacity.
-An indorser is entitled to notice of dishonor. Here there was no notice of dishonor for at least three years, and the court states that he can not be held liable on the instrument as an indorser.

APPLICATION
-The note at question does not contain the language that states “I promise to pay,” or “we promise to pay,” or any other similar language that indicates that the D made a promise to pay.
-Gunter (D) made no promise to pay.

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