179 Roberts v.

Chappell
63 Ohio App. 397 • 26 N.E.2d 930 (1939)
McCurdy, J. / Tita K
Subject Matter: Discharge of secondary parties; by discharge of prior party
Summary:
Makers executed a PN in favor of payee Chappell. Payee then indorsed it holder Roberts. On due presentment, it was dishonored
and due notice of dishonor was given to the payee-indorser. In action filed by the holder against the payee, payee argued that he
has been discharged him of his liability on the note because the holder failed to file a claim against the estate of the maker. WON
failure of a creditor to file his claim against the estate of a deceased principal operates as a discharge of subsequent parties. The SC
answered in the negative.
Doctrines:
The discharge of a prior party referred to is a discharge by some act or neglect of the creditor and does not contemplate a discharge
effected by the operation of law. Rule of construction of NIL contemplates some affirmative act on the part of the holder of the note
which operated to discharge the person primarily liable and does not contemplate a discharge by passive conduct on the holder's
part.

Parties:
Plaintiff Roberts (holder)
Defendant Chappell (payee)

Type of Instrument: Promissory Note (PN)

Maker: George Daily, Audrey Daily, Lewis Daily
Payee: Chappell
Holder: Roberts

Facts:
1. Jan. 28, 1926: George, Audrey, and Lewis Daily (makers) executed a PN for USD 237, payable to the order of Chappell (payee)
one year from date.
2. Before maturity, it was indorsed to Roberts (holder). On due presentment, it was dishonored. Due notice of dishonor was
given to payee-indorser Chappell.
3. In this action by Roberts (holder) against Chappell (payee-indorser), the latter said that Lewis Daily (maker) was solvent at the
date of his death, Nov. 18, 1930, and since no that was filed by Roberts against Lewis’ estate, the administration for which had
now been closed. Chappell argues that Roberts’ failure to file the claim discharged him of his liability on the note.
Issue/s: WON failure of a creditor to file his claim against the estate of a deceased principal operates as a discharge of subsequent
parties. (NO)

Ratio:

 Third provision of Section 8225, General Code, provides:

"A person secondarily liable on the instrument is discharged:
xxx
3. By the discharge of a prior party."
 The discharge of a prior party here referred to is a discharge by some act or neglect of the creditor and does not
contemplate a discharge effected by the operation of law. Rule of construction of NIL contemplates some affirmative act on
the part of the holder of the note which operated to discharge the person primarily liable and does not contemplate a
discharge by passive conduct on the holder's part.
o In the instant case, while the payee-indorser Chappel was, before maturity, only contingently liable, the
contingency was completely removed when at maturity, demand was made of all the makers and notice thereof
and of their failure to pay was given to the defendant endorser. At that time the indorser's contract with the
holder became a contract to pay.

Judgment affirmed.