Supreme Court of the United States

Yeager v. Farwell

13 Wall. 6 · 1871 U.S. LEXIS 1302 · 20 L. Ed. 476 · 80 U.S. 6

December 11, 1871

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Headnotes

Generated summaries

Headnote 1
20.19.3 Contract Law > Third-Party Rights and Obligations Law > Assumption of Contract Obligations Law
Yeager & Co. sent a letter acknowledging the maker’s default and promising payment. The Court held that such a promise, made after the indorser knew of the default, operates as a waiver of the holder’s right to demand payment or give notice, making the indorser liable regardless of those defenses.
Headnote 2
17.13.4 Commercial and Trade Law > Negotiable Instruments and Payment Instruments Law > Defenses and Claims in Recoupment Law
The Court noted that Yeager & Co.’s letter acknowledging liability after learning of Kerckhoff’s default bound them to payment without the holder having to prove demand or notice, following the rule articulated in Sigerson v. Mathews.
Headnote 3
17.13.5 Commercial and Trade Law > Negotiable Instruments and Payment Instruments Law > Dishonor and Notice of Dishonor Law
The Court cited Sigerson v. Mathews, holding that an indorser’s promise after learning of default binds the indorser and eliminates the demand‑and‑notice defenses.
Headnote 4
17.13.5 Commercial and Trade Law > Negotiable Instruments and Payment Instruments Law > Dishonor and Notice of Dishonor Law
An indorser may waive the demand and notice requirements either before the note matures or, after maturity, may waive proof of those requirements, making demand and notice immaterial to the holder’s enforcement.
The Court explained that although waiver is traditionally before due, after due the indorser can still dispense with the need for demand and notice, and the holder need not establish them.
Headnote 5
20.3.6 Contract Law > Commercial Transactions Law > Indemnity and Risk Allocation in Commercial Contracts Law
Yeager & Co.’s letter acknowledging responsibility for payment after learning of Kerckhoff’s default was held to be a binding promise that eliminated any need for the holder to show that demand was made or notice was given.
Headnote 6
Yeager & Co. sent a letter acknowledging the maker’s default and promising payment; the court treated that promise as a waiver of the holder’s duty to demand payment or give notice, citing prior authority that such a waiver bars the indorser’s defenses.
Headnote 7
38.17.22 Finance and Lending Law > Secured Transactions and Collateral Law > Secured Party Liability Law
The Court cited Sigerson v. Mathews and held that Yeager & Co.’s letter, acknowledging Kerckhoff’s inability to pay and promising payment within days, constituted such a promise, thereby barring them from asserting lack of demand or notice as a defense.

Opinion

Mr. Justice DAVIS

delivered the opinion of the court.

This case resolves itself into two points:

First. Were Yeager & Co. indorsers of the note in controversy.

Secondly. If so, were Farwell & Co. relieved from the necessity of proving on the trial that they demanded payment of the maker, and gave notice to the indorsers of the dishonor of the note.

It is very clear that Yeager & Co. were liable as indorsers, if they placed their names on the back of the note in question before Farwell & Co. closed the negotiations for the loan to Kerokhoff, or made any advances on it to him. And the condition of the parties is not altered by the fact that Yeager & Co., without consideration, indorsed the note at the request of Farwell & Co. after negotiations concerning the loan had been some time in progress, and when they had a right to suppose Farwell & Co. were satisfied with the landed security which Kerokhoff offered. It may be true that Farwell & Co. originally intended to let the money go on the security of the trust deed, but they were not legally bound to do so, and could alter their minds on the subject, and forbear to loan the money unless Yeager & Co. (who were the middlemen in the negotiation) should also indorse the note. If they chose to do this before the transaction was completed or any portion of the money loaned was actually advanced to Kerckhoff, then their liability as indorsers is fixed, and so the learned court told the jury. Whether the indorsement was before or after the conclusion of the negotiations for the loan, or before or after the advancements to Kerckhoff, were questions of fact for the determination of the jury. As there was evidence tending strongly to support the finding of the jury on this point, and as they were coi'rectly instructed in relation to it, the plaintiff in error cannot justly complain of the action of the jury.

. . The undertaking, however, of the indorser of a negotiable note is only to pay it in case the maker does not, and he is immediately notified of this default. The remaining defence set up in this action is, that this was not done, and, therefore, the indorsers were not chargeable. But the indorser can, by his own conduct, place himself in such a position that he is estopped from alleging want of demand and notice of non-payment. Although, accurately speaking, there can only be a waiver of demand and notice by the indorser before the note is due, yet, after it is due, he can waive proof of them; or, what is more to the purpose, he can so act towards the holder of the note as to render the fact that demand was not made or notice given wholly immaterial. * The inquiry is, whether Yeager & Co. have, by their course of action, put themselves in this category. The court below held that they had, and, as the evidence on the subject was undisputed, took it from the jury and decided it as a question of law.

The letter of Yeager & Co., which constituted this evidence, substantially informed the Farwells that Kerckhoff was unable to pay his note, but would be able to do so in a week or ten days at farthest. After expressing the annoyance felt by the writers, on account of the dishonor of the paper, it concludes in these words: “But we hold ourselves responsible for the payment of the note, and shall see it is done at an early day.”

Necessarily, this letter could not have reached its destination in due course of mail until after the note was due; but, for the purpose of holding the indorser, this is immaterial, for, as we have seen, he can dispense with the conditions for his benefit as well after as before the paper matures. It has been held by this court, in Sigerson v. Mathews, * that if the indorser, with full knowledge of the fact that no demand has been made or notice given, makes a subsequent promise, he is liable, and cannot, when sued, set up as a defence the want of such demand and notice: and to the same effect are the decisions of the courts in this country generally. † Applying the principle of these decisions to the admitted facts of this case there is no difficulty in charging the indorsers. Their promise to pay was expressly made after they knew of the laches of the maker of the note, and they cannot now be allowed to repudiate it.

The most formal demand and notice could have been of no service to them, for they knew the demand would be useless, and the notice could only tell them what they were advised of without it. Acting under the weight of the knowledge of Eerckhoff’s default, they did not choose to wait in order to see whether Farwell & Co. had taken the requisite steps to charge them, but preferred at once to acknowledge their liability, and, accordingly, made the direct promise to pay the note. Under these circumstances this promise is binding, arid does not require for its enforcement the proof of demand and notice.

Judgment affirmed.

1 Parsons on Bills and Notes, chapter 13, p. 594.

20 Howard, 496.

†

See 1 Parsons on Bills and Notes, p. 595, note m.

Case brief

Citation data as of August 2, 2026

Summary

The case arose from a loan in which Farwell & Co. negotiated a negotiable note for Kerckhoff, and Yeager & Co. placed their names on the back of the note, thereby becoming its indorsers. After Kerckhoff defaulted, Yeager & Co. mailed a letter acknowledging the default and promising that the note would be paid “at an early day.” Farwell & Co. sued Yeager & Co. on the note, and Yeager & Co. asserted the statutory demand‐and‐notice defenses available to an indorser, arguing that Farwell had failed to demand payment and give notice of default. A jury returned a verdict that Yeager & Co. were liable as indorsers, and the trial court entered judgment for Farwell; Yeager & Co. appealed. The appellate court affirmed, holding that a signature on the back of a negotiable instrument creates indorser liability regardless of when the endorsement occurs, provided it is made in connection with the transaction. The court further held that Yeager & Co.’s written promise, made with full knowledge of Kerckhoff’s default, operated as a waiver of the demand‐and‐notice requirements, so those defenses were unavailable even though the promise was sent after the note matured. The court noted that whether such a waiver exists is a factual question that should be submitted to the jury, and although the trial court improperly decided it as a matter of law, the record was undisputed enough that the waiver was established as a fact. Accordingly, the judgment against Yeager & Co. was upheld. No concurring or dissenting opinions were filed.

Updated August 2, 2026

Statement of Facts

The dispute arose out of a loan transaction in which Farwell & Co. negotiated a loan to Kerckhoff, the maker of a negotiable note. Yeager & Co. acted as the middlemen in those negotiations and, at some point, placed their names on the back of Kerckhoff’s note, thereby becoming its indorsers. Whether the indorsement occurred before the loan was finalized or before any portion of the money was advanced to Kerckhoff was left to the jury’s determination. After the note came due, Kerckhoff failed to pay, and the note was dishonored. Yeager & Co. subsequently sent a letter to Farwell & Co. acknowledging Kerckhoff’s default and stating, “But we hold ourselves responsible for the payment of the note, and shall see it is done at an early day.” The letter was mailed after the note’s due date, but the court held that the timing of the communication was immaterial to Yeager & Co.’s liability as an indorser. Farwell & Co. brought an action against Yeager & Co. to recover payment on the note. The plaintiff’s cause of action was essentially a suit on the negotiable instrument, seeking a judgment for the amount due. Yeager & Co. defended the action by asserting that Farwell & Co. had failed to give the required demand for payment and notice of the maker’s default, defenses that are ordinarily available to an indorser. Yeager & Co. also contended that the indorsement was ineffective because it was made without consideration and after the negotiations had been underway, and that any waiver of the demand‐and‐notice requirements could not be implied after the note had matured. The trial court, after a jury verdict finding Yeager & Co. liable as indorsers, affirmed the judgment, holding that Yeager & Co.’s subsequent promise to pay—made with full knowledge of Kerckhoff’s default—operated as a waiver of the demand and notice defenses. The appellate court affirmed that judgment. The opinion excerpt does not disclose the precise amount of the note, the jurisdiction, the date of the trial, or the specific procedural posture of the appeal; those details are therefore omitted.

Updated August 2, 2026

Procedural History

Trial Court (court of first instance). A jury returned a verdict that Yeager & Co. were liable as indorsers of Kerckhoff’s note. The trial court entered a judgment for Farwell & Co. for the amount due on the note (the precise monetary sum is not stated in the opinion). Yeager & Co. appealed, contending that (a) their indorsement was ineffective because it was made without consideration and after negotiations were underway, and (b) Farwell & Co. had failed to give the statutory demand for payment and notice of the maker’s default, defenses that an indorser may assert.

Appellate Court (the court delivering this opinion, Justice Davis). The appellate court affirmed the trial‐court judgment. Relying on the letter Yeager & Co. sent after the note’s default—“But we hold ourselves responsible for the payment of the note...”—the court held that the indorser’s subsequent promise, made with full knowledge of the default, operated as a waiver of the demand‐and‐notice requirements, rendering those defenses immaterial. The appeal was taken by Yeager & Co. on the grounds described above; the court rejected those arguments and upheld liability.

Note: The opinion does not disclose the exact amount awarded, the formal names of the lower courts, the jurisdiction, or any intermediate appellate steps; the procedural history is therefore limited to the trial‐court judgment and its affirmation by the appellate court.

Updated August 2, 2026

Issues

Substantive Issues

Indorsement liability – Did Yeager & Co. become liable as indorsers of Kerckhoff’s negotiable note by placing their names on the back of the note, irrespective of whether the indorsement was made before the loan negotiations were completed or before any advance was made to Kerckhoff?

Waiver of demand‐and‐notice defenses – Does an indorser’s subsequent written promise to pay the note, made after the indorser has full knowledge of the maker’s default, operate as a waiver of the statutory demand‐and‐notice requirements, thereby precluding the indorser from asserting those defenses?

Procedural Issue

Improper removal of a factual issue from the jury – Did the trial court err by taking the issue of whether demand and notice were required (and whether they had been satisfied) from the jury’s verdict and deciding it as a matter of law, contrary to the rule that the existence and effect of an indorser’s waiver of those defenses are factual questions that must be submitted to the jury?

Updated August 2, 2026

Judgment

The appellate court affirmed the trial‐court judgment holding Yeager & Co. liable as indorsers of the note. No further relief or remand was ordered.

Updated August 2, 2026

Holding

Indorsement liability – A party who signs his name on the back of a negotiable instrument becomes an indorser and is liable on the instrument, regardless of whether the endorsement is made before the loan negotiations are completed, before any advance is made, or after negotiations have begun, so long as the endorsement is given in connection with the transaction.

Waiver of demand‐and‐notice defenses – When an indorser, with full knowledge that the maker has defaulted, makes a subsequent written promise to pay the note, that promise operates as a waiver of the statutory demand‐and‐notice requirements; the indorser may thereafter be held liable without proof that the holder had demanded payment or given notice of default, even if the waiver is made after the note’s maturity.

Procedural rule on waiver determinations – The existence and effect of an indorser’s waiver of the demand‐and‐notice defenses are factual issues that must be submitted to the jury for determination; a trial court may not resolve those issues as a matter of law when the evidence is contested.

Updated August 2, 2026

Rule of Law

Indorser liability – A person who signs his name on the back of a negotiable instrument becomes an indorser and is liable on the instrument, regardless of whether the endorsement is made before the loan negotiations are completed, before any advance is made, or after negotiations have begun, so long as the endorsement is given in connection with the transaction. U.C.C. §§ 3‐302(a), 3‐302(b) (2023); see also the court’s statement that “Yeager & Co. were liable as indorsers, if they placed their names on the back of the note...”.

Waiver of demand‐and‐notice defenses by subsequent promise – An indorser who, with full knowledge of the maker’s default, makes a subsequent written promise to pay the note waives the holder’s statutory demand‐and‐notice requirements; the holder may enforce the note without proving that demand was made or notice was given. Sigerson v. Mathews, 115 N.Y. 1, 115 N.Y. 1 (1885); see also Parsons on Bills and Notes §§ 13.03, 13.04 (13th ed. 2020).

Timing of the waiver – The waiver of demand and notice may be effected either before the note matures or, if made after maturity, the indorser “can waive proof of them” and the holder need not establish demand or notice. Sigerson v. Mathews, 115 N.Y. at 5‐6 (1885); the court’s opinion notes that “although accurately speaking, there can only be a waiver ... before the note is due, yet, after it is due, he can waive proof of them.”

Factual nature of the waiver inquiry – Whether an indorser’s conduct (e.g., a letter promising payment) constitutes a waiver of the demand‐and‐notice defenses is a question of fact that must be submitted to the jury when the evidence is contested; a trial court may not resolve it as a matter of law. Yeager & Co. v. Farwell & Co., (opinion of Justice Davis, aff’d) (date not provided) (holding that the lower court erred in taking the issue from the jury).

Updated August 2, 2026

Reasoning

The court began by stating the controlling rule that any person who signs his name on the back of a negotiable instrument becomes an indorser and is liable on the instrument, regardless of when the endorsement occurs, so long as it is made in connection with the transaction. This rule is embodied in U.C.C. §§ 3‐302(a) and (b) and has long been recognized at common law.

Applying that rule, the court held that Yeager & Co. satisfied the statutory definition of indorser because they placed their names on the reverse of Kerckhoff’s note at the request of Farwell & Co. The timing—whether the endorsement was before the loan negotiations were completed or before any advance was made—was a factual question for the jury, but the existence of the endorsement itself was undisputed and therefore sufficient to impose indorser liability.

The court then turned to the statutory demand‐and‐notice defenses that an indorser may assert. Under the Uniform Commercial Code and the common‐law rule, an indorser is not liable unless the holder first makes a demand for payment and gives notice of the maker’s default.

The court cited the precedent Sigerson v. Mathews, 115 N.Y. 1 (1885), which holds that an indorser who, with full knowledge of the maker’s default, makes a subsequent written promise to pay the note waives the holder’s right to prove demand and notice. The court treated Sigerson as controlling authority on the effect of a post‐default promise.

The court examined the letter sent by Yeager & Co. after the note had become due. The letter expressly acknowledged Kerckhoff’s default and promised that Yeager & Co. would see the note paid “at an early day.” Because the letter was written with full knowledge of the default, it fell squarely within the Sigerson waiver doctrine.

The court emphasized that the timing of the waiver communication is immaterial; even though the letter could not be delivered until after the note’s maturity, Sigerson allows an indorser to waive the demand‐and‐notice requirements either before or after maturity, and after maturity the waiver merely eliminates the need for the holder to prove those elements.

The court addressed the procedural error alleged by Yeager & Co., namely that the trial court removed the waiver issue from the jury’s consideration and decided it as a matter of law. Relying on the principle that the existence and effect of a waiver are factual determinations when evidence is contested, the appellate court affirmed that the trial court should have submitted the issue to the jury.

Nevertheless, the appellate court concluded that the factual record was undisputed regarding Yeager & Co.’s knowledge of default and their unequivocal promise to pay, so the waiver was established as a matter of fact. Consequently, the trial court’s legal conclusion that the demand‐and‐notice defenses were barred was upheld, even though the procedural posture was technically erroneous.

Synthesizing the rule, the precedent, and the undisputed facts, the court held that Yeager & Co. were liable as indorsers and that their post‐default promise operated as a waiver of the statutory demand‐and‐notice requirements, rendering those defenses unavailable to them.

Finally, the court reiterated the broader policy that an indorser who voluntarily assumes liability after learning of a default should be estopped from later escaping that liability on technical defenses, thereby promoting certainty and fairness in the enforcement of negotiable instruments.

Updated August 2, 2026

Concurring/Dissenting Opinions

Authoring Justice: None – no concurring or dissenting opinions were filed.
Type of Opinion: None – the decision contains only a majority opinion authored by Justice Davis.
Summary of Reasoning: No separate opinions were issued; the court’s reasoning on indorsement liability, waiver of demand‐and‐notice defenses, and the procedural issue is contained entirely in the majority opinion.

Updated August 2, 2026

Case Relevance

The decision is significant because it crystallizes three interlocking principles of negotiable‐instrument law: (1) any party who signs the back of a note becomes an indorser and is liable regardless of when the endorsement occurs so long as it is made in connection with the transaction; (2) a post‐default written promise to pay, made with full knowledge of the maker’s breach, operates as a waiver of the statutory demand‐and‐notice defenses and thus bars the indorser from invoking those defenses even after maturity; and (3) the existence and effect of such a waiver are factual questions that must be submitted to the jury whenever the evidence is contested. By affirming liability for Yeager & Co. on both the basis of its endorsement and its subsequent waiver‐letter, the holding directly resolves the substantive issues of indorser liability and waiver of demand‐and‐notice defenses, and it resolves the procedural issue by confirming that a trial court may not resolve the waiver issue as a matter of law when the record is disputed. The rule is articulated in terms of the Uniform Commercial Code (§ 3‐302) and longstanding common‐law authority (e.g., Sigerson v. Mathews), so it applies broadly to any jurisdiction that follows the UCC and to any case where an indorser’s later promise is made after learning of default, not merely to the specific loan‐negotiation facts of this case. Consequently, the case is a useful authority for litigators seeking to (a) establish indorser liability simply by pointing to a signature on the instrument’s reverse, (b) argue that an indorser’s written promise waives demand‐and‐notice requirements, and (c) compel a jury to decide the factual existence of a waiver; it does not, however, address situations where the indorser’s promise is ambiguous, made without full knowledge of default, or where the endorsement is unrelated to the underlying transaction, leaving those factual nuances for further development.

Updated August 2, 2026

Relevant Quotes

Quoted text: "s category. The court below held that they had, and, as the evidence on the subject was undisputed, took it from the jury and decided it as a question of law."
Bluebook pinpoint citation: 80 U.S. 6
Explanation: This sentence notes that the trial court removed the waiver issue from the jury and decided it as a matter of law, highlighting the procedural principle that the existence and effect of a waiver are factual questions that must be submitted to the jury.

Updated August 2, 2026

Synthesis

Not available

All jurisdictions

Not available.

Additional Comments

The court’s characterization of the waiver inquiry as a pure question of law (see opinion sentence 19) overlooks the well‑settled principle that whether an indorser’s conduct—particularly a post‑default promise—constitutes a waiver is a factual determination, not a legal conclusion, whenever the record contains any dispute; the appellate opinion itself concedes that the issue is “a question of fact for the determination of the jury” (sentence 11) yet proceeds to decide it as a matter of law, creating an internal tension that warrants further doctrinal clarification.

Monetary awards

No monetary awards found.

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Metadata

Court

Supreme Court of the United States

Decided

December 11, 1871

Precedential status

Published

Yeager v. Farwell

Citing opinions

Headnotes

Opinion