## Facts

- Makel Textiles, Inc. (Makel) loaned Dolly Originals, Inc. (Dolly) $10,000.
- Dolly, acting through its president and principal officer Nathan Goldberg, executed two promissory notes for $5,000 each payable to Makel.
- The backs of the notes bore the signatures of Nathan Goldberg and Fred Kushner as endorsers.
- Dolly also delivered five checks for $2,000 each to Makel, signed by Goldberg.
- One $2,000 check was paid.
- A second $2,000 check was deposited by Makel but was returned unpaid.
- Makel sought the remaining balance of $8,000 and sued Dolly (as maker) and Goldberg and Kushner (as endorsers).
- Dolly interposed no defense, and judgment was entered against Dolly.
- Goldberg and Kushner moved to dismiss the complaint against them, claiming they were discharged because Makel did not present the notes for payment and did not give them notice of dishonor and nonpayment.

## Issues

1. Whether endorsers of promissory notes are discharged when the holder does not make presentment of the notes for payment and does not give notice of dishonor, given the circumstances of the transaction and the parties’ roles.

## Decision

- The court denied Goldberg and Kushner’s motion to dismiss.
- The court held that the complaint stated a viable claim against the endorsers and that they were not discharged as a matter of law on the asserted presentment-and-notice grounds.

## Legal Principles

- Under U.C.C. Article 3, an endorser’s liability is generally conditioned on dishonor and timely notice of dishonor, and presentment is commonly part of the process by which dishonor is established.
- Presentment and notice of dishonor may be excused under U.C.C. rules when, based on the circumstances, the omitted steps would not serve their customary function of informing an endorser of nonpayment and allowing protective action.
- An endorser who is closely tied to the maker and the payment process (such as a corporate officer who signs instruments for the maker) may not obtain discharge on a bare claim of missing formalities where the facts support excusing presentment and/or notice.

## Conclusion

The New York Supreme Court allowed Makel’s action to proceed against Goldberg and Kushner, ruling that they were not discharged from endorser liability on Dolly’s promissory notes simply because Makel did not allege formal presentment and notice of dishonor; on the pleaded facts, those requirements did not warrant dismissal as a matter of law.


Makel Textiles, Inc. v. Dolly Originals, Inc., 4 U.C.C. Rep. Serv. 95, 1967 WL 8938 (1967)