Plaintiff bank is the holder of a promissory note which defendant Thomas Fusari has signed both on the face, under the name of the corporate maker of the note, and on the reverse side, under the following printed language:
The endorser or endorsers of this note, in addition to guaranteeing payment thereof, do each hereby waive demand, protest, presentment, and notice of dishonor of this note and any renewal thereof, and further agree that the time for payment may be extended and the terms and conditions thereof may be changed as to amount, rate of interest and as to amount or kind of security pledged or otherwise, without notice to us as endorser and without our consent and without releasing our liability thereon.
The case came on for trial with each party agreeing to a stipulation of facts, the only question being whether the claim was barred by the statute of limitations.
The instrument is a demand note dated November 27, 1968, not under seal, and is for the face amount of $40,000. The note's original interest rate was 7%, however, it appears that interest was renegotiated over the years so that ultimately it evolved to 11%. No demand was made upon defendant until August 15, 1975, and thereafter this action was
filed on November 5, 1975. The parties stipulate that $23,250 remains unpaid on the principal obligation and that unpaid interest to December 13, 1976 totals $3,784. The last payment made by the maker was on April 28, 1975 in an amount of $500. Defendant Fusari stipulated to having signed as "a guarantor and endorser." He maintains that the six-year statute of limitations, under N.J.S.A. 2A:14-1, precludes imposing liability, contending his obligation arose on the date of the making of the note and expired six years after that date. Plaintiff acknowledges the applicability of the aforesaid statute but contends that the cause of action did not accrue at the time of the signing of the note by Fusari, but rather it began to run on August 15, 1975 when demand was made upon him to make good on his obligation. Plaintiff contends that N.J.S.A. 12A:3-122(3) is controlling wherein it provides:
A cause of action against a drawer of a draft or an indorser of any instrument accrues upon demand following dishonor of the instrument. Notice of dishonor is a demand.
Defendant takes the position that while he may be "a guarantor and endorser", he is not an "indorser" and therefore the provisions of N.J.S.A. 12A:3-122(3) are not applicable. There is no contention that defendant is liable as a maker.
That the same person may be both an indorser and also a guarantor of a note does not appear to have been the subject of any legal debate in the past although both sides in this action seek to distinguish such roles and the resulting obligations. See Newark Finance Corp. v. Acocella , 115 N.J.L. 388 (Sup. Ct. 1935).
The Uniform Commercial Code became operative in New Jersey in 1963 and the parties must be presumed to have contracted under the law as it existed when the note was made and indorsed. A.J. Armstrong, Inc. v. Janburt Embroidery Corp. , 97 N.J. Super. 246 (Law Div. 1967). Nothing in the Code appears to preclude a person from being both
an indorser and a guarantor. The language adopted by Fusari as it appears on the note cloaks him with both roles. However, to avoid the application of N.J.S.A. 12A:3-122(3), he distinguishes between the terms "endorser," as used on the note and as it was commonly used prior to the Code, and the term " indorser " as used in the Code. The Code mentions no such distinction and, contemporaneously, Webster's New Twentieth Century Dictionary (2d ed. unabr. 1964), under "indorse" lists the present participle as "to ...