Extens as indorsers. Are the Extens liable under their indorser’s liability? Explain.
On August 10, 2015, Theta Electronic Laboratories, Inc., executed a promissory note to George and Marguerite Thomson. Three other individuals, Gerald Exten, Emil O’Neil, James Hane, and their wives also indorsed the note. The note was then transferred to Hane by the Thomsons on November 26, 2016. Although a default occurred at this time, it was not until April 2018, eighteen months later, that Hane gave notice of the dishonor and made a demand for payment on the Extens as indorsers. Are the Extens liable under their indorser’s liability? Explain.
The endorser of a note is liable to pay against any kind of dishonor or nonpayment against the note within a reasonable period of time. Individual H has taken a period of 18 months to inform Individual E about the dishonor of the note, which is unreasonable.Individual E cannot be held liable for payment against the note.
The court is going to decide in favor of Individual E since Individual H has taken an unreasonable amount of time to inform about the dishonor of the promissory note.