19 S.E.2d 599 | W. Va. | 1942
Lead Opinion
Plaintiff, P. R. Cost, instituted this chancery cause in the Circuit Court of Kanawha County to obtain against K. C. MacGregor and Maybelle MacGregor a money decree and to enforce such decree by process of attachment against their real estate. Defendants filed a joint plea of *205
the statute of limitations, to which plaintiff interposed a demurrer. The circuit court having sustained the plea, this Court granted an appeal which, upon hearing, was dismissed as improvidently awarded because the order from which the appeal was taken was not a final or appealable order. Cost v.MacGregor,
The facts of this cause appear in the opinion prepared by Judge Fox upon the former appeal, and for convenience we repeat them as therein stated:
"On February 1, 1929, Cost-MacGregor Co., Inc., executed its negotiable promissory note for $5,000, payable to P. R. Cost, K. C. MacGregor and Maybelle B. MacGregor in one hundred twenty days. This note was endorsed by the payees and discounted at the Union National Bank at Clarksburg. The obligation of the indorsers was equal, the indorsement being joint. The note was not paid by the maker, was duly protested for non-payment, and paid by P. R. Cost on October 31, 1929, the amount paid, including interest, being $5,122.40. At the time of this payment, the bank made the following indorsement on the back of the note: 'This note paid and assigned to P. R. Cost without recourse.' On May 26, 1939, P. R. Cost instituted this suit in the Circuit Court of Kanawha County, and service of process was obtained on the MacGregors in that county. In the bill the facts above noted are set up, and a claim made by Cost against the MacGregors for two-thirds of the amount paid to the bank, on the theory that the MacGregors were liable for and should be required to contribute their share of the amount so paid on account of said note. The prayer of the bill is 'that defendants * * * may be required to contribute to the payment of their proper part of the note and interest herein described * * *' and '* * * further and general relief as to equity may seem meet * * *.' It should be noted that a writ of attachment was sued out and levied on a tract of land *206 situated in Tyler County, West Virginia, and its sale sought under the lien created thereby."
Was the trial chancellor in error in concluding that this proceeding was "governed by the five years statute of limitations"? Code, 1931,
"Every action to recover money, which is founded * * * on any contract * * * shall be brought within the following number of years next after the right to bring the same shall have accrued, that is to say: * * * if it be upon any other contract in writing under seal, within ten years; if it be upon * * * a contract in writing, signed by the party to be charged thereby, * * * but not under seal, within ten years; and if it be upon any other contract, express or implied, within five years, * * *."
Initially, it is to be noted that plaintiff seeks to require defendants "to contribute to the payment of their proper part of the note and interest" and the trial court apparently applied the rule that since contribution is grounded in the theory of an implied promise, the limitation of five years under our statute was applicable. There is ample judicial authority to sustain such a conclusion when the principle of contribution is controlling, whether the proceeding be one in equity or at law. Bartlett v. Armstrong,
The bill of complaint alleges the bank "assigned and endorsed" the note to plaintiff Cost, and the note itself shows that "This note paid by and assigned to P. R. Cost." The position of defendants, denied by plaintiff, is that payment by Cost extinguished the debt. Were this an instance where a party primarily liable for the payment of an obligation had discharged it, the recent case of Perkins v. Hall,
"A negotiable instrument is discharged (1) by payment in due course by or on behalf of the principal debtor; (2) by payment in due course by the party accommodated, where the instrument is made or accepted for accommodation; (3) by the intentional cancellation thereof by the holder; (4) by any other act which will discharge a simple contract for the payment of money; (5) when the principal debtor becomes the holder of the instrument at or after maturity in his own right."
The sections read in pari materia clearly are indicative that the instrument herein was not discharged. The Supreme Court of Texas in Fox v. Kroeger,
"If either section 119 or section 121 were considered alone, the language might make each difficult of interpretation, but the two sections must be construed together, and in the light of each other, since they deal with the same subject-matter. When so construed, the manifest meaning is that the payment by the principal debtor or by the party accommodated discharges the instrument, *208 but payment by a party secondarily liable, other than the principal debtor or party accommodated, does not discharge or extinguish the debt."
It is pertinent, too, to observe in Fox v. Kroeger the accommodation indorser, having paid the note, based his right of recovery upon the note itself; and while it is true that the case was an indorser-maker involvement, we think the case is significant because of its recognition of the principle that under the Negotiable Instruments Law payment by a party secondarily liable does not extinguish the debt and thus place the party seeking recovery in a position where he must apply to the conscience of the chancellor in a court of equity to re-vitalize the evidence Of the indebtedness and thus necessitate invoking the doctrine of subrogation. The Virginia Court in Gatewood v. Gatewood,
We are cognizant of the rule enunciated by this Court inGreenbrier Valley Bank v. Holt,
We must conclude, therefore, that Cost acquired from the bank a negotiable promissory note with all the vitality it had in the hands of the bank as holder thereof (including the right to maintain a proceeding thereon against his co-indorsers) except in so far as Cost's liability as a co-indorser detracted therefrom. As the holder of such note, under the language of the statute of limitations, a proceeding instituted thereon by Cost within ten years from the date when the right accrued could be maintained, which, in the instant case, is the due date of the note. Inquiry must, however, be directed as to whether the prayer *210
of the bill warrants recovery upon the instrument itself. "Relief can only be obtained under a general prayer where there are supporting allegations and the relief sought is not inconsistent with the special relief prayed for." Atwater Co. v. Fall River Pocahontas Collieries Co.,
Defendants say that if the note is still alive, then this chancery proceeding must fail, for the reason that plaintiff has a complete and adequate remedy at law. Defendants overlook the fact that plaintiff seeks not only to recover a money decree against them but also to subject to sale in satisfaction of such decree certain real estate which plaintiff charges is in the name of defendant, Federal Land Bank of Baltimore, but for which, plaintiff charges upon information and belief, defendants have procured a deed. The bill alleges that there has been attachment placed upon the real estate and that there has been no attack thereon. It requires no citation of authority to sustain jurisdiction of a court of equity in such matters.
We reverse the decree of the circuit court dismissing plaintiff's bill of complaint, and remand the cause.
Reversed and remanded.
Concurrence Opinion
I fully concur with the majority as to the necessity of a reversal in this case, but I would place the plaintiff's right to proceed on the note wholly upon equitable principles which became applicable immediately when he, an accommodation indorser, was called upon to, and did, pay the note. I am not at all certain that any additional rights accrued to him by reason of the pretended "assignment" of the instrument, or that any vested in him by virtue of any statute, applicable to the situation.
The note was paid, not sold. Banks, in regular course, do *211
not sell notes, but require their payment by those liable therefor. In this case, the plaintiff expressly says, both in his affidavit for attachment and in his bill of complaint, that the bank demanded payment and that he did pay. He nowhere pretends that he purchased the note. These statements are made in the bill of complaint in great detail, covering two full pages in the record, and are followed by allegations of subsequent demands for contribution from the defendants. Then ensues another numbered paragraph of the bill alleging that on the day on which the note was paid, the bank "after receiving
from the said P. R. Cost the said sum of Five Thousand One Hundred Twenty-Two and 44-100 ($5,122.44) Dollars, assigned and endorsed said note, without recourse, to the said P. R. Cost." (Italics supplied). This unquestionably shows that the note was paid before it was attempted to be assigned. In this situation, what could the bank assign? What right, title or interest in the note had the bank left which could be the subject of an assignment? Could the bank have assigned the note to a third party so as to vest in him any character of right? And, if such an assignment to a third party would have been ineffective, how could it have any greater efficacy when made to the plaintiff? True, the note was not, by its payment, actually discharged for all purposes, nor as to all parties, but all the rights of the bank were thereby discharged. It could not, itself, maintain any sort of action on the note, or make any claim by virtue of it, hence, it could not transfer or confer upon anyone else any such rights with relation thereto. The payor acquired undoubted rights by his payment, but they were such rights only as accrued to him by the act of payment, independent of the "assignment." The assignor of a past due negotiable instrument, even without recourse, assumes substantial liabilities. Code, 46-5-6; Houston v. Lawhead,
Nor are we cited to any statute which may be construed as having created any rights in the plaintiff by reason *212 of the payment of the note. Section 3, article 8, chapter 46, Code 1931, provides that: "When the instrument is paid by a party secondarily liable thereon, it is not discharged; but the party so paying it is remitted to his former rights as regards all prior parties * * *." (Italics supplied). This sentence postulates precisely the plaintiff's situation. He was secondarily liable; he paid the note; he therefore, is now "remitted to his former rights as regards all prior parties." But who are the "prior parties" in this case? The MacGregors were joint payees with the plaintiff and became with him joint endorsers. They never were "prior parties" as to him. The only prior party was the maker of the note. And what were Cost's "former rights"? He was merely an accommodation payee and indorser and never had any rights on the note against any party thereto prior to his payment thereof. This statute, therefore, avails the plaintiff nothing against the defendants, and no other statute is cited as a source of any rights accruing to him by virtue of his payment of the note.
Hence, I am persuaded that the plaintiff acquired no rights which he could enforce on or through the note, either by the "assignment," or by any statute applicable to the case. But equity, under these circumstances, creates for him a remedy on the note. In 60 C. J., pp. 754, 755, is found a readily available statement of the correct basis of the plaintiff's right to relief in this suit: "While the English rule, refusing subrogation to the debt, * * * has apparently been followed in some jurisdictions, * * * it is the widely accepted American rule that, no matter what the effect of payment at law, it is, in equity, by virtue of the doctrine of subrogation, to be regarded as a purchase by the surety, and operating as an equitable assignment to him of the debt and all its evidences and incidents, so that he may enforce the same to the extent necessary to obtain reimbursement from the principal, or contribution from the cosurety."
The plaintiff has pleaded, distinctly and fully, abundant facts to entitle him, in equity, to be subrogated to all rights on the note which the bank had against the defendants *213 prior to its payment by him, and which may be necessary to equalize the burden of the note's payment between him and them; and he is, therefore, entitled to prosecute his suit on that theory under the prayer for general relief.