174 F. 72 | S.D.N.Y. | 1909
I am not able to concur with the conclusion of the referee in this case in respect to the eight notes which remain in controversy. Seven of those eight notes were made by the Meers Artificial Leather Company, and were indorsed by McCord, the bankrupt, by Frank Squier, and by two or three others; each indorsing for the accommodation of the makers. The other note'was made by H. & J. T. Slade, and indorsed by McCord and Squier; each indorsing for the accommodation of the makers. The money received from the discount of these eight notes was paid either to the Meers Artificial Leather Company or to the Manufacturers’ Mercantile Company. Neither McCord nor Squier ever obtained any consideration or benefit for his indorsement. On each of these notes McCord’s indorsement was prior to that of Squier. At the maturity of these notes, Squier was called upon by the holders to pay them, and did pay them. He subsequently went into bankruptcy, and his trustee in this proceeding* .has proved for the full amount of the notes against the estate of the bankrupt. The referee has- held that McCord, Squier, and the other indorsers were all accommodation indorsers, and that each knew that . the others were such, and for that reason he has held substantially that' .all these accommodation indorsers are sureties as between themselves, . - and that each is liable only for his proportionate share of the amount
Jt is undoubtedly well settled that accommodation indorsers can, by agreement among themselves, restrict the liability of each to his proportionate share, or, indeed, make any other arrangement as to their liability to each other which they see fit to make. But it is, of course, fundamental in the law of commercial paper that, in the absence of any such agreement, an indorser who pays a bill or note has recourse against each prior indorser for reimbursement. I do not understand that the mere fact that indorsers are accommodation indorsers, and known to each other to be so, is sufficient, without proof of an express agreement, to change the general rule of law that prior indorsers are liable in solido to subsequent indorsers who have paid a note. There must be, as I understand the rule, a specific agreement, as between the various indorsers, that they shall only be liable ratably. If there is no such agreement, the law fixes their liability in accordance with the order of the names on the paper. McCarty v. Roots, 62 U. S. 432, 16 L. Ed. 162; Easterly v. Barber, 66 N. Y. 433; Kelly v. Burroughs, 102 N. Y. 93, 6 N. E. 109; Egbert v. Hanson, 34 Misc. Rep. 596, 70 N. Y. Supp. 383. Each of these accommodation indorsers indorsed each of these notes in the same order. McCord, the bankrupt, indorsed first, the others next, and Squier last. In the absence of evidence of a specific agreement to the contrary, the order of the indorsements indicates an understanding between the indorsers that Squier, if he paid the notes, was to be entitled to recourse against each o f the others, and that McCord, being the first indorser, in substance guaranteed each of the other indorsers against loss. I have read over the evidence, and there is no proof of any specific agreement between the indorsers.
I think, therefore, that under the fundamental principles governing the law of mercantile paper and the express provisions of the Negotiable Instruments Law, §§ 55, 114, 118, Squier’s trustee is entitled to prove his claim against the bankrupt’s estate for the full amount paid on the, eight notes in question.
