Inge v. Branch Bank of Mobile

8 Port. 108 | Ala. | 1838

COLLIER, C. J.

— The view we take of this case makes it unnecessary to consider whether the record discloses the facts essential to the regular exercise of jurisdiction upon notice and motion; besides, the law on this subject may be understood as settled by the decisions of this court—(Duncan vs. Tombeckbee Bank, 4 Porter's R. 181; Bates vs. Planters' and Merchants' Bank, and Lea & Langdon vs. the Branch Bank at Mobile, decided at this term.)

The questions arising upon the bill of exceptions, are:

1. If the plaintiff endorsed the bill in question, with an understanding that it should he accepted by Horner, Blocker & Co., and that understanding was communicated to the directory of the bank, previous to its purchase by the bank, is he liable on his endorsement ?

2. Does the agreement between the directors of the bank, and Messrs. Adams & Taylor, (the acceptors,) that they should not be looked to for the payment of the bill, until the bank had exhausted, without success, the legal remedies against the other parties, operate to the discharge of the plaintiff?

1. The charge of the Circuit judge supposes that the plaintiff, with a view of enabling Messrs. Horner, Blocker & Co. to obtain money, endorsed the bill in suit, while it was blank as to its amount, time of payment and address, and entrusted it to John R. Blocker to perfect it, with the understanding that Horner, Blocker & Co. were to accept it. Taking these to have been the circumstances under which the plaintiff lent his endorsement, his agreement was to be liable as an endorser, if Horner, Blocker & Co. should become acceptors. I-Ie did not undertake for the punctuality of any other persons who might accept the bill, however willing he might have been to do so, had it been thought necessary to enable Messrs. Horner, Blocker & Co. to effect their purpose. But the plaintiff’s liability cannot be ascertained by en-quiring what he was willing to do, but the true question is, what was done by him?

In Powell vs. Waters, (17 Johns. Rep. 176,) the note was made with an expectation that it would be discounted at hank, but it was negotiated to a third person. The endorser resisted a recovery, on the ground that the note was not disposed of, as it was intended — but the court held that the inducement to the defendant’s endorsement was to raise money for an object of which he was aware — that though it was expected to sell the note to the bank, yet there was nothing said or done to induce a belief on the part of the endorser, that if the bank declined purchasing, the note would not be put in circulation. That case bears no analogy to the present— there, it was not understood that the bank was the only source from which the money could be obtained — it was expected to be had there, but if the application was unsuccessful, the note might be negotiated to some one else. In the case at bar, it was understood that Horner, Blocker & Co. were to accept the bill, and if so understood by the plaintiff, it could not be put in circulation without their acceptance, but in violation of his understanding.

It is true, if the understanding between the plaintiff and Horner, Blocker & Co. was unknown to the directory of the bank at the time they discounted the bill, then it would be of no avail, and the plaintiff would be liable upon his endorsement, without reference to the circumstances under which it was obtained. It might, then, have been very well inferred by the bank, that the holder had an authority from the parties to the bill, to fill up all its blanks, and negotiate it in the usual course of business—(Chitty on Bills, 124; Putnam et al. vs. Sullivan et al. 4 Mass. R. 45.) And the plaintiff would also have been liable upon the principle, where one of two innocent persons must suffer from the act of a third person, he who has put it in the power of such third person to do the act, must be the sufferer. But if the bank had either a positive or constructive knowledge that the plaintiff lent his endorsement, under an agreement either expressed or understood, that Horner, Blocker & Co. were to become acceptors, the plaintiff may avail himself of the breach of that agreement, as a defence to a recovery against him—(Brown vs. Mott, 7 Johns. R. 361; Humphries vs. Blight’s assignees, 4 Dall. 370.)

It is no answer to say that Horner, Blocker & Co. would still be liable to the plaintiff, if he were to pay the bill, though not as acceptor, yet for money paid to their use. The plaintiff’s understanding was, that the liability of Horner, Blocker & Co. should be primary, and appear on the face of the paper. Being thus situated, it is possible he may have thought, that they would have been more strongly urged to punctuality, in order to save their credit, than they would, had their undertaking been (as it is) indirect and secondary.

It,should have been left to the jury to determine whether the plaintiff’s endorsement was made with an agreement, either expressed or understood, that Horner, Blocker & Co. should accept the bill, and if there was such an agreement, whether it was known to the directory of the bank before they purchased it. The existence of both these facts, were quite sufficient for the plaintiff’s defence — and in instructing the jury that if it was not intended to injure the plaintiff, and if he was not in fact injured, he was still liable, the judge of the Circuit court mistook the law.

2. A bill of exchange has usually three parties — the drawer — the drawee, (who after acceptance is the acceptor,) and the payee, (after endorsement the endorser)— (Chitty on Bills, 1, 19.) The acceptor is primarily liable to pay the bill, and the drawer and endorser, if the proper steps are taken to charge them, are liable on his default—(Ibid. 182, 183.) And in no instance is the endorser under any liability to the acceptor, unless it be in the case of an acceptance for his honor — (Ibid. 142.)

With a view to the solution of this question, Adams & Taylor must be considered as having become acceptors, with the knowledge and assent of the plaintiff, and the plaintiff be regarded in the nature of a surety for the performance of their engagement.—(Ibid. 292— and Theobold on Prin. & Surety, 180, et post.)

It is a well established rule, and repeatedly recognis-ed in this court, that if the creditor, without the consent of the surety, make a valid agreement with the principal debtor, to prolong the time of payment, the surety will be discharged.— (Pyke vs. Searcy, et. al. 4th Porter, 61, and cases there cited.) It is said there are two points of view in which, agreeing to give time to an acceptor, will discharge the indorser. According to the one, the creditor, in prolonging the day of payment, is considered as having disentitled himself to proceed against the acceptor, until the time agreed to be given, has expired. Such an agreement is inconsistent with the obligation of a creditor to sue the principal debtor, at any moment when required by the surety to do so ; and the creditors, voluntary disablement of himself for the performance of any obligation which he is under to the surety, discharges the latter. According to the other, the creditor is regarded as having,- in point of good faith towards the debtor, obliged himself not to proceed against the surety: because if he were to proceed against the surety, and the surety to pay, the surety would he instantly entitled to his remedy against the debtor; and. so, through the medium, of the surety he would deprive the debtor of the time he had agreed to give him — and therefore, to preserve good faith, he will not be allowed to proceed against the surety.— (English vs. Darley, 2 Bos. & Pul. 61—Boultbee vs. Stubbs, 18 Ves. R. 20—Maltby vs. Carstairs, 1 M. & R. 562, note— Bowmaker vs. Moore, 3 Price, 214—See also, Theobold on Prin. & Surety, 123, et post, and 180 et post—Chitty on Bills, 289, et post.)

There is certainly no obligation to active diligence on the part of the holder in suing the acceptor, and he may forbear the employment of coercive measures as long as he chooses, if he does not agree to give time so as to suspend his remedy against the acceptor, to the prejudice of the parties who are secondarily liable. And whether, in giving time to the principal, a creditor may reserve the right to sue the surety in the interim, is a question, touching which, there is not entire harmony in judicial decision, and as it does not necessarily arise, we decline its examination.

As the record does not discover any objection to the legal validity of the agreement between the directory of the Bank and Adams & Taylor, or of the evidence by which it was shown, we must intend that both the proof and agreement were unexceptionable ; the more especially as the Judge, in his charge, does not notice any objection to either.

The^record then, discloses that the directory of the Bank agreed with Adams & Taylor that they would not look to them for payment, until the legel remedies against the other parties had been exhausted, without affecting a collection. True, the agreement not to sue, was for no definite period, yet the remedy of the Bank against the acceptors was necessarily suspended for six months, for it would have required that length of time (at the least) after the maturity of the bill, to have obtained judgments and had executions issued against the drawer and endorsers. The agreement then, brings the case clearly within the principle of the rule we have stated— and upon both grounds, the judgment must be reversed, and the cause remanded.