Knox v. Widow of Dixon

| La. | Sep 15, 1832

Porter, J.,

delivered the opinion of the court.

This is an action by the payee and endorser of an accommodation note, discounted at bank, to compel the subsequent endorser to contribute his equal or virile share of the amount of the obligation. The note was protested, and taken up and paid by the plaintiff.

Parole evidence, taken on the trial below, shows the plaintiff endorsed the note in question first. The maker, on procuring his endorsement, told him he should have another endorser. The ancestor of defendants endorsed out of the presence of the plaintiff, and was not informed the maker had promised the payee to procure another endorser.

The note was in the usual form. On the face of it the following memorandum is found: “Credit the drawer. W. G. K., J. D.” These are the initials of the names of the two endorsers.

The payee or first endorser on a bill or note is reponsible to all the endorsers or parties who come after him according to the lex mercatoria. And although the court can look beyond the form in which the parties clothe their contract, yet without an express agreement to the contrary, it will be presu med to be their intention to be governed by the rules to which the form of the obligation is subjected. The lex merí;«/o;vy/. imposes on the endorser of accommodation pa per the obligation to pay every subsequent endorser or holder, in the same manner as in business paper.

The case has been well argued, and the discussion at the bar has taken a wide range. It has been decided in this court in two cases, namely, that of Bullard vs. Wilson and Stone vs. Vincent, that the endorser of an accommodation note was responsible over to the endorsee, as he would be on any other paper. In the case of Nolte & Co. vs. their Creditors, where the rights of the payee against the maker of an instrument of this kind were examined; and in the case of Dorsy Co. vs. their Creditors, where the subject was still more fully gone into, we expressly stated, “that as to all parties who came after the payee on the bill, the lex mercatoria applied in full force, and made him responsible under its rules.” 5 Martin, N. S. 196. 6 Ibid. 518. 7 Ibid. 9, 498.

There can be no doubt the court can look beyond the form into which the parties may have cast their contract. But what follows? Why, this: That unless an understanding is shown to take the case out of the obligations which the form given to the contract imposes, these obligations must be presumed to be within the intention of the parties, and that they engaged themselves accordingly. In the two cases last cited, which were in relation to accommodation paper, we were of opinion that the mercantile law did not, even where the contract assumed the form of a bill of exchange or a promissory note, enable the payee, or whoever may have lent his name to the maker or drawer, to recover from either more than he was compelled to pay. But as we intimated in these cases, as we had previously, decided, and as we think now, the lex mercatoria imposes on the endorser of accommodation paper, the obligation to pay to every subsequent endorser or holder, in the same manner as in business paper. We refer again to the authority of Chancellor Kent and the authorities cited by him, both from English and American cases. “Accommodation paper (he says) is now governed by the same rules as other paper; this is the latest and best doctrine both of England and this country.”

It cannot be made a question that endorsers to an accommodation note may take themselves out of this law, and by particular agreement make a law for themselves. But unless ¿0? we icnow of no law which can regulate their contracts, but that which governs negotiable paper in general. The principal question then, in this cause, is, whether the proof in this case shows the parties intended that their contract should be governed by other rules than those which the commercial law furnishes. The evidence offered to that effect is the memorandum on the face of the note, by which both endorsers direct the amount to be credited to the maker. This certainly furnishes some ground to infer that such might have been their intention. But after the best consideration we can give to the subject, we do not think it sufficiently strong to destroy the obligation created by one of the parties endorsing before the other.

It is, therefore, ordered, adjudged, and decreed, that the judgement of the District Pourt be affirmed, with costs.