Case ID: tenn_31/html/0217-01.html
Source: Caselaw Access Project
Author: {"author": "Totten J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Bank of Tennessee vs. Johnson and Hamilton.
    Negotiable Paper. Bill. Endorsement. If the drawer of a bill of exchange fraudulently procure a party to endorse it, and the holder takes the bill with notice of the fraud, he is, as to that and subsequent endorsers, a mala fide holder, and not entitled to recover as against them.
    Same. Same. Same. Until a bill of exchange is negotiated, and value given for it, an accommodation endorser may recall and revoke his endorsement.
    Same. Same. Discharge of Endorser, An accommodation endorser of a bill of exchange, is discharged from liability upon his endorsement, if before the bill is negotiated, and without notice to him, a prior endorser revokes his endorsement.
    Thrs was an action of assumpsit, in the circuit court of Davidson county. At the June term, 1851, Maney, Judge, presiding, there was judgment in favor of Johnson, from which the Bank appealed in error, and judgment in favor of the Bank against Hamilton, from which he appealed in error.
    Reid, for the Bank.
    Suit is brought upon two bills of exchange, each for $5,100, dated 8th April, 1848; and the first due eight months, and the second twelve months after date. These bills are drawn by C. Connor, and endorsed by A. Hamilton and Jesse Johnson. The endorsers resist the suit upon two grounds : 1st. Upon the ground that before these bills passed into the Bank’s hands, they revoked their endorsement; and secondly, upon the ground, that a fraud was practiced upon them by Connor, which was sufficiently communicated to the Bank before the bills were taken.
    1st. As to Hamilton, did he revoke his endorsement? What amounts to a revocation? The Judge below charged the jury, that to amount to a revocation of his endorsement, Hamilton must have conveyed to the mind of the Bank, or one of its directors, the idea that he would no longer consent to be bound.
    If this be the law — and I take it to be the law clearly— Hamilton did not revoke his endorsement. He spoke only to Maj. Ledbetter, upon the subject, and asked as a favor to him, that the Bank would not discount the bills. He did not communicate to the mind of Ledbetter, that he would no longer be bound. On the contrary, he stated, that he was opposed to endorsing the bills at first, but could not refuse to do so, because of similar favors extended to him by Connor.
    Did the Bank practice a fraud upon him? clearly not. He could read and write. He knew of the existence of the bills, long before he endorsed them, and did what he did with his eyes open. Nor will it lie in his mouth to say, that a fraud was practiced upon Johnson, and to work out his defence through him; because, if he did not know of the fraud before he endorsed the bills, he has recourse against him, and if he did know of the fraud upon Johnson, he by endorsing them, was aiding Connor in committing a fraud upon Johnson and the Bank. 4 Humph. Rep., 413, Osborne vs. U. Bank.
    
    2d. As to Johnson, did he revoke his endorsement? No, because his whole defence goes upon the ground, that he never endorsed the bills — that he thought he was endorsing notes, and for a smaller amount.
    Was a. fraud committed upon him by Connor? The Judge charged the jury, that if so, it must be proved by other evidence than the statements or declarations of Johnson himself. Is this the law? I think so. If it is, there is no evidence of fraud in the case. If a man endorses a blank bill, which is afterwards filled up, it is good, and he is bound thereby. If he endorses a bill which is post dated, it is good. Story on Bills of Ex., § 222; 16 Law Lib. (Byles on Bills Ex. 28.) Now, Wharton proves this ma3r have been done with these bills. This, and the declarations of Johnson himself, are all the evidence upon the subject in the record.
    But if a fraud was committed — if he really thought he was endorsing notes, was he not bound to take advantage' of it by plea of non est factum ?
    
    But again: suppose a fraud was committed, was it sufficiently communicated to the Bank, or one of its directors before the bills were taken? Story on Bills of Ex., § 194 § 41'6.
    In fact, if Johnson had believed he was endorsing notes and not bills, his conduct after he had the conversations with Waters ought to make him responsible upon the bills; it amounted to a ratification of his endorsement, and to discharge him now, would be to help him to commit a fraud upon the Bank.
    Meigs, with Reid.
    The defendants are sued, as endorsers of two bills of exchange, drawn by C. Connor, on Pickett, Perkins & Co., on the 5th of April, 1848, each for $5,100, at eight and twelve months from date, and endorsed by the defendants. They were discounted by the Bank of Tennessee, and the proceeds went to C. Connor, for whose accommodation they were endorsed.
    ■The genuineness of the endorsements is not denied. The defencé is, that Connor committed a fraud on the defendants, or at least on Johnson, who most earnestly relies upon the de-fence. He says that he endorsed blank papers for Connor, which Connor said he was going to fill up as notes for the price of a house, purchased by Connor from Hayes, upon which house there would be a lien for the purchase money. But Connor filled up the blanks as bills, the same now sued on. And he says that he communicated the facts, as above stated, to a director of the Bank, before the bills were discounted. And he insists upon this as a revocation of his endorsment.
    An endorsement in blank, being an implied power to the holder to fill up the paper in any form of negotiable security, and it being competent for the endorser to limit this general authority any way he pleases, it follows that the filling up must be void if the holder violates his authority, as between the parties themselves. But when the paper comes into the hands of a Iona fide holder, the endorser cannot question the transaction, though the blank may have been filled up in a manner entirely different from the understanding and expectation of the endorser, when he put his name upon the paper. Mechanics and Farmers’s Bank vs. Schuyler, et als., 7 Cowen, 337, note; Story Prom. Notes § 10; Kimhro vs. Lamb, 4 Humph. 95-97.
    The question, then, in this case is, whether the Bank is a bona fide holder?
    Johnson informed Waters, a director, that he had endorsed blanks to be filled up as notes, to be given to Hayes, for the purchase of a house; but not any other blanks, or blanks coupled with any other authority.
    Connor, however, presented for discount two bills endorsed by Johnson; and while the bills were before the board for discount, the director was notified that the papers were blanks when endorsed and that Connor’s authority to fill them up was limited, and not the general authority implied in law by such endorsement.
    What had the Bank then before it? 1st. It had the bills, actually endorsed, bearing upon their face no suspicion of ir•regularity. 2d. It had Johnson’s declaration to a director in the street, contradicting these appearances. 3d. But it had no evidence that Connor had a limited authority, nor any evidence that the bills were blank when endorsed by Johnson. - ‘ Connor pressed the bills for discount.
    The Bank knew what Johnson had said in the street.
    Did this knowledge impose upon the bank the duty to inquire which was true — what his endorsement implied, or what he said in the street; and is it a mala fide holder if it omitted to make that enquiry?
    1 st. In the first place, unless the limitation of Connor’s authority actually existed, the Bank was not a mala fide holder, merely because Johnson said that the authority was limited. Now, Johnson has given no evidence in the case, that Con • nor’s authority was other than the general authority implied in law from a blank endorsement, or rather, from the endorsement of a blank. Nothing is shown to make it probable, that the Bank would have found the fact to be as Johnson asserted it, if the enquiry had been made. Therefore, there is no ground to say that there was any mala fides in taking the note without enquiry. It is not mala fides merely to omit to make an enquiry, which would not have resulted in ascertaining the fact, had it been made. If the authority was limited, Johnson might have shown it on the trial by Connor, who is a competent witness, and in that way he might have made it appear that the Bank actually was guilty of mala fides in taking the note without enquiry. But merely taking the paper without enquiry is at the utmost gross negligence, which, per se, is not bad faith. Chitty on Bills, 256, note z, 10 Am. Ed. Springfield, 1842; Story on Notes, §§ 196-197; Union Bank vs. Osborne, 4 Humph., 413.
    2d. But suppose, taking the bills without enquiry is not bad faith, and that the Bank is not, for that reason, precluded from recovering the bills as a bona fide holder; it may be, in the se■cond place, insisted that what Johnson said to a director in the street is to be taken as if said to the board in official session, and that if so said, it would have amounted to a revocation of the endorsement.
    In Chitty on Bills, 194, 10th edition, the obligations of a drawer of a bill are said to be irrevocable. And in Cox vs. Troy, 5 Barnwell & Aid. 477; in 7 Eng. Common Law R., 163-167, Bailey, J., says: “I have no difficulty in .saying, from principles of common sense, that it is not the mere act of writing on the bill, but making a communication of what is so written, that binds the acceptor; for the making the communication is a pledge by him to the party, and enables the holder to act upon it.” And in the same case, Iialroyd, J., says: “Where a man accepts a bill, and delivers it out accepted, he must remain irrevocably bound.” See Story on Bills, § 252; Mallory, Book 2, chap. 10, § 18; a bill once accepted cannot be revoked, áre.
    If the holder knows that an accommodation acceptance has been for a particular purpose, and that that purpose has been accomplished, he cannot retain, or apply the bill to any other purpose. Story on Bills, § 253.
    This point also, then, depends upon the Bank’s knowledge of the limited nature of the endorsement; upon its knowledge that it was made for a definite purpose, and not to enable Connor to raise money in general. But there is no evidence that Connor was really under any restriction in this respect. Johnson said he was, but it does not otherwise appear.
    3d. But suppose the notice given by Johnson to Waters amounts in law to the notice of a state of things of which there is no evidence, still it does not appear that Connor did not apply the money to the purpose mentioned by Johnson.
    Marshall, for Johnson and Hamilton.
    Accommodation endorsers, are simple securities for the ac-eommodated party; 3 Barber, S. C., Rep., 634, Baker vs. Martin-, they are, however, securities in the first, second and third degrees, according to the order of the endorsements, and the subsequent endorser guarantees the genuineness of the signatures of the previous parties to the paper. The Bank in this case, being a fraudulent original party, knowing as it did, that Jesse Johnson was over-reachedby Maj. Connor, could not recover against Hamilton, for it would then become a fraud on Hamilton in the Bank. Story on- Bills, §§ 110-111.
    An accommodation endorser may revoke or withdraw his endorsement before bill negotiated in due course of trade; 15 John. Rep. 274; 1 Richardson’s Reports, 35: 8 Leigh’s Reports, 194; 5 Barn. & Cress. Rep; 1 Denio Rep., 583.
    It is immaterial in this case, whether Hamilton had notice of Jesse Johnson’s equity or not, for notice to him, would not bind the Bank, unless the Bank had notice also. It is admitted, that a third person may, at the request of the maker, endorse a note for his accommodation, which had been previously endorsed for his accommodation also, by another person, and upon payment by him, to a Iona fide holder, he may recover against such third person, as in the case of Brown vs. Mill, 7 Johns. 360; but there must not be the slightest semblance of fraud in the transaction ; the holder, in such case, is not a bona fide holder, by reason of his endorsement without notice only, (8 Leigh, 204), but by reason of his having paid to the first holder the note, which he, the first holder, could have recovered against the previous party, in addition to the fact of his, the second holder’s being an endorser without notice of the previous party’s equity; 8 Leigh, 164. In this case, Hamilton, as against Jesse Johnson, must stand in the shoes of the Bank, and must be subject, also, to all the consequences of notice to himself of which the Bank had no notice — so that he may be in a worse condition than Johnson, but cannot be in a better condition. It was a fraud, therefore, on Hamilton in the Bank to take the bills, without informing' him of Johnson’s equity.
    Suppose Johnson’s name was forged on the bills, and the Bank knew it, and concealed the fact from Hamilton; the Bank could not recover on the bills against Hamilton, simply because it would be a fraud in the Bank to conceal such fact from him; and it is insisted, that it would be immaterial whether there was correspondence or not between the Bank and Hamilton on the subject of the bills. So it is insisted it would be, if the endorsement by Johnson was revoked, or obtained fraudulently, &c. Hamilton, by his endorsement, guarantees the title to the bills and the liability, of Johnson on them, and the Bank knows that Johnson is not liable on them, and does not communicate this knowledge to him, this is fraud on a security by the creditor; Elting vs. U. S. Bank, 11 Wheaton; especially as the Bank and Hamilton had correspondence on the subject of the bills. 3 B. & Cress. 605; 1 Dow’s Rep., 272
    Connor offers these bills, endorsed by Jesse Johnson, who has been over reached by Maj. Connor, and Johnson has revoked or repudiated his endorsement to the Bank, to be substituted in the place of other liabilities of his; and the Bank knows these circumstances, and tells him to get another endorser, and we will take them. It may have been, the Bank reasoned, that it could not recover against Johnson, as his immediate assignee, but it could, if an innocent man, although insolvent, were interposed as endorser’ — and Conner may have been told, to get any body to become the last endorser, as he could not get a good one, and keep him ignorant of what Johnson says. Or, if the law be as is contended on the other side, a detestable fraud of this kind might be practiced with perfect impunity and success.
    It is contended, on the other side, that the case of the Union Bank vs. Osborne, 4 Humph. 413, militates against this view of law. It is .submitted, that the case referred to, so far as it is a'decision does not, for the Union Bank had only constructive notice of the dissolution of the firm of Chaffin, Kirk & Co., by reason of the gazette publication, and Osborne,had the same constructive notice, so that if the Bank had been required to give Osborne notice, it would have required the Bank to give notice to Osborne of what he knew already; so also, there would be no fraud by not speaking of the dissolution. There the note was discounted in the regular order of business, ^without interview between the Bank and Osborne on the subject of the note. It is true, that the learned Judge who gave the opinion, in that case, after deciding the case, on the points already mentioned, in substance says: That the Bank, if it did not mislead, was not bound to communicate information in its possession, and would reasonably prevent the accommodation endorser from entering into the contract of suretyship, .and bases this conclusion on the authorities cited, governing the duty of principals, when contracting, in giving information, in their possession affecting the thing sold or its price.
    It is with the greatest deference insisted and contended, that the authorities cited have nothing to do with the case of accommodation endorsers or sureties, and that the authorities in the .case of sureties and accommodation endorsers are directly the- reverse; 1 Story’s Equity §§ 213-214-215-323-324-325-383; 5 Eng. C. L. Rep. 87; 11 Wheaton, Siting vs. Bank U. S.; Smith vs. Bank of Scotland, 1 Dow. 272; 3 B & Cress. 605; Pitman on Principal and Surety, 214; 3 White & Tador’s Leading cases, 356, (top), and authorities there cited: 5 Plumph., Bond vs. Ray.
    
    If is contended, that there is no case to be found any where, (except the doctrine in Osborne’s case,) where it is intimated even, that the holder can recover against a subsequent accommodation endorser, when a previous endorser is let into his defence, by reason of the holder’s getting the paper not in due course of trade — nor is there any case where such subsequent endorser has taken up the paper and recovered against the previous endorser.
   Totten J.,

delivered the opinion of the court.

The action is of assumpsit, in the circuit court of Davidson county, by the Bank of Tennessee, against Johnson and Hamilton, as endorsers of two bills of exchange, dated 5th April, 1848, for $5,100 each, the one payable at eight, the other at twelve months after date. These bills appear to be drawn by Cornelius Connor, on Pickett, Perkins & Co., at New Orleans, without acceptance; they were made payable to Jesse Johnson, who is the first endorser, and Andrew Hamilton is the last endorser. The case was tried at the May term, 1851, of the circuit court, when the jury found the issue in favor of the defendant, Johnson, and against the defendant, Hamilton. The plaintiff moved for a new trial as to Johnson, and the motion was overruled; the defendant Plamilton moved for a new trial, and his motion was likewise overruled, and judgment rendered against him for $11,748 81, the amount due on the bills; and there was judgment also for defendant Johnson, that he go hence, &c., whereupon a bill of exceptions was taken, and the plaintiff has appealed in error from the judgment in favor of said Johnson; and the said Hamilton has appealed in error from the judgment against him.

1st. We will consider the case as it relates to the defendant, J. Johnson. It appears that C. Connor was indebted to the Bank of Tennessee, at Nashville, for loans, as follows: a bill for $3,500, due 6th January, 1848; a bill for $3,200, due 6th February, 1848; a bill for $3,500, due 3d March, 1848; and a note for $2,000, due in May, 1848; of these bills and note the said Connor was drawer, and Pilcher & Porterfield were his accommodation endorsers. We may observe here, that these bills and note were not met at maturity, but all went to protest. The President and Directors of the Bank were advised that Pilcher & Porterfield did not intend to aid in a renewal of this paper by a renewal of their endorsement for said Connor, and that they were anxious to be released from their existing liability.

The witness Wharton states, that sometime before the 10th January, 1848, he was requested by Connor to attest the signature of Jesse Johnson, as endorser, on the two bills now in question; that Johnson could not write, but made his mark, the name being written by Connor, and witness attested the act. He does not know whether the bills were filled or in blank, as he did not see the face of them.

Dr. Waters, a director of the Bank states, that in May, 1848, at a meeting of the board of directors, he was informed that Connor had offered Jesse Johnson, as endorser; a few days after this, when witness saw Jesse Johnson, he asked him if he would endorse Connor’s bills; Johnson replied that he would not endorse any bills for Connor. At a subsequent meeting of the board, witness informed them of what Johnson had said. Nichol, a director, stated to witness, that Johnson had already endorsed for Connor, that he had seen the paper; and when witness again saw Johnson, he, witness, expressed his surprise that Johnson had endorsed Connor’s bills, after what he had said at the former interview. Johnson replied, “No, I have endorsed no bills, and will not.” He stated that he had become Connor’s surety on some notes for a house and lot, in Southfield, Nashville, which Connor had bought of Playes, and that the notes were secured by alien on the property; and then said to the director: “I don’t want 'the Bank to take any bills with my name on them.” Before the bills were discounted, witness advised the board of this interview with Johnson, and what he had said. Witness had not seen the bills, and was not then aware of their actual existence. It appears from a title bond in the record, that Hayes had agreed to convey a lot of land to the use of Connor’s wife and children, on payment of the purchase money. Connor was in doubtful circumstances, and the Bank was anxious to secure his suspended debt. They did not immediately resolve to take the new bills offered by Connor, with Johnson and Hamilton’s endorsement. The President, Mr. Ledbetter, says that Johnson was represented at the time, as owning property in Nashville, worth more than the debt; that he had conversations with Mr. Shapard, a director, the father-in-law of Por-terfield, who was of opinion that Johnson’s endorsement was better than that of Pilcher & Porterfield; and Dr. Waters says, that Mr. Shapard was anxious to have the arrangement effected, stating further that the means of P. & P. were limited. The bills remained in Bank from May, 1848, until 24th August, 1848, when the board concluded to accept them. On this day, when the bills were produced before the board, they were accompanied by a proposition that they would pay in cash on the debt $3,500, and if that were not accepted, that they would quit business. The board were advised of Johnson’s statement to Dr. Waters, then present, that he had endorsed notes for Connor for another purpose; that he had endorsed no bills for him — 'and that he did not wish the Bank to take any bills with his name upon them; this matter was considered by the board, and “the decision was that a written notice should have been given.”

It seems that the bills were twice rejected, but were finally accepted and ordered to be discounted. They were discounted on the 20th August, as before stated, but do not appear in the discount books until the 29th August, as entries of that description were made only once a week. The proceeds of the bills, and the $3,500 in cash, advanced by Pilcher and Por-terfield, extinguished the liability before stated of said Con-nor to the Bank, and left a balance, which was credited on one of the bills. The Cashier, according to the usage of that Bank, checked for the proceeds, in the name of Andrew Hamilton, the last endorser, of which fact, it seems, Hamilton was not advised at the time. Johnson and Hamilton were merely accommodation endorsers, and were so regarded by the Bank, when the paper was accepted. It further appears, that after the discount was ordered, Dr. Waters, in going from the Bank, met Jesse Johnson, and informed him of what had been done. He still protested that he had endorsed no bills for Connor, and said he was ruined. Dr. Waters advised him “to go to the Bank before the bills were entered, and tell the President not to enter them.?’ He went in the direction of the Bank.

The President says, “I did not know Jesse Johnson, when the bills were discounted. My recollection is, that he called at the Bank, sometime afterwards and had a conversation with me on the subject, in which he stated, that he thought he was endorsing notes for Major Connor, and not bills, but said nothing about the proceeds goings to Connor’s credit.” These are all the facts deemed material to be stated.

It is argued by the counsel for Johnson, that it is a just and reasonable inference from the proof, that Connor, the drawer, practiced a fraud upon Johnson, in procuring his endorsement, by applying it to a different purpose, from that which was expressed and intended; and that the Bank was so advised before its acceptance of the bills. If this were so, the Bank would be a mala fide holder of the bills, and not entitled to recover. It is a question of fact, and it was submitted to the jury, under instructions from the court, which we deem very favorable to the Bank, and to which it certainly can take no just conception.

But it is insisted for the Bank, that there is no proof that ' such fraud was in point of fact perpetrated by Connor upon Johnson, and that the fact must appear by competent proof, before the notice thereof, given by Johnson to the Bank, can avail him in his defence. On this point, the court instructed the jury, “that the declaration of Johnson is not competent evidence of his giving notice of such fact. The fact itself must be shown by other evidence.” Under such instructions, it is not probable that the jury have placed too high an estimate upon the evidence bearing upon this point. It is likely that Connor was the only person who could have stated distinctly what did occur when Johnson’s endorsement was procured. He was not examined as a witness. There are, however, facts and circumstances in the case, tending pretty strongly to the conclusion that Johnson was deceived, and that his endorsements were misapplied. And to these we may add, that the case itself affords intrinsic evidence tending, in some degree, to the same conclusion. It seems to háve been known that Connor was embarrassed. The board of directors was very much concerned for the safety of the debt — the debt was a large one, probably nearly as much as Johnson was worth — he was an illiterate man, could not write his name, and it may be inferred, was unskilled and uninformed in the nature and character of commercial and bank paper. The paper remained an unusual length of time in the possession of the Bank before it was accepted, probably some six weeks.

Pilcher and Porterfield, alarmed for their safety, had resolved to force the Bank to an adjustment on their own terms, or to close business and give up their credit. Johnson had notified the Bank, through the agency of one of its directors, not to discount any bills with his name upon them. Upon the day the bills were discounted, the directors hesitated, and once or twice rejected the bills, before they resolved to accept them — thus showing by their own conduct, in view of facts and circumstances known to them, and of which we have, perhaps, an imperfect view, that they themselves doubted the propriety and justice of the act that they were about to perform. And yet, they made no enquiry of Johnson or of the witness who attested his signature, as to the facts under which his signature was obtained, or whether after the lapse of so long and unusual a time, in such transaction, he was still willing to abide his endorsement, in perhaps, the much changed and ruinous circumstances of Connor.

We cannot doubt, from the evidence in the case, that the President and Directors in the Bank were advised of the failing circumstances of Connor. Now, regarding Johnson as a person of ordinary prudence and intelligence, could they reasonably believe that he was still willing after so great a length of time, to abide the consequences of his endorsement, for a failing debtor to the Bank, to an amount nearly equal to his, Johnson’s entire estate?

In the next place, it is insisted for Johnson, that in point of fact, he revoked and recalled his endorsements before the Bank accepted and discounted the bills. On the contrary, it is argued for the Bank, that having endorsed the bills, and they having been afterwards endorsed by Andrew Hamilton, the last endorser to the Bank, Johnson had no right or power to revoke and recall his endorsements.

In the Planters' Bank vs. Galloway, 11 Humph. R., 343, the theory and nature of a bill of exchange are thus stated: “The drawer having funds in the hands of the drawee, assigns the same to the payee of the bill; if the drawee accept, it is an agreement on his part to pay the funds to the payee, or to such person as may become the holder of the bill. The acceptor is primarily and ultimately liable on the bill to every other party, the endorser, the payee, or drawer; that is, he is regarded as the principal debtor, and the other parties as his sureties, that if he do not pay the bill at maturity, they will pay it for him. Now where the bill is not accepted, which is the present case, the drawer occupies the position of the acceptor, in all these respects. The bill itself imports a consideration to have been given at each negotiation of it, and the holder is presumed to be prima facie, a holder for value, Story on Bills, § 198. And the general rule is, that a Iona fide holder for value, is not affected by reason of any fraud, want of consideration, or other defect or infirmity, in the bill, as between the antecedent parties, of which he had no notice at the time he became such holder, Story on Bills, § 188. It is no objection to the title of the holder, that he knew it to be an accommodation bill, if he take it for value, Iona fide, before it has become due; for the parties to an accommodation bill are bound to a hona fide holder for value to the same extent as if that value had been advanced to them, Story on Bills § 191; Chitty on Bills, 80, (margin.)

But an accommodation bill, until it has passed into the hands of a holder for value, has no force or effect. As between the parties to such bill, no action will lie, for it confers no rights and imposes no obligations. There is no consideration upon which any right could be predicated, or any duty imposed. We have seen that if such bill be negotiated for value, the case is entirely changed, and the value paid by the holder imposes a duty on every party for accommodation, in the same manner as if he, himself, had received such value. See cases cited in Story on Bills, § 187; Chitty on Bills, 70 and 305, (margin,) and cases there cited.

If this be the true doctrine, it must necessarily follow that until an accommodation bill be negotiated for value, it is a mere voluntary and gratuitous proposition, and has not the force and effect of a valid and existing contract, such as, in point of form, it would seem to imply. Thus, in Downs vs. Richardson, 5 Barnwell & Alderson, 674, the court say, that “when an accommodation bill has the names of the different parties written upon it, it is in some sense of the word, a bill of exchange; but it is utterly unavailable as a security for money, until it is issued to some real holder for a valuable consideration.”

Regarding an accommodation bill as a voluntary and gratuitous proposition, the conclusion is inevitable, that until it be negotiated and value be given for it, it may be recalled and revoked by any person, so far as relates to himself, who is a party merely for accommodation. Dogan vs. Dubois, 2 Richardson’s Eq. R., (S. C.,) 85; Marvin vs. McCollum, 20 Johns. R., 288; Skelding vs. Warren, 15 Johns. R., 272.

Mr. Chitty in his work on Bills, says that “although a drawer has written his acceptance on the bill, with the intent so accept the same, he may before he has communicated such fact to the holder, and parted with the bill, change his mind, and obliterate his acceptance, and thereby relieve himself from liability.” But this he could not do after he had induced the holder to take the bill on the credit of his acceptance.” Chitty on bills, 309.

And so, an endorsement, like an acceptance before it has been delivered to a bona fide holder, for value, may be revoked, Chitty on Bills, 243, margin; Cox vs Troy, 5 Barn. & Ald., 474; 1 Dow & Ry., 38.

Now to apply these principles to the present case. Johnson stated to Dr. Waters, a director, that he had endorsed no bills for Connor, and that he would not, and that he did not wish the Bank to take any bills with his name upon them. He further explained that he had endorsed notes for a different purpose, and which were secured by a lien upon the lots of land for which they were given. We have seen that this communication was made to the board of directors at the Bank, before the bills were discounted, and that the board came to the conclusion, that the notice should have been in writing. The substance of Johnson’s statement is simply this: “I endorsed notes for Connor, which are otherwise secured, but have endorsed no bills for him, and will not; but if he has misapplied that endorsement, and it appears upon bills to be discounted for his credit in bank, in the manner you state, then I do not wish the Bank to discount the bills with my name upon them. We can but regard it as a direct and imperative revocation of the endorsement, accompanied by the further impressive circumstance, as stated by the endorser, that it had been improperly and unjustly obtained. But certainly it was not necessary that he assign any reason for recalling and receding from his endorsement; it was voluntary and gratuitous, and by his mere will he might revoke it. It follows, that in legal effect, when the Bank accepted and discounted the bill, Johnson was not then an endorser, or responsible as endorser, because before that time, and before any rights became vested in the Bank,’he had recalled and revoked his endorsement. The verdict in favor of Johnson was therefore correct.

In the next place, as to Andrew Hamilton: We do not think that the case shows a revocation as to him. It is true, that he did not wish to endorse for Connor, and after he had endorsed, desired the Bank as a matter of favor, not to discount the paper. But he could not decline Connor’s application, and it is to be inferred, that if Connor insisted upon his endorsement that he would continue and remain as his endorser, however unwillingly.

But Hamilton had no knowledge or information, as we in. fer from the record, that Johnson had recalled and receded from his endorsement. We are to presume that he endorsed upon the credit of all the antecedent parties to the bill, upon whom he was entitled, by his position on the bill, to recourse for his indemnity. But Johnson had ceased to be a party bound on the bill, and this fact was made known to the Bank, as we have seen, and not communicated to Hamilton. Can it be supposed that Hamilton would have consented to remain on the bill, as endorser, if this material fact had been made known to him? Certainly not; and as the Bank accepted the .bill, with a full knowledge of the facts, we cannot regard it in any other light than as a mala fide holder of the bill, as relates to this endorser. If this were not so, and Hamilton were made liable to the Bank, then he should be entitled to his recourse upon Johnson for indemnity. But Johnson having revoked his endorsement, had ceased to be a party to the bill before the Bank became entitled to it, and consequently before the Bank became entitled to Hamilton’s endorsement. Johnson’s revocation was effectual to release him entirely from any responsibility upon the bill. He was not liable to the Bank, and he could not be liable to Hamilton; for such a position would imply only a mere circuity of action, and Johnson’s revocation would be a mere idle and unmeaning ceremony. We think that the true principle is, that in the circumstances of this case, the Bank is to be regarded as a mala file holder of the bill, as to any parties subsequent to Johnson, and who would otherwise have been entitled to indemnity from him. It seems to us, that to hold the contrary doctrine would be in effect, to deny to an endorser the right and power to recede from a voluntary and gratuitous endorsement; and we have seen that this right is well grounded both in reason and authority.

The case of the Union Bank vs. Osborne, 4 Humph. R., 416, was, as we think, correctly decided upon the principal question made in the case; Osborne the last endorser, had notice at the time of his endorsement, of the defect in the prior endorsement. In the present case there was no such notice.

We are of opinion, therefore, that the judgment be affirmed as to Johnson, and reversed as to Hamilton, and as to him the cause will be remanded for further proceedings.