Case ID: ohio_11/html/0054-01.html
Source: Caselaw Access Project
Author: {"author": "Lane, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Micajah T. Williams v. Bosson & Brothers.
    The indorsers of an accommodation bill are not joint sureties, but are liable to each other in the order of their becoming parties.
    This is a writ of error to the Supreme Court of the county of Miami.
    It brings up the following case by a bill of exceptions:
    The action was upon a bill of exchange, for $3,000, drawn by Green, upon Bosson & Brothers, to the order of Dana, and indorsed by Dana to the plaintiff, Williams, dated September 16, 1838, payable in ten months, and accepted.
    The defendants proved, that before this time they had accepted, for Green’s accommodation, a draft in favor of Lawrence, duo in September, 1838, and that the present draft was made and placed in Green’s hands to obtain a renewal of the Lawrence draft, but that it was not used for this purpose.
    That another bill, for Green’s accommodation, drawn by him, to the order of Dana, and indorsed by the present plaintiff, Williams, payable April 18, 1839, was negotiated at the Commercial Bank. That when that fell due, the present draft, thus remaining in Green’s hands, was used by him to raise money to pay the Dana draft, and that, for this purpose, the blanks were filled by Green, and indorsed by Dana and Williams. The present bill was not paid at maturity, and remained under protest until December, 1839, when it was paid by *funds raised upon another loan, made on a bill drawn by Green on the defendants, indorsed by Dana and Williams, but not accepted.
    These facts show three drafts had passed between the parties. The first was the Lawrence draft; the second is the draft now in suit, intended by the acceptors to renew the Lawrence draft, but used to renew the Dana draft; the third is the one drawn by Green on them, and not accepted.
    The second draft was taken up by the bank, and came to the hands of Williams in the following manner: It lay in the bank, under protest, some time. Bill, No. 3, was drawn by Green to Dana, and indorsed by him and Williams, and negotiated at the Commercial Bank. Williams being the last indorser, the money was placed to his credit, and could be drawn only by his check. Dana, at the request of Green, then took up the bill, by means of Williams’check, and retained it. Some-time after, Williams endeavored to persuade Dana to join in prosecuting the defendants on the present draft, but Dana declined, because he thought the negligence of the notary had exonerated him. Williams then procured the bill, for the purpose, as he said, of seeing if he was not released also, and has commenced this suit upon it.
    The court instructed the jury as follows:
    1. That if there was a misapplication of the bill by Green, with the knowledge of Williams, it is a defense to this suit; but this misapplication must bo proved by defendants.
    2. Joseph Bosson, one of the firm of Bosson & Brothers, having died while bill No. 2 lay, unused, in the hands of Green, such death, and Williams’ knowledge of such death, would not impair his rights as holder, he being ignorant of such misapplication.
    3. That the rule in Douglass v. Waddle, 1 Ohio, 413, applies to notes only, and not to bills, although accommodation bills.
    4. That the circumstances of the payment of draft No. 2, by Williams’ check, and his possession of the draft, are prima facie evidence of payment by him.
    *5. They declined to charge that possession being obtained by Williams, under the above circumstances, the same equitable defenses would prevail in this suit as if it was’brought by Green.
    The jury returned a verdict for the plaintiff.
    R. S. Hart, for the plaintiff in error,
    insisted that the court erred in their charge to the jury. He cited 2 Stark. Ev. 153, 180; Chit, on Bills, 255, 241, 243, 554, 335, 53, 60, 256, note G.
    C. L. Telford, on the same side,
    cited 3 Kent Com. 79; Bay v. Coddington, 5 Johns. Ch. 56; Gill v. Cubit, 3 Barn. & Cress. 466; Riley and Van Amringe v. Johnson, 8 Ohio, 526; Coddington v. 
      Bay, 637; Evans v. Smith, 4 Binn. 367; De la Chaumette v. The Bank of England, 9 Barn. & Cress. 208, 17 Eng. Com. Law, 356; Lowndes v. Anderson, 13 East, 135; Wardell v. Howell, 9 Wend. 170; Denniston v. Bacon, 10 Johns. 198; Woodhull v. Holmes, 10 Johns. 231; Collins v. Martin, 1 Bos. & Pul. 648.
    Odlin, Schenck & Howard, for the defendant
    in error, sustaining the charge of the court, cited Byles on Bills, 63; 2 Stark. Ev, 166; Crook v. Jadis, 5 Barn. & Adol. 1106, S. C., 27; Eng. Com. Law, 234, 278; McDonald v. McGruder, 3 Pet. 470; Adams v. McMillen, 7 Porter, 73; Bank of United States v. Dunn, 6 Pet. 51; Matthews v. Hall, 1 Vt. 316; Chitty on Bills, 255; 9 ed.
   Lane, C. J.

The propriety of the court’s refusing to hold the bill liable to all equities which might be set up against Green, depends upon the following proposition :

That Green could never set up the note, it having been given for his accommodation ; that Williams did not acquire the note in the common course of business, as a purchaser, for a consideration passing at the time, but that it was a paper whose obligation was extinct, because it had done its office; and having *been taken as security for a prior debt, and under circumstances calculated to awaken suspicion, such as the death of Joseph Bosson, the embarrassments of Green, the long time of credit on the face of the bill, and the period since its date in which it had remained unemployed in Green’s hands; and the case of Riley and Van Amringe v. Johnson, 8 Ohio, 526, is relied on to sustain the position.

The justice of this view depends on assuming that Williams acquired his right to the paper in suit, after it was duo, by the transfer from Dana, and as collateral security for his liabilities for Green. Upon this assumed fact, the case referred to might apply, and as the authority of that decision is questioned, it might be necessary for the court to examine its grounds. But the facts do not justify the defendant in this position. Although Williams has said he held it as such security, he is not concluded by an inadvertent admission, if he really possesses other rights. He did not take the paper by any new assignment from Dana, or derive any rights to it from Green, after its dishonor; but he was one of the series of indorsers upon it, and if he paid the debt, he created or retained a right to it as his own, to enable him to pursue his remedy against its earlier parties. Ho holds it, therefore, not as a purchaser of a dishonored security, but as the indorser of a bill not due ; and his rights are referable to the time of his indorsement, not to the time when he took the note from Dana. It was, then, not wrong for the court to decline instructing the jury that the possession of the bill acquired from Dana, under the pretense of inquiring into his liabilities, conferred no right of action..

The other considerations to which the defendants allude, were entirely proper to be laid before the jury. The bill was not applied by Green to the purpose for which it was intended; and such misapplication, if proved to have boon made with the knowledge of Williams, would involve him in all the consequences attaching to Green. Stone v. Vance et al., 6 Ohio, 246. To this end the suspicious circumstances were the subjects of animadversion and comment to establish notice. But it is plainly not law to hold the indorser of paper, *not due, responsible fora misuse to which ho is not privy, except in such eases as gaming notes, or those void by statute. The death of William Bosson, one of the partners of the firm whose surviving members are sued, does not invalidate the paper. It was accepted before, and, at the time of his death, was in the possession of Green. It received its form and vitality before his death, and no act of any member of the firm is necessary to add anything to it.

The opinion expressed by the court, that the facts shown in the depositions of Dana, Outcalt, and Hall are prima facie evidence of a payment by Williams, is claimed to be not sustainable. The necessity of this proof of payment, in the first instance, is not perceived ; because the holder of a bill is entitled to a suit, unless some circumstances exist to render his title suspicious. Yet if the bill was taken up by Green, an earlier party, no right of action would accrue to Williams. The bill in suit was, in fact, regained from the Commercial Bank by means of money, acquired by the discount of another, drawn by Green on the Bossons, indorsed by Dana and Williams. The money raised on the loan was placed to Williams’ sole account, and was paid over on the bill in suit on his check. It was, therefore, apparently Williams’ money ; and if the bill were a real transaction, this would be complete proof. It was still competent for the defendants to show the money, in fact, belonged to Green, but the evidence makes no such proof. At the maturity of the second bill, the indorsers were under the necessity of providing for its payment. Their arrangements, among themselves, were of no moment to the defendants; and none of their remedies against the acceptor’s are taken away, if they received money by means of 'Green's draft, and complied with their own responsibility, unless Green paid it; and the facts, instead of showing this, .make it probable that the payment of the third draft is fastened upon Williams, from Green’s insolvency, and from the discharge of Dana, through the omission of the notary.

But the principle most relied on, as erroneous in this charge, is that which regards the rule of a former decision of this *court, not applicable to bills of exchange. In the case of Douglass v. Waddle, 1 Ohio, 413, it is held that in accommodation notes, the foundation of loans from banks, the several parties whose names are used for the benefit of the person for whom the loans are made, are presumed to be joint securities only, and each can recover from the other, whether maker or indorser, his proportion only. That decision was made in 1824, and the liability of the parties occurred at a still earlier period. At that time the form of obtaining accommodations from banks was on notes only; upon such notes a local usage obtained, holding the sureties on each paper as joint securities only, and not liable to each other in the order of their coming upon the notes. It is this local rule which is recognized and established as law by the authority of that case.

In the law of real property, each state has its local rules, and its own courts are competent to establish and maintain them. But in the law of contracts, especially in mercantile contracts, the principles are nearly uniform throughout the civilized world; they are established by a wider experience, and are maintained in a greater uniformity, in consequence of the great number of tribunals through whom they are expressed. Our state has become, and is becoming, the scene of large commercial operations, and it is of much moment that the principles on which justice is administered should be made to conform, as far as possible, to the general law merchant. The intrinsic propriety of this step is increased by remembering that the foreigner will find the general law merchant governing the tribunal which sits by our side, and will obtain there a different rule of justice than our own citizen. The introduction of bills, as a basis of bank accommodation, has taken place long since the decision of Douglass v. Waddle. They are of mercantile origin, and the law merchant should govern their use. The right of the indorsee to hold all earlier parties responsible to him, is undoubted: and it is plainly our duty to follow these rules, unless bound by our own precedents. But we see no reason to extend the rules of Douglass v. Waddle beyond the kind of paper to which local usage had applied it; and it is ^sufficient evidence that the parties, by adopting paper of a different form, did not rely on its protection. This stop has heretofore boon taken on the circuit. Walker v. Worthington, Ross Supreme Court, 1835. And the court unite in the opinion that the judge committed no error. ' Judgment affirmed.