Case Name: Bullit et al. v. Thatcher et al.
Court: High Court of Errors and Appeals of Mississippi
Jurisdiction: Mississippi
Decision Date: 1841-01
Citations: 5 Howard 689
Docket Number: 
Parties: Bullit et al. v. Thatcher et al.
Judges: 
Reporter: Mississippi Reports
Volume: 6
Pages: 689–697

Head Matter:
Bullit et al. v. Thatcher et al.
An accommodation endorser is not discharged upon notice to the holder of the paper to sue, and proof of his failure to bring suit until after the drawer became insolvent,
Where the drawer of a bill of exchange is not a citizen of the state, the statute requiring drawers and endorsers to be sued jointly in the same action, does not apply.
ERROR from the circuit court of Warren county.
The defendants, Thatcher and Bodley, were sued as endorsers of a bill of exchange drawn by John F. Broadnax, and protested for non-acceptance, of which they had due notice. Upon the trial a verdict was found for them under the instructions of the court, and plaintiffs have brought the case into this court, by writ of error.
Thatcher and Bodley introduced testimony tending to prove that they were the accommodation endorsers of Broadnax, the drawer of the bill. They then proved that some few days after the' 24th of March, 1888, they required the plaintiffs by written notice, to proceed against Broadnax; that they neglected then to proceed by suit; that in June following, Broadnax conveyed to others, in trust, all the unincumbered property which he possessed, and in a few months thereafter, died insolvent.
•Upon this state of fact, the court, at the instance of the defendant, charged the jury in substance, that the notice given to plaintiffs to proceed against Broadnax, and their failure to do so, discharged the defendants, provided the jury should believe, “ that they were placed in a situation to be damnified by such neglect The propriety of this charge, which decided the case against plaintiffs, was the principal question submitted to the court. -
Holt, for plaintiffs in error.
The authorities upon this subject, it is admitted, are not uni•form; but it is believed, that the weight as well as the number of adjudications, is decidedly against the instruction of the circuit judge. The principle, as established by the greatest judicial names, is this: That the creditor is not bound to any measures of active diligence in collecting his debt from the principal, and that though urged to proceed by the surety, his failure or neglect to do so, will not discharge the surety, unless such failure or neglect be accompanied by some settled and binding contract for delay, made with the principal without the knowledge or assent of the surety. 2 J. C. R. 554. 4 do. 123, 132. Story’s Eq. 1 vol. 592-3, 321-2. 9 Wheat. 720. 12 lb. M’Lemore v. Powell. 1 M’Cord’s C. R. 454. 6 Yesey, 734. 2 JBro. C. R. 579. 10 East. 34. 3 Mason 446. 1 Bailey R. 412. 1 Devereux R. 484. Croughton v. Du-val, 3 Call, 69. 5 Munroe, 252. 2 Pick. R, 614. 4 do. 382. 5 do. 307. 4 Vermont R. 131. 1 Watt’s R. 146-7. 3 Blackford R. 92. 3 J. J. Marshall, 527. 1 Gallis’ R. 32. 1 Leigh’s R. 434-5.
In many of these cases the surety had formally notified the creditor to proceed against the principal debtor, and he' had neglected to do so. Yet this circumstance was held not to take the cases out of the operation of the general rule. The only redress for the surety, is by proceeding in chancery, whereby he may compel the creditor to sue for and collect the debt of the principal, upon tendering to such creditor indemnity against the risk, delay, and expense of the suit. 1 Story’s Eq. 322. No such proceeding was attempted by Thatcher & Bodley, nor was their requisition upon plaintiffs, to sue Brodnax, accompanied by any offer of indemnity.
The leading case which will be relied on by defendants in error, as supporting the charge given by the circuit judge, is King v. Baldwin, 17 John’s 384. A case, which, as an authority, must be regarded as of very little weight, except with the courts of New York. It was decided in the Senate of that state, by the casting vote of the Lieutenant Governor, against the opinion of Chancellor Kent and a majority of the judges of the Supreme Court. It was the arbitrary establishment of a principle, unknown to the common law, as the authorities cited abundantly show, and differs but in name from a statutory enactment.
The case from 17 Johns, might, however, be conceded to be law, without prejudice to plaintiffs in error, as it bears no analogy to the case at bar. The principle there settled, is that a surety, (technically so called,) sustaining damage fronT the failure of the creditor to proceed against the principal debtor, after having been required to do so, will' be discharged. The reason upon which this decision rests, is, that the surety himself cannot 'proceed at ■law against his principal upon the paper; but the reason of the rule ceases, and consequently the rule itself has no application to ,the case of endorsers, whose right and duty’ it is, to take up the paper when dishonored, and sue such parties as they may’choose to .hold responsible. Hence, it -has been constantly held in New York, that the decision referred to in 17 Johns, do.es not reach cases against endorsers, which is the character in which defendants in error are sued. 6 Wendell, 613. 16 Johns. 152. Lennox et al. v. Prout, 3 Wheat. 580.
The instruction of the circuit judge, proceeds Upon the assumption, that to entitLe themselves to a discharge, it was not necessary for the defendants to prove that .they had been actually damni-fied, by the neglect of the plaintiffs to sue the drawer of the bill. It was sufficient that “they were thereby placed in a situation to be damnified,” or, in other words, if the jury believed that there was a possibility of defendants being damnified, by the neglect complained of, they were bound, under this charge, to find against the plaintiffs. We have sought in vain for .authority in support of this position taken by the court. Unquestionably the strongest adjudications, which defendants can" cite in their behalf, will be found to require proof of'actual loss and injury, suffered by the sureties, as a condition precedent to their discharge. Was any such testimony introduced by defendants, on the trial in the court below? Far from it. The: proof, was, that about the 1st of April, 1838, the notice, was served on plaintiffs, at which timé Broadnax, the drawer of the bill, was the owner of four* teen slaves, worth from twelve to sixteen hundred dollars each, which he had bought but had riot paid for; that.in June following, he conveyed the slaves in trust to some of his creditors, and a few months' thereafter, died insolvent. It was the opinion of the witness, .that a judgment for the amount of the bill sued on, could have been collected of Broadnax, in April or May, 1838. Under these circumstances, it was incumbent upon the defendants to have proved that plaintiffs could, by instituting'suit after receipt of the notice, have obtained a judgment before June, 1838, when the insolvency of Broadnax occurred. They utterly failed to make any such proof. The only witness examined, by them, to that point, stated explicitly, that he could not say, that a judgment could have been obtained, after the date of the notice, and before the death or known insolvency of the drawer of the bill. If the witness could not say this much for defendants, by what authority could the jury stretch their vision beyond the light of the testimony? Even then, if the case in 17 Johns, were law, and. the defendants were sureties, and not endorsers, they have not brought themselves within the reason of tjie rule, under which they claim a release.
G. S. Yerger, for defendants.
• The simple question in this case is, whether an endorser for accommodation (and known to be so to the holder,) is discharged when he notifies the holder to sue, which he does not do until after the drawer becomes insolvent. It is unquestionably true, that when an agreement to give time is made, it discharges the endorser, who is quasi a surety; and most of the cases in the books, are upon agreements of this kind. 2 John. Ch. Rep. 554. 1 Leigh. Rep. 434-35. McLemore v. Powell, 12 Wheat, and numerous other cases. But it by no means follows, that the surety will be discharged only in case of an agreement to give time.
Where by the neglect of the creditor, the benefit of any security is lost, it has recently been decided in England, it will discharge the surety. 2 Simon & Stewart, 457. 1 Con. Ch. Rep. 543, Ca-pel v. Butler. Thus if notes or other securities are put in his hands to secure the debt, and by his failure to proceed they are lost, the surety will be discharged.
The principle of this case is direct: the drawer of the bill is liable to the endorser; the endorser when he pays it is entitled to the bill, and may sue the drawer. The bill is a security which may be enforced by the endorser; and if the holder when requested, fails to proceed against the drawer, it is a fraud upon the endorser, and if by intervening insolvency the debt is lost, the holder must lose it. I cannot present the case more fully and clearly than it has been presented by Chief Justice Spencer, in delivering the opinion of the' court in King v. Baldwin, 17 John. Reports, to which opinion and reasoning I refer the court. Vide pages 390-91.
The same point had been previously- decided by the Supreme Court of New York, in the case of Paine v. Packard, 13 John. Rep. 174. The principle decided is, “when the holder is requested to sue the principal out of whom it could be made, but he fails to do so until it cannot be made, the surety is discharged.”
It is clear the surety could file a bill in equity and compel him to do so. Hays v. Ward, 1 Story’s’Equity, 593. Why compel him to go into equity ? The supreme court of Tennessee has decided the same way. Hancock v. Bryant, 2 Yerger’s Rep. & 10 lb. 362. . ' .
A distinction is attempted to be drawn between an endorser and a surety.' There is ground perhaps for the distinction where the endorsement is in a due course of business; but when, as in the present case, it is an accommodation endorsement, the same rule w;hich discharges a surety on the face of the. note, will discharge the accommodation endorser. Hence agreement to give time, release -of securities, &c. discharge equally in both cases. Baily on Bills. ' In fact, an accommodation endorser is to all intents and purposes, a conditional surety. He engages to pay if upon demand the principal does not, and he is notified of the demand. The difference between a.-surety bn the back of a note, and one on its face is, that in one case demand and notice is necessary to charge the surety, in the other it is not.
Theobald in his Law of Surety,’ 1 Law Library, 180 marginal page, 107 top page, lays down the law “ that whatever will discharge the sureties, will discharge endorsers.” The Supreme Court ■ of Alabama also decided, that accommodation endorsers occupy the situation of sureties. Mack & Co. v. Black, 4 S. & P. Rep. 374. ■ Same point decided in Louisiana, State Bank v. Senegal, 11 La. Rep. 31. The .case in* 10 Yerger, 362, was the case of an accommodation endorser, and the court held there was no distinction. ' . ,
Judge Story lays down the rule thus: “ If a creditor does any act injurious to the surety, or inconsistent with his rights, or omits to do any act when required by the surety, which his duty enjoins him to do, and the omission proves injurious to the surety, in all such cases the surety will be discharged, if not at law, in equity.” VoL 1 page 321. Whatever will discharge a surety in equity, will also discharge him at law. People v Jansen, 7 John. Rep. 333. S. P. 2 John. ,Ch. Rep. 554. .

Opinion:
Opinion of the court by
Mr. Chief Justice Shakkey:
The defendants were accommodation endorsers of a bill of exchange drawn by John F. Broadnax, dated the 1st of January, 1837, payable in New Orleans, at six months, which was protested for non-acceptance on the 16th of the same month. The holders, the plaintiffs in error, are citizens of New-Orleans, the maker being also a citizen of the state of Louisiana, and the defendants are citizens of this state. On the 24th of March, 1838, the defendants wrote to the plaintiffs, and requested them to sue the drawer of the bill immediately, or they would consider themselves discharged. The maker at that time had twelve or fifteen ne-groes unincumbered, but conveyed them away in June, and shortly afterwards died insolvent. On the 16th of April, 1838, this suit was brought, and on the trial the defendants relied on the notice and the failure to sue, as a discharge; and so the court instructed the jury, which is now assigned as error.
The question here presented has received frequent adjudications, and some difference of opinion seems to exist in regard to the rule of law. It is contended that an accommodation endorser is but a surety, who has a right to require diligence of the holder in suing the principal, and authorities are cited which do sustain this position. To a certain extent, and for certain purposes, an accommodation endorser .may be regarded as a surety. The object of such an endorsement is to secure the debt, but the undertaking or contract in a strictly legal point of view is materially different from that of an ordinary surety. In the one case it is several only, whilst in the other it is always joint, or joint and several. An endorser undertakes to pay the debt himself on condition; when the condition is performed by giving him notice of demand and refusal, his undertaking becomes absolute; it is not secondary. The holder of a protested bill may proceed against either or all of the parties to it, at his election, but by separate actions. Our statute, it is true, has changed this rule, but it does not apply in this case, because the maker was not a citizen of the state.
By the common law there was neither a legal or an equitable obligation on the holder to sue the maker first, and if he may sue any party, how can it be that an endorser is discharged if the holder fails to sue the maker on request. Such a proposition is at war with principle. It is repugnant to the nature of the contract. To ¿Ilústrate it by the case before us: Thatcher and Bodley say to Bullit, Shipp & Co., we are but accommodation endorsers for Broadnax; sue him immediately, or we shall consider ourselves discharged; and thereupon they immediately sue Thatcher and Bodley, but do not sue Broadnax. Can any one question their right to do so ? Certainly not. Could Thatcher and Bodley say, we did not tell you to sue us,- but Broadnax, which you were bound to do. Would such an answer constitute any defence to the action, and if it would not, there is no foundation for the position. As regards endorsers, the notion of their being discharged by the delay of the holder is predicated on the assumption that the drawer must be first sued, or at least it resolves itself into that, and as that is not true in principle, the idea is fallacious. " .
When a note or bill is protested the endorser stands as an individual contractor, bound to lift the bill immediately, and will the law favor him, and ultimately discharge him for standing out in violation of his contract ? The law does not suppose that he can be injured by delay. It does not tolerate delay on his part, but requires immediate payment. If he is to be discharged by a failure to sue the maker, even after notice, it is but a reward for a breach of contract and of good faith. He has his recourse against the maker, and if there be danger of losing that by delay, his duty is plain; let him pay the debt according to his contract and take his recourse. His condition and his liability are different from a surety in a bond. A mere surety in a joint liability may resort to chancery and compel the holder of the bond to use proper diligence. In both cases, however, a new and binding contract for delay would discharge the surety.
This view of the subject seems to be the necessary result from the nature of the contract, and it is supported by most of the adjudged cases. It is true that the decisions are conflicting. The cases of Paine v. Packard, 13 J. Rep., and King v. Baldwin, 17 J. Rep. seem to be leading cases in favor of the defence here set up, and yet they have been much questioned even in New-York. The question was very fully investigated by Chancellor Kent in the last case cited, reported in 2 J. C. Rep., and he even denied the law to be as decided in Paine v. Packard. In the case of Beardsley v. Warner, 6 Wendell, 610, the court refused to apply the rule established in Paine v. Packard, to the endorser of a promissory note, and he was consequently held responsible, although he had given notice to sue. The court said " the moment the note is dishonored and notice of that fact duly given to the endorser, the holder's right to sue him is perfect, and this right is not impaired as long as he remains passive."
These remarks apply with all their force to the present case, and it is an authority directly in point, so that even in New York, where mere sureties are held to be discharged if prejudiced by delay, endorsers are placed on a different footing. In Tennessee and Alabama the courts have adopted the rule of Paine v. Packkard, and have also applied it to endorsers. In the case in 10 Yerger, the court admitted that if the question were res integra, they might have decided differently; but the question was settled in the case in 3 Yerger, and they would not depart from it. In that state there is a statute which may have had an influence on the decision. Contrary decisions, however, are numerous, in which the defence here set up has been overruled. The point was made in Crane v. Newell, 3 Pick. 612, and held to be no defence. The reporter has added a note of many authorities to the same effect. The case of Hunt v. Bridgham, Ib. 581, was of the same kind. These were cases of sureties, not endorsers, and if sureties will not be discharged by mere delay, unaccompanied with fraud, or an agreement not to prosecute the principal, certainly endorsers will not.
• The same doctrine is reiterated in the case of Frye v. Baker & Jennings, 4 Pick. 382, which was also a case of mere suretyship. The case of Billows v. Lovel, 5 Pick, was a suit on a joint and several promissory note, and it was held that the refusal of the creditor to sue the principal on the request of the surety, unaccompanied with an oifer of indemnity against the costs and charges of the suit, is not a defence at law for the surety, al"though the principal may have become insolvent. Now even if these defendants occupy the attitude claimed for them of mere sureties, still by these authorities, their defence must be unavailing.
But the Massachusetts cases do not stand alone. They are fully sustained by the cases cited by counsel from 1 Bailey's Rep. 3 Call's Rep. 1 Leigh's Rep. and 5 Monroe. The case of Kerr, Administrator, v. Baker, Walker's Rep. 140, was a case of a surety; and it was held that he was not discharged by the failure to sue the principal, after notice given to do so. The most of these cases are in exact harmony, and must be considered as decisive of this question.
The judgment must be reversed, and the cause remanded.