Case Name: Peter, Kautzman et al. v. Jesse Weirick et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1875-12
Citations: 26 Ohio St. 330
Docket Number: 
Parties: Peter, Kautzman et al. v. Jesse Weirick et al.
Judges: Welch, C. J., Rex, Gilmore, and McIlvaine, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 26
Pages: 330–334

Head Matter:
Peter, Kautzman et al. v. Jesse Weirick et al.
T. The payee of a negotiable promissory note, who, on transferring it to a third party, writes his name on the back and guarantees its payment at maturity, is a party to such note within the meaning of section 38 of the code, and may be sued jointly with the maker.
2. The liability of such party is, within the meaning of the section of the code above referred to, substantially the same as that of an indorser who has waived demand and notice.
Error to the District Court of Seneca county.
On the 8th of December, 1870, Jesse Weirick and Upton 1. Weirick, partners as J. Weirick & Sou, brought suit in the Court of Common Pleas of Seneca county against Spencer Lewis and Eiteh B. Lewis, partners as S. Lewis & Brother, and Peter Kautzman and T. M. Walker on a promissory note, of which the following is a copy:
“ Belleeontaine, Ohio, June 1, 1870.
“ Six months after date we promise to pay to the order of S. Lewis & Brother, or bearer, three hundred and seventy-five dollars, value received, payable at the People’s Bank at Bellefontaine, 0., with interest.
Peter Kautzman,
T. M. Walker.”
On the back of the note was the following indorsement; “Eor value received we guaranty the payment of the ■within note. Tiffin, 0., July 30, 1870.
• S. Lewis & Bro.”
The only question made in the case is, whether a joint action cah be maintained against the defendants on the note.
The makers delivered it to the payees, and the latter before maturity transferred it for value to the plaintiffs below, J. Weirick & Son.
In the Court of Common Pleas judgment was rendered for the plaintiffs. This judgment, on error, was affirmed by the District Court.
The plaintiffs in error, who were the defendants below,, prosecute the present petition in error to obtain the reversal of these judgments.
John McCauley, with whom were West, Walker $ Kennedy, for plaintiff in error:
I insist that under section 38 of the code it is not proper. to join as defendants any persons who may be parties to a note, unless they are liable parties. The first clause of this section provides that “ persons severally liable upon the same obligation or instrument ” may be joined as defendants. The payees are parties to the note, but not liable parties. When they become guarantors of the note they still remain parties to it, but not liable parties upon it, even yet, but liable, if at all, upon a different contract. So that the fact that a person is a party to a bill or note does not import that any liability attaches to him. He may be liable or may not, depending upon his relation to it. An original indorser is liable on the note the same as the makers. His liability is strictly upon the same obligation or instrument as the liability of the makers; while the liability of a subsequent indorser, or of a payee who may indorse or guaranty, is upon a separate and distinct contract. The name of an original indorser would ordinarily appear on the back of the note, and while his liability might be the same as that of the maker, so that he could be joined with the maker in an action upon it, yet the position of his name upon paper might be such as to require special averments in a pleading upon the note, to make apparent the exact nature of his liability. He may appear as an indorser or guarantor on the paper, but really be liable as an original promisor. In such case it is competent to join in the same action the maker with those who may appear to be only indorsers.
Section 122 of the code provides for this case, and requires, when others than the makers of a promissory note, or the acceptors of a bill of exchange, are parties, it shall be neces sary to state, also, the kind of liability of the several parties, and the facts as they may be, which fix their liability.
The guaranty upon this note was as follows :
“For value received we guaranty the payment of the within note. Tiffin, 0., July 80,1870.
S. Lewis & Bro.”
I claim that this was strictly a guaranty and not a mere indorsement—a distinction of some importance probably in this case. The liability of a guarantor differs from that of an indorser in many respects. He is not liable as an original promisor, as a surety is; yet he engages to pay the debt, in case the principal does not pay. He is not entitled to notice of non-payment, and can only plead such want of notice when it has operated to his injury. He also warrants the solvency of the promisor. An indorser does not warrant the payment of the note nor the solvency of any party to it. He is answerable upon a strict compliance with the law by the holder, whether the promisor is solvent or not.
The difference between an indorser and a guarantor is stated 2 Parsons on Notes and Bills, p. 117. See also Brewster v. Silence, 4 Seld. 207; Allen v. Fosgate, 11 How. Pr. 218; 10 Barb. 638 ; Edwards on Notes and Bills, 205; 6 Barb. 282; 5 Wend. 307; Parsons Bills and Notes, 119,125; 2 Chitty PL 839.
W. F. Noble, for defendants in error.

Opinion:
White, J.
At common law a joint action could only be brought to enforce a joint liability. This principle of the common law has been greatly modified by legislation.
Section 38 of our code of civil procedure provides as follows : " Persons severally liable upon the same obligation or instrument, including the parties to bills of exchange .and promissory notes, may, all or any of them, be included in the same action at the option of the plaintiff."
Section 122, which prescribes a short mode of declaring on certain causes of action, provides that " when others than, the makers of a promissory note, or the acceptors of a bill of exchange, are parties in the action, it shall be necessary to state also the kind of liability of the several parties, and the facts, as they may be, which fix their liability."
The .question here raised is whether Lewis & Brother, at the time they were sued, were parties to the note within the meaning of the section of the code first above quoted.
That they were parties to the note at the time of its execution, is undeniable. The note was negotiable, and they were its payees. In their hands it first became operative as a legal instrument; and it is through their indorsement the plaintiffs derive title.
The point of objection is that, by the terms in which the payees prescribed their liability when they parted with the note, they ceased to be indorsers, and became guarantors merely.
The contract of an indorser, as well as that of a guarantor, is separate and distinct from that of a maker. A guaranty may be made by the legal holder, or by a third party who is a stranger to the instrument. "When the guaranty is by the legal holder on transferring his title to the instrument, and is merely intended to vary his liability from what it would be under the law merchant, and to prescribe the terms upon which he is to be held liable to subsequent parties, he is, we think, still to be regarded as a party to the instrument within the remedial provisions of the code.
Although the liability of Lewis & Brother in the present case is not strictly that of indorsers, yet, as respects the remedy now in question, it is substantially the same as that of an indorser who has waived demand and notice. To this effect is the decision in Clay et al. v. Edgerton, 19 Ohio St. 549.
In Brewster v. Silence (4 Selden, 207), a case relied on by the plaintiffs in error, the guaranty was by a third party. Such also seems to have been the case of Allen v. Fosgate, 11 How. Pr. 218. De Ridder v. Shermerhorn (10 Barb. 638), was not the case of a guaranty of a note, but of a contract to lay out certain money in tbe purchase of land.
But without entering into an analysis of the cases in New York, it may be remarked that the principal discussion in those cases seems to have been as to the nature and effect of the guaranties under the statute of frauds of that state.
The question before us is whether, under the remedial provisions of the code, a joint action, in cases like the present, can be maintained. This question must be answered in the affirmative, and the judgment is therefore affirmed.
Welch, C. J., Rex, Gilmore, and McIlvaine, JJ., concurred.