Case Name: United States Rail Company, Respondent, v. Ernst Wiener and Chester W. Tallcott, Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1915-11-05
Citations: 169 A.D. 561
Docket Number: 
Parties: United States Rail Company, Respondent, v. Ernst Wiener and Chester W. Tallcott, Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 169
Pages: 561–563

Head Matter:
United States Rail Company, Respondent, v. Ernst Wiener and Chester W. Tallcott, Appellants.
First Department,
November 5, 1915.
Bills and notes — liability of payees and indorsers of a bill of exchange upon its dishonor.
The drawer of a bill of exchange upon its dishonor may not recover from the payees who have indorsed it before maturity, in the absence of a special or collateral agreement.
Hence, a complaint which alleges that plaintiff drew a bill of exhange in favor of defendants on a corporation which accepted it; that thereafter defendants indorsed it and the same before maturity was delivered to plaintiff for value, and that said plaintiff is still the owner and holder thereof; that at maturity the bill was not paid and was protested, due notice being given to defendants, is'insufficient, where there is no allegation of any special or collateral agreement on the part of defendants, the payees and indorsers of the bill.
A bill of exchange upon acceptance becomes, in effect, a promissory note, • the acceptor standing in the place o'f the maker and becoming primarily liable and' the maker standing in the place of a first indorser.
Appeal by the defendants, Ernst Wiener and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 16th day of November, 1914, upon the decision of the court after a trial before the court without a jury, and also from an order entered in said clerk’s office on the 24th day of November, 1914, denying defendants’ motion to dismiss the complaint at the opening.
Woolsey A. Shepard, for the appellants.
Henry B. Corey, for the respondent.

Opinion:
Scott, J.:
The complaint states three causes of action, two upon bills of exchange and one upon a promissory note.
As to each bill of exchange the complaint alleges that plaintiff drew a bill of exchange in favor of defendants on the corporation of Ernst Wiener & Co., which accepted it; that thereafter defendants indorsed it, and the same before maturity was delivered to plaintiff for value, and that said plaintiff is still the owner and holder thereof; that at maturity the bill was not paid and was protested, due notice being given to defendants. There is no allegation of any special or collateral agreement on the part of defendants, the payees and indorsers of the bill, so that the bald question presented by the pleading is whether the drawer of a bill of exchange, upon its dishonor, may recover from the payees, who have indorsed it before maturity.
Section 111 of the Negotiable Instruments Law (Consol. Laws, chap. 38; Laws of 1909, chap. 43) provides as to the liability of the drawer of such an instrument that "if it be dishonored, and the necessary proceedings on dishonor he duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it." Thus upon acceptance a bill of exchange becomes in effect a promissory note, the acceptor standing in the place of the maker, and becoming primarily liable, and the maker standing in the place of a first indorser. So, upon the face of the. drafts in suit, Ernst Wiener & Co. became primarily and the plaintiff secondarily liable to defendants. When the acceptor' defaulted in payment plaintiff's obligation arose, and when it acquired title to the note its liability was extinguished, because it was both debtor and creditor, but this did not create any liability on the part of these defendants as original payees and indorsers. Plaintiff relies to sustain its judgment on Haddock, Blanchard & Co. v. Haddock (192 N. Y. 199). That case, however, is not applicable. The bill of exchange therein considered was drawn by plaintiffs to their own order, and the case turned upon a collateral agreement by the defendant to become hable in case the draft was dishonored. No such agreement was alleged in the present case. A letter was read in evidence signed "Ernst Wiener Company, Chester W. Tallcott, Treas.," reciting that the company accepted plaintiff's proposition to take " sixty days acceptance " provided that "our Messrs. Wiener and Tallcott endorse the said notes." This letter was not admissible, not having been pleaded, and its meaning is not entirely clear. It does not purport to be an agreement on the part of Tallcott and Wiener individually, and is not signed by the latter in any capacity. Whatever may be the fact as to any collateral agreement on the part of defendants, none was alleged, and the complaint was, therefore, insufficient so far as concerns the bill of exchange.
As to the note sued upon the only defense is that notice of dishonor was not properly given to defendants. We think that, under, the circumstances, the notice was properly given. The result is that the judgment appealed from must be reversed and a new trial granted, with costs to abide the event, and the findings numbered "V" and " XIX ' reversed, unless plaintiff stipulates to reduce the judgment by the amount recovered upon the two bills of exchange, in which case the judgment as reduced will be affirmed, without costs.
Ingraham, P. J., McLaughlin, Laughlin and Clarke, JJ., concurred.
Judgment reversed and new trial ordered, with costs to appellant to abide event, and findings numbered "V" and " XIX " reversed unless plaintiff stipulates to reduce the judgment as stated in opinion, in which event the judgment as so modified affirmed, without costs. Order to be settled on notice.