Case Name: Donley v. Bank
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1883-01
Citations: 40 Ohio St. 47
Docket Number: 
Parties: Donley v. Bank.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 40
Pages: 47–52

Head Matter:
Donley v. Bank.
D. and others executed 3 penal bond conditioned that they would pay to the obligee any sum or sums, which D. may owe to or thereafter become indebted to the obligee, upon bond, bill, note, draft, check, account or otherwise ; and would indemnify the obligee and save him harmless “from all loss, damage and expense, by reason of said or any indebtedness incurred by D.” Subsequently a promissory note was made and-delivered to the obligee for value by a firm of which D. was a member, and for its use, and which was at its inception indorsed by D. in his individual name.
Held: The note is not within the condition of the bond, and the action is not maintainable.
Error to the District Court of Coshocton county.
Plaintiff in error was one of the original defendants. The action was brought in the Coshocton common pleas on a bond and two promissory notes. The bond was executed on the 23d day of October, 1876, to the defendant in error, by Joseph Donley, Hugh Heaton and T. B. Donley, three of the defendants. It is as follows:
“ Know all men by these presents, that we Joseph Donley, of the county of Allegheny, and state of Pennsylvania; Hugh Heaton, county of Yermillion, and state of Illinois; and T. B. Donley, city of Pittsburgh, county of Allegheny, and state of Pennsylvania, are held and firmly bound unto the Liberty Improvement Bank, of the city of Pittsburgh, in the county of Allegheny, and state of Pennsylvania, in the sum of ($3,000) three thousand dollars, to be paid to the said bank, its certain attorney, successors or assigns; to which payment, well and truly to be made, we do bind ourselves, our heirs, executors and administrators, and every of them jointly and severally firmly by these presents.
“ Witness our hands and seals the twenty-third day of October, in the year of our Lord one thousand eight hundred and seventy-six.
“The condition of the above obligation is such, that if the above bounden Joseph Donley, Hugh Heaton and T. B. Donley, their heirs, executors, administrators and assigns, do well and truly pay or cause to be paid unto the said bank, its successors and assigns, any sum or sums of money, which the said Thomas B. Donley may owe to, or hereafter may become indebted to the said bank, upon bond, bill, note, draft, check, account or otherwise, and shall indemnify and save harmless the said bank, from all loss and expense by reason of said or any indebtedness incurred by the said Thomas B. Donley, — It is also understood, that this bond is, and shall be security to the firm of Donley, McNabb & Co., ‘Live Stock Brokers,’ for any sum or sums of money the said Thomas B. Donley owes or may owe the said firm, without any fraud or further delay, then this obligation to be void, otherwise to be and remain in full force and virtue.”
“ Witness for J. Donley, F. M. Darling; for H. Heaton and T. B. Donley, George W. Humbert.
“ Joseph Donley. [Seal.]
“Hugh Heaton. [Seal.]
“ T. B. Donley. [Seal.]”
On the 21st day of March, 1877, the firm of Donley, McNabb & Co., composed of Thomas B. Donley, (one of the obligors) John McNabb and George W. Humbert, made ‘and negotiated for value its promissory note to the said’ bank the same having been first indorsed in blank by the members of the firm in their individual names and also in the firm name.
The note is as follows:
“$2,000.00. “ Pittsburgh, Pa., March 21, lSU.
“Four months after date we promise to pay to the order of John McNabb, two thousand dollars at Liberty Improvement Bank, Pitts., Pa., without defalcation, value received.
Donley, McNabb <& Co.” ■
The following are the only endorsements thereon :
“ John McNabb,” “T. B. Donley,” “ Geo. W. Humbert,” “ Donley, McNabb & Co.”
On the 12th day of April, 1877, the said firm made and negotiated for value to the bank another note for the sum of $1,0.00, in all other respects similar to the first note and similarly indorsed. After their maturity the bank brought suit on the bond and notes, averring that by reason of the non-payment of the notes, a cause of action accrued to the bank on the bond and writing obligatory against the members of the firm and the obligors on the bond to recover the amount due on the notes.
To the petition, the obligor Joseph Donley, filed a general demurrer, which was overruled. Thereupon he filed an answer setting up several alleged defenses, which it is unnecessary to state here; and to which the bank filed a general demurrer, which was sustained. At the April term, 1878, judgment was rendered in favor of the bank for the amount claimed against Joseph Donley and McNabb, the-only defendants served with process. On error to the-district court the judgment was affirmed. To reverse the judgment of the district court this proceeding is prosecuted..
Spzngler $ Pomerene, for plaintiff in error,
cited Palmer-v. Y-irrington, 1 Ohio St., 253; Ins. Co. v. Bold, 6 Adol. & Ellis, N. S., (51 E. C. Law,) 514; Blair v. Elsworth, 34 Campbell, 52; 20 Ohio, 93.; 17 Ohio, 565; 27 Ohio St., 499; 30 Ohio St., 662; 9 Ohio St., 17; Bill v. Barker, 16; Gray, 62 ; Bank v. Eddy, 7 Met., 181; Bank v. MitchellY 15 Conn., 206; Brandt on Suretyship, 138, § 97; Burge on Suretyship, 68; 61 N. Y., 39; 3 Saunders, 415; Bright v. Carpenter, 9 Ohio, 139; Robinson v. Abell and another, 17 Ohio, 36-42; Sage v. Olds, 12 Ohio, 158-167; Champion & Lathrop v. Griffith, 13 Ohio, 228-239; John F. Seymour & Co. v. Mielcey, 15 Ohio St., 535.
Gr. K.-Bargar and Nicholas James for defendant in error,
cited 2 Daniel on Neg. Inst., § 1755, 1752, 1753, 1754; 1 Id., 527; Parsons on Part., 389; Bawson v. Taylor, 80 Ohio St., 389; Alexander v. Morgan, 31 Ohio St., 550.

Opinion:
Martin, J.
The plaintiff in error claims that there was error in the overruling of his demurrer to the petition. The petition contains two counts, each of which is planted on the bond and one of the notes. The parties to the notes respectively are the same; whilst only one of them is an obligor on the bond. The demurring defendant is an obligor, but not a party to the note. No objection was raised to the petition on account of this defect. The notes being similarly executed and indorsed, the disposal of either count serves for the other. This issue is as to the meaning of the condition. The defendant in error claims that because Thomas B. Donley is a member of the firm of Donley, McNabb & Co., and as such is bound for its engagements, a note of the firm falls within the terms of the condition; and further, if that claim be untenable, that his indorsement of the firm note at its inception effects that result. The condition is that the obligors Joseph Donley, Hugh Heaton and Thomas B. Donley do pay to the bank " any sum or sums of money which the said Thomas B. Donley may owe to or hereafter may become indebted to the said bank upon bond, bill, note, draft, check, account or otherwise," and shall indemnify and save harmless the said bank from all loss and expense by reason of said or any indebtedness incurred by the said Thomas B. Donley." The indebtedness to be paid is that of Thomas B. Donley to the bank. It is to be evidenced by bond, bills, &c. This specific enumeration is of course restricted. And the general term, otherwise must be held under the maxim noscitur a sociis to cover only evidences or forms of debt of the same class as may accidentally have been omitted.
The indemnity elapse against "loss and expense by reason of said or any indebtedness incurred by said T. B. Donley," was obviously intended to enlarge the measure of the liability already described, — to stipulate for the recovery of expenses and undefined loss, in addition to reimbursement to the amount of the debt. It is rather repetitional than copulative. As to the creditor and debtor features of the description, there is no strained effort. The statement is simple. The creditor is the bank and no one else. The only debtor named is Thomas B. Donley. In the condition to pay, the debt is one which he might then or thereafter owe; and in the indemnity condition the indebtedness is one incurred or to be incurred by him. If the intention were to include the debts of any trading firm of which he was or might become a member, it could have been easily expressed. Without calling to our aid or considering the old rule, that such a condition of defeasance is . the language of the obligee, and to be taken most strongly against him, we are fully satisfied that the clear meaning of the condition is to give credit to Thomas B. Donley individually, and not to a firm of which he may happen to be a member.
The further claim is, that by7 reason of the indorsement the debt became his individually7 within the meaning of the guaranty. The indorsement before delivery generally makes the indorsee- a maker. But here he was already- a maker, and no indorsement was needed to fix his liability as such. Generally, if not always, the only7 purpose tobe served by such double execution is to dispense with the necessity of proof of membership. As between the partner and his firm he is surety for the firm debt. And in case of the total insolvency of the firm and its members, a guarantor of a firm debt would be excluded from the assets of the individual members. Surely such exclusion was not contemplated here. The claim amounts to this, that the condition is broad enough to include a suretyship assumed by Thomas at his pleasure. The indorsement being merely formal, if the guaranty attaches, it is because of its letter only. We cannot reverse the rule and allow the guarantee to stand on the letter of his contract. The guarantor is surety merely, and for his own protection, may stand, strictly within the spirit of his engagement.
We are clearly of the opinion that the intention of the condition is, to require the obligors to answer only, for the debts of Thomas B. Donley to the bank, incurred by him individually and for his own benefit. The demurrer to the petition should have been sustained.
Judgment reversed and cause remanded.