Case Name: McGuire vs. Union Bank
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1848-12
Citations: 9 Hum. 438
Docket Number: 
Parties: McGuire vs. Union Bank.
Judges: 
Reporter: Tennessee Reports
Volume: 28
Pages: 438–443

Head Matter:
McGuire vs. Union Bank.
1. It seems that when an accommodation endorser, after judgment has been obtained against him, notified the judgment creditor to make the money out of parties previously liable, who were then solvent, and such judgment creditor refuses to enforce his execution until such other parties become insolvent, the accommodation endorser is in equity entitled to his discharge. The'rule is otherwise as to an endorser for value received.
Si. Looney, the owner of an accepted bill of exchange, endorsed and dolivered it to Chaffin, Kirk & Co., in discharge of a debt due that company, by Looney & Co., of which McGuire was a. member. The Union Bank agreed to discount the bill if Looney & Co., would endorse it. It was endorsed ,by Looney & Co., and was discounted, and the proceeds paid over to Chaffin, Kirk & Co. On this state of facts, it is held, that McGuire was not an accommodation endorser, but an endorser for a valuable consideration.
This bill was'filed in the Chancery Court at Columbia, to enjoin the enforcement of an execution on a judgment obtained against him in the Circuit Court of Maury county, for the sum of five thousand, two hundred and eighty-five dollars. At the final hearing on the proof, Chancellor Oahal perpetually enjoined the enforcement of the judgment. The decree entered states the facts of the case.
It recites that D. Looney was the owner, of a bill of exchange, drawn by J. T. Brown, on Caruthers, Harris, & Co., which was transferred by Looney to Chaffin, Kirk, & Co., in payment of a debt due by D. Looney &■ Co. to said Chaffin, Kirk, & Co; that Chaffin, Kirk, & Co., having endorsed the bill, offered it for discount to the president and directors of the Union Bank; that the Union Bank agreed to discount if D. Looney & Co., would endorse it; (McGuire, the complainant, was a member of that firm) that David Looney & Co. thereupon did endorse it, and the bill was then discounted, and the proceeds paid to Chaffin, Kirk, & Co.; that the bill was protested, and suit was instituted by the bank against Chaffin, Kirk, Looney, Harris, and complainant McGuire, and judgment recovered against ( them for five thousand three hundred and forty dollars; that an execution was issued on thfe 31st of May, 1839, and stayed by order of the plaintiff; that on the 16th July, 1840, an execution was again issued, and was again returned by order of the plaintiff; that the persons liable on said bill of exchange before the complainant, had at the time of the rendition of said judgment, a large real and personal estate, in the county of Maury, and continued to have for a long time, by the sale of which said judgment could have been satisfied; that whilst said property was held by the other defendants in the execution, subject to the lien thereof, the president and directors of the bank made an arrangement by which they received real and personal property to the amount of fifty or sixty thousand dollars from the said defendants, in discharge of other liabilities, on which there was no judgment; by which arrangement the defendants aforesaid were left without the means of paying or satisfying the judgment recovered on the bill of exchange; that from the date of the rendition of the judgment till the 16th day of July, 1840, complainant stated to the president and directors of the bank that he was not liable and urged them to collect the money by sale of the property of the other defendants in the execution; and that no execution was issued and enforced until October, 1840, when said defendants • were insolvent, and that, thereupon, the complainant removed it to the Supreme Court, where the judgment was reversed as to complainant, and left in full force as to the other defendants; that the president and directors of the bank then instituted an action, on the endorsement made by D. Looney & Co., against complainant, and recovered judgment against him in the Circuit Court of Maury for the sum of five thousand, two hundred and eighty-five dollars. And upon these facts the Chancellor declared that, upon the payment of the first judgment by complainant he would have been entitled to have it assigned to him with the lien of said judgment and execution, and as the defendants had, in bad faith, deprived themselves of the power of assigning said judgment to complainant, they had no right in equity to enforce the judgment subsequently recovered on said endorsement, and there was a decree for a perpetual injunction accordingly.
From this decree the president and directors of the bank appealed.
Fogg, M. S. Frierson, Nicholson, and Houston, for the complainant.
S. D. Frierson and Washington, for defendants.

Opinion:
McKinney, J.
delivered the opinion of the court.
The decision of this cause rests upon a single question. It was conceded in the argument, and very properly, that if the complainant cannot be regarded as standing in the relation of an accommodation endorser of the bill of exchange transferred to Chaffin, Kirk, & Co., and by them to the Union Bank, and upon which, in the character of an endorser of said bill, the judgment sought to be enjoined, was obtained against him, he can have no claim to relief in this case, whatever might be the determination of the other questions in the case.
The facts material to the decision of this question, are briefly these: In the year 1837, the complainant was a member of the firm of David Looney & Co., of Columbia, of the same place of the former firm. Said David Looney was the individual owner of a bill of exchange for five thousand' dollars — payable to his order, due at twelve months, and dated 27th March, 1837, drawn by one Jobn T. Brown upon Carutbers, Harris, & Co., of New Orleans, and by them accepted. In part discharge of the debt due from David Looney & Co., to Chaffin, Kirk & Co., said bill of exchange was transferred to the latter firm, with the individual endorsement of said David Looney thereon, and the proceeds were placed to the credit of the firm of D. Looney & Co , upon the books of Chaffin, Kirk & Co., as payment of so much of the liabilities of the former to the latter firm. Said bill of exchange was shortly afterwards offered for discount, at the branch of the Union Bank at Columbia, by Chaffin, Kirk & Co., but the bank refused to discount it without further security, and it was proposed to furnish the endorsment of David Looney & Co., which the bank agreed to accept, and upon this being done, said bill was discounted and the proceeds applied to the benefit of Chaffin, Kirk & Co.
Upon the foregoing facts, can the complainant be considered as amere accommodation-endorser of the bill of exchange? Most certainly he cannot. Looking at the transaction in its true nature and substance, as a court of equity must view it, what is it ? Simply, a transfer of the bill by the firm of D. Looney & Co., for value, to Chaffin, Kirk & Co. The fact that the bill was originally the individual property of one member of the firm, and endorsed in the first instance, by him individually, does not affect the question. It was treated as firm property, by D. Looney & Co., as they might well do: the firm transferred it, as is proved by Chaffin, and the firm received the proceeds, in the extinguishment of so much of its indebtedness to Chaffin, Kirk & Co. Suppose the latter firm had refused, iñ the first instance, to have received the bill, without the endorsement of the firm of David Looney & Co., and upon such endorsement being made, had paid over the proceeds in money, or what was the same thing in effect, had accepted it in absolute payment of a pre-existing debt, there would have been no question but that they would have been endorsers for value. And how is the question changed by the fact, that the endorsement of the firm was subsequent to the transfer, and made with the view of enabling the endorsees to negotiate the bill more readily?
The only enquiry material to be made is, was the endorsement made upon a valuable consideration, or otherwise. Can it be doubted that if the holder of a bill or note transfer it by delivery, for a valuable consideration, and afterwards, at the request of the person to whom'the transfer was made, agrees to endorse it, for the purpose •of giving it additional credit, or for any other lawful purpose, and does so endorse it, that his liability will be precisely the same, and that he will stand in all respects in the same condition, as if the endorsement had been made at the time of the transfer. Why not ? Such subsequent agreement, if fairly made, is valid and binding, because supported by the original consideration, to which the endorsement will relate. The party has done no more than he might in the first instance have been required to do, and there being a sufficient consideration to support it, upon what principle can he be permitted to avoid the liability thus voluntarily incurred?
Could David Looney & Co., upon payment of this bill of exchange, have maintained an action against Chaffin, Kirk & Co., to have recovered the amount so paid ? Upon what principle, or upon what consideration, could they have done so? Were they not bound, both in law and in equity, as against Chaffin, Kirk & Co., to have paid the bill? We think they were beyond all question. Upon this ground, therefore, the complainant is repelled, without adverting to others, presenting, perhaps, not less insuperable difficulties to the relief sought by the bill.
It is certainly true, that an accommodation endorser, after judgment, occupies very different, and much more favorable ground, in the view of a court of equity, than a surety, in the technical sense of that term, and possesses none of those summary and ample remedies, provided by our statute for the protection and indemnity of the latter. And when a case shall be presented, clearly showing, that such endorser, after judgment obtained against him, had notified the judgment creditor to proceed to make the money out of the parties previously liable, who were then solvent and able to pay, and that he had refused or neglected to do so, until such previous parties became insolvent, as it will present a case wholly different from the present, it will receive a very different determination. Here it is obvious, that the attitude of an accommodation endorser, is newly assumed by the complainant: and that, too, in irreconcilable opposition to his former relation, or rather want of relation of any kind, to the bill of exchange in question.
The decree of the Chancellor will be reversed, and the bill dismissed, but without costs.