Case Name: Melms and another vs. Werdehoff
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1861-05-15
Citations: 14 Wis. 18
Docket Number: 
Parties: Melms and another vs. Werdehoff.
Judges: 
Reporter: Wisconsin Reports
Volume: 14
Pages: 18–22

Head Matter:
Melms and another vs. Werdehoff.
Where A & Co. delivered, their note to B, payable to his order, and C afterwards signed his name to the note, under the signature of A & Co., at the request of B, to enable him to raise money by its negotiation, believing, at the time, that A & Co, were actual debtors of B, and relying upon the legal import of the note, A & Oo. are estopped from alleging, after they have paid the note, that it was given merely for the accommodation of B, and that C is liable to contribution as a co-surety.
APPEAL from the Circuit Court for Milwaukee County.
The plaintiffs, who were partners, signed and delivered to one Busack a note for $600. The note was in the forni of a joint and several contract: “ For value received, we, or either of us, promise,” &c.; and was signed by the plaintiffs in their partnership name. The payee offered it to one Pritzkow to be discounted, who required another name before he would discount it. The payee then applied to the defendant, telling him he wanted to get money on the note, and could get it if the defendant would sign it. The defendant then signed his name under the names of the plaintiffs, and Busack indorsed the note to Pritzkow. After the note fell due the plaintiffs paid it, and brought this suit against the defendant for one Half the amount, claiming that the note was made by them and by the defendant merely for the accommodation of Busack, and that the defendant was liable as a co-surety to contribution.
On. tbe trial there was evidence tending to show tbat as between Busack and tbe plaintiffs tbe note was an modation note. Melms also testified tbat at tbe time tbe note was executed by tbe plaintiffs, be told Busack be wanted another name for bis security, and that Busack agreed to procure tbe name of tbe defendant or of one Spoerl. Busack testified tbat be never promised tbe plaintiffs to pay tbe note, but thought Melms owed him more than tbe amount of it; tbat there was no agreement tbat be should get another signature to it; and tbat when tbe defendant signed tbe note, nothing was said as to Melms being indebted to tbe witness. Tbe defendant testified tbat when Busack first asked him to sign tbe note, be declined; tbat Busack then told him tbat Melms owed him tbe money, and tbat Melms & Go. would pay tbe note; tbat for tbat reason he signed it; tbat be signed it on tbe credit of Melms & Go. by tbe persuasion of Busack, to enable tbe latter to raise money on it, and did it to accommodate Melms as be supposed; that Busack told him where to put bis name ; and tbat be would not have signed tbe note as security for Busack. The plaintiffs objected to tbe admission of any evidence of what passed between tbe payee and defendant at tbe time tbe note was signed by him, but tbe court overruled tbe objection.
Tbe court charged tbe jury, tbat if they found tbat tbe plaintiffs signed and delivered to Busack tbe note in question, and tbat tbe payee offered it to Pritzkow to be discounted, who required another name as tbe condition of discounting it; and that the payee then asked tbe defendant to sign it, and be, in tbe belief tbat tbe plaintiffs were tbe actual debtors, and relying upon tbe statement in tbe note, signed it; then tbe plaintiffs were estopped from alleging in this suit tbat tbe note was an accommodation note and tbat tbe defendant was liable as co-surety; and tbat, if tbe jury found tbat the facts were as above stated, they should not take into consideration any testimony tending to show tbat as between Busack and tbe plaintiffs, tbe note was an accommodation note. Yerdict and judgment for tbe defendant.
SooTeer & Sjoangeriberg, for tbe appellants,
argued tbat tbe implied contract for contribution entered into by tbe makers of tbe note, could not be changed by any understanding between tbe payee and tbe defendant; that evidence of wbat occurred between tbe payee and tbe defendant at tbe time tbe latter signed tbe note, was inadmissible, because it tended to vary tbe effect of tbe written contract (7 Wis., 532; 2 Seld., 33); that if that evidence was admissible, it showed no defense when tbe fact appeared that both tbe plaintiffs and tbe defendant signed tbe note for tbe accommodation of tbe payee; that to make tbe defense available, tbe defendant must show such a state of facts as would entitle him, if he bad paid tbe note, to recover tbe full amount of it from tbe plaintiffs as bis principals (3 Wend., 398; 13 id., 401); that tbe plaintiffs are not estopped from saying that' they were accommodation makers, because their signature was obtained upon tbe assurance of tbe payee that tbe defendant or one Spoerl would also sign it. Tbe admission made by tbe plaintiffs in signing tbe note was not that they owed tbe payee tbe amount, but merely of their liability to pay it to a Iona fide purchaser. Estoppels bind only parties and privies. The note was given to a stranger to this suit, and tbe defendant does not claim under him. 3 Hill, 215; 2 Yt., 218; 3 Johns. Cas., 101; 9 Barn. & Cress., 577. Besides, tbe note was incomplete when presented to tbe defendant for bis signature; partners are one person in law.
Jas. S. Brown, for respondent:
In a suit for contribution, parol proof of tbe relation of tbe parties is admissible. 12 Mass., 102; 3 Wend., 397 ; 13 id., 400. There is no privity between tbe plaintiffs and defendant, and no agreement by tbe defendant to be an accommodation maker for Busack. 13 Wend., ubi supra. 2. Tbe plaintiffs, by delivering their note to Busack, declared to tbe world that they were bis debtors, and the defendant, believing this representation and having faith in their solvency, signed tbe note, intending to become their surety. They are es-topped now from denying that they were debtors of Busack. 1 Phill. Ev., 453, 464-6. When one clothes another with an apparent power or character, be is estopped, as against a person dealing on tbe faith of such character, from denying it. Story on Agency, §§ 73, 127; 2 Conn., 215 ; 1 Barn. & Aid., 712; 9 Cow., 277; 3 Hill, 219; 9 Wend., 147; 3 Pick., 38; 2 id., 546; 19 Wend., 557; 16 S. & R, 18.
May 15.

Opinion:
By the Court,
Cole, J.
We are not able to discover any error in tbe record or proceedings in this case. The charge of the court appears to be substantially correct, arid properly states the rule of law applicable to the facts disclosed on the trial. For to our minds it is very clear, if Melms & Co. signed and delivered the note mentioned in the pleadings, to the payee, Busack, and the latter obtained the signature of the respondent after it was thus delivered, who signed it, as the court states, in the belief that Melms & Co. were the actual debtors, relying on the legal import and effect of the note, that then Melms & Co. are estopped from alleging now that the note was an accommodation note and that the respondent is liable as a co-surety. The respondent did not know, and could not know, that they were accommodation makers and had executed the note in that character. He had the right to assume, and indeed nothing was more natural than that he should assume, that they were the makers of the note, and of course, primarily liable for its payment. Busack had apparently a good title to it, and for aught he knew, had a perfect right to collect the amount of them when the note became due. Busack asked the respondent to sign the note so as to enable him to negotiate it with Pritzkow, and seeing that the note was given by the firm of Melms & Co., and knowing that they were responsible, he signed it for the purpose indicated. He did not suppose that he was signing the note as a security with them. There is nothing in the case that shows he did know the -note was not given by the ostensible makers in the usual course of business. He had a right to assume that it was, and to act upon that presumption. They now allege that it was an accommodation note, and that the payee agreed to procure the name of the respondent or Spoerl as a co-surety. If so, they must look to the payee for redress, and not to the respondent. He knew nothing about their understanding with the payee, if indeed they had such an one as they now insist existed. They had invested tbe payee with tbe character of creditor, and enabled him to deal with the world in that relation as re-gpected this note. And now if they or the respondent must suffer damage, the loss should rather fall upon them, who have been the least vigilant, than upon him who signed the note, under the circumstances, as surety for them, supposing they were primarily liable for its payment.
The judgment of the circuit court is affirmed, with costs.