Court Opinion

ID: 9811615
Source: CourtListenerOpinion
Date Created: 2023-08-31 22:25:52.662511+00
Date Added: 2024-06-11T15:20:12.132288
License: Public Domain

EaiRcloth, O. J.,
dissenting. The question in this case is presented by the second issue: “Is the plaintiff’s right of action barred by the statute of limitations as to the defendant T. L. Erancis?” The jury answered, “Yes,” under the instruction of the Court.
Stripped of unnecessary words, the following are the facts stated in the case, and the record: On the 26th of March, 1886, A. I. Reeves and L. D. McD. Reeves, as principals, and K. Reeves and W. T. Reeves, as sureties, executed and delivered their note under seal, payable to T. L. Erancis 12 *536months after date, for value received. After the note was delivered and before it became due, the payee endorsed said note for value to defendant Iierren, who endorsed it to the plaintiff. Several payments were made by the maker, A. • J, Reeves, the last payment being made on December 23, 1896. No payment was made except by the principal maker, A. J. Reeves. This action was commenced on September 12, 1898. It is conceded that plaintiff’s right of action is barred as to defendant Francis by the lapse of time, unless the payment made by the maker, after the bar was complete,-restores and revives the liability of Francis, the payee and endorser for value. The majority of the Court hold that said payment had that effect. The question turns upon the proper construction of the Act of 1827, chap. 2, Code 50, which reads as follows: “Whenever any bill or negotiable bond or promissory note shall be endorsed, such endorsement, unless it be otherwise plainly expressed therein, shall render the endorser liable as surety to any holder of such bill, bond or promissory note; and no- demand on the maker shall be necessary previous to an action against the endorser.” Upon the present and all similar state of facts my contention is:
1. That since the passage of said act, the original obligors, the accomodation endorser or endorsers, and the payee endorser and subsequent endorsers are all sureties to the final endorsee, and that he may sue any one of them without alleging demand on any other one.
2. That whilst the above is true, the Act of 1827 goes no further, and does not affect the relations and rights of the parties inter se, hut leaves them to he worked out as they were prior to the passage of the act.
These propositions I gather from the authorities and from my reading of the statute. The principal debtor delivers his note for value received and his sureties stand for Mm. The *537endorsement before the note is delivered is without consideration, and is intended to strengthen the security for the accomodation of the malcer of the note. These, as to the payee, constitute one class of joint debtors, with all the rights of contribution, etc,, among those who have a community of interest.
The endorsement by the payee is for a consideration, the sale of his property, and the Act of 1827- makes him liable as surety, unless he girards himself in some way, such as without recourse or the like, and he and subsequent endorsers, (all sureties to the final endorsee) constitute a different class of debtors, with no common interest whatever with the original maker of the note. They are only supplemental sureties. Before the act, the holder had much difficulty in collecting from endorsers, guarantors, etc. It devolved upon him to show diligence, demand before suit, presentation at the specified time and place, etc., and it often resulted in the loss of his claim. I think the Legislature intended to save the holder from such risks, and did not intend to allow the maker, who alone has received benefit, by his own act to impose on the (payee) endorser a liability, against which he was protected by a statute of limitations. . The construction of the Act of 1827 was a serious question with this Court soon after its passage, and its.construction has been followed until now.
Tt is a plain principle that those who have engaged in a common hazard should share in the loss consequent upon it, and on this principle is founded the obligation of contribution among co-sureties. But I do not think that the Act of 1827 establishes the order of their liabilities as arranged among themselves. Those liabilities are to be determined by rules independent of, and in force prior to, the act.
In Williams v. Irwin, 20 N. C., 74, it was held that since *538the Act oí 1827, the endorsee could maintain, an action against the endorser without averring or proving any demand on the maker. In the opinion, RuffiN, C. J., turns his attention to the language of the act under consideration: “The expression, liable as surety/ has no definite legal sense, nor any established signification in common parlance. Whenever one person is liable for the debt of another, by whatever means, or in whatever form the liability is created, the person is in law a surety; and, perhaps, in popular language, is said to be liable as surety for the other. But the extent of the liability, its nature, whether immediate o>r remote, positive or conditional, legally depends upon the terms, and nature of the engagement. It may be by recognizance, by bail-bond, obligation note, guaranty, endorsement and otherwise, in the same or a separate instrument. But ‘liable as surety’ is not the phraseology of the law; and in either of those cases the surety is said to be liable for the debt as cognizor, obligor, maker or endorser. It is therefore hazarding something to change the responsibility of an endorser upon language so vague and unsatisfactory.” He then enumerates the difficulties in collecting from an endorser before the statute, and says: “Perhaps those were all that were in the contemplation of the Legislature. * * * This will be carrying the act far enough for all the purposes of justice. * * * And the holder can lose his money only by such delay as will bar him by force of the statute of limitations.”
The’next case was Ingersoll v. Long, 20 N. C., 295, which approves the last case cited, and G-astoN, J., remarked on the Act of 1827: “That the object of the act in declaring the endorser liable as surety was not to bind him as though he had signed the note with the maker as surety — not to make him liable to the endorsee if the endorsement were made without consideration — nor to deprive him of the protection which the acts of limitation had extended to endorsers.”
*539In Topping v. Blount, 33 N. C., 62, it was beld “that the-contracts of the obligor and the endorser are in their nature several, and no act of the former can change the latter. The Act of 1827, indeed, says the endorser shall be liable as surety to the holder; * * * but has been for sometime settled that the sole purpose of that act was to turn the implied conditional contract, between the endorser and holder, into an unconditional one; and that it was not intended to charge the endorser, as if he had executed the bond as co-obligor, or upon an endorsement without consideration, or to deprive him of the benefit of the statute of limitations, by exposing him to stale demands, kept alive, perhaps, by collusion between the obligor and the holder.”
I have freely quoted from the above cases to show that the endorsers in the present case constitute one class of debtors and that the original obligors constitute another class, separate and distinct from the first, and that there is no community of interest between the two classes, although they are all conditionally liable to the endorsee by force of the Act of 1827.
I must admit that I have found no case on all fours with the present, i. e., where the facts are the same, but all the expressions of the Court for 60 years, as to the meaning of the act, are uniform in support of my position.
If this is true, can the act of one member of one' class impose a liability on a member of another class, or deprive him of his protection by the lapse of time after the statute of limitations has run long enough to bar the plaintiff’s right of action ? I think not.
'\Vhe”e a payment is made upon a claim, before it is barred by the. lapse of time, by one of several obligors of the same class, it becomes the legal act of all, and arrests the operation of i lit' statute as to them, but does not revive the liability of *540others of a different class. The rule that payment by one of the same class binds all of that class is founded upon the community of interest among those of that class. Wood v, Barbour, 90 N. C., 76; 2 Greenleaf Ev., sec. 444. Where one surety makes a payment on a note after the bar of the statute has arisen, it does n.ot revive the debt against the co-sureties. Long v. Miller, 93 N. C., 227; Green v. Greensboro College, 83 N. C., 449. “Part payment of a note by the payee who had endorsed it will not repel the bar of the statute of limitations as against the maker, the statute, Code sec. 171, confining the act, admission or acknowledgment as evidence to repel the bar to the associated partners, obligors and makers of a note.” LeDuc v. Butler, 112 N. C., 458. This principle is recognized and distinguished in Harper v. Edwards, 115 N. C., 248.
This case rests upon The Code, sec. 171, and is equally applicable to a copartnership or makers of a note. It also draws the distinction as to different classes, and the absence of a community of inter'est and the consequences, as I have already stated.
Tf then, the endorser in one class, by his act, can not deprive the maker of his statutory protection against the holder, on what principle can the maker, by his act, deprive the endorser for value of his protection ? Common reasoning is against the proposition.
I can not agree or admit that Johnson v. Hooker, 47 N. C., 29, is an authority against the defendant, but quite the contrary. That 'was an action by the holder against an accommodation endorser without consideration,for the benefit of the. maker, and before the note was discounted or delivered to the holder. Of course, the language quoted from Judge Pearson referred to the endorser, who was the defendant, and whose liability was being considered. That is my argument, that *541such an endorser does not belong to the same class as a payee who endorses for a valuable consideration and becomes thereby a surety to the holder, by force of the statute of 1827.
Eor these reasons I think his Honor’s instruction to the jury on the second issue was right, and that his judgment' should be affirmed.