Court Opinion

ID: 8002739
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:50:40.111206+00
Date Added: 2024-06-11T16:35:46.436832
License: Public Domain

Bliss, Judge,
delivered the opinion of the court.
This cause has once been before this court and is reported, im 38 Mo. 281. A new trial has been had and the case is again here upon exceptions to the ruling of the court. The questions-not heretofore decided are but few, and in order to understand them it is not necessary to recite the numerous instructions given and refused upon the last trial. The defendants drew a bill of exchange upon Anderson & Co. for f5,000 at sixty days, in favor of the plaintiff, which bill was indorsed by him, accepted by the drawee, and discounted at the bank. The drawers and indorser had no interest in the paper, but became parties to it for the accommodation of Anderson & Co., the acceptors. It was protested at maturity, the indorser paid it, and now brings suit against the drawer. Several questions were raised upon the second trial, which it is claimed were not decided when the- case was here before.
*178The defendants claim that, although they are the drawers of the bill, yet as both they and the indorser are but accommodation parties, they ought to be held as co-sureties merely, and that the drawers should not be held to the ordinary liability to which they would be subject .upon paper in which they were interested. Counsel have cited a number of authorites in support of their claim, but I find but one of them that even gives color to it. It is held in Daniel v. McRae, 2 Hawks, 590, that indorsers of an accommodation promissory note for the benefit of a third person, and when neither is benefitted, are to be considered as co-sureties. If this were the law, it would be reasonable to apply the rule to accommodation drawers and indorsers of bills, for their relation to each other is similar to that of successive indorsers of promissory notes. But in commercial law, in the absence of a contract, the accommodation indorsers of a promissory note are not co-sureties, but are held in the order of their indorsement. (2 Pars, on Notes and Bills, ch. 1, § 6; McNeilly v. Patchin, 28 Mo. 40; Wilson v. Stanton, 6 Black, 507.)
As-to the liabilities of parties to bills of exchange, there is but one rule known to the law: the drawree, if the bill is accepted, is bound to all other parties. Upon his default the drawer becomes obligated to the indorser, and the indorsers, if there are more than one, are bound in the order of their indorsement. (Story on Bills, § 107.) This obligation may be varied by special contract. (Dunn v. Wade, 23 Mo. 207; Kelley v. Pew, 18 Ohio, 441.) And the accommodation parties to the bill should not be held to those for whose benefit it is drawn. But all .accommodation parties, as between themselves, are bound by the obligations which they assumed under the law merchant by becoming such parties. Co-securities can surely be held to contribution, and if the parties to this action held that relation, the judgment for the full amount of the bill would have been clearly erroneous. But, in the absence of any special agreement, their relation is to be determined by the instrument to which they are parties. If they intended to be co-securities, they should have so agreed, or should have been drawers merely; or if the payee and indorser so intended, they should have been also drawers. In Ohio an early *179decision made accommodation indorsers of a promissory note co-securities in acknowledged contravention of the general law, but in Williams v. Blossom, 11 Ohio, 62, the Supreme Court of that State refused to go further, and applied the rules of the commercial law to accommodation parties to bills of exchange.
The defendants also claim that the securities turned out to the plaintiff by the acceptors who had assumed obligations on their behalf, and was their creditor in the sum of $25,000, besides this bill, should be applied pro rata upon the obligation now in suit. This claim is without foundation.
The assignment was made for the security of the plaintiff alone, and the defendants can have no interest in it, unless it inures to their benefit by virtue of their relation to the plaintiff upon the paper. If the plaintiff and defendants were co-sureties, the property turned out to one should inure to the benefit of all, for “it is a settled principle of equity that if one of several co-sureties subsequently takes a security from the principal for his own indemnity, it inures to the benefit of all the sureties.” (1 White & Tud. Lead. Cas. in Eq., 3d Am., from 2d Bond, ed., notes on p. 62, and see cases there cited.) Defendants’ counsel cite many authorities to sustain the above position, but they have no application to this case unless the relation of co-sureties between the parties is first established.
But if they were not co-sureties, it may still be claimed that the plaintiff was under obligation to apply the sureties received by him pro rata upon the indebtedness of Anderson & Co. to him, and upon all the debts upon which he was liable on their account. The debts upon which he was liable were the bill now in suit for $5,000, an acceptance for $10,000 drawn by the plaintiff and indorsed by defendants, and an acceptance for $10,000 drawn by plaintiff and indorsed by Knapp & Co.
These two $10,000 bills the plaintiff paid, as he was bound as drawer to do. Now, if the plaintiff’s relation to all these four items named in the assignment, to-wit: the three bills and the deposit — were the same, we do not say that the other parties might not require him to apply the securities pro rata, for that would be equality. He might perhaps not be permitted to make *180arbitrary distinctions when the rights o£ others would be affected, and where his own rights are not concerned. But that is not this case. Four-fifths of this indebtedness upon the bill he has been .obliged to pay. The assignment was to him for his liability, not the defendants, and there is no equity in the claim unless their liability is also his, i. e., unless they are co-sureties. In Brown v. Ray, 18 N. H. 102, where a co-surety, who had taken a security from the principal, also held personal claims against him, the court held that “ the indemnity furnished by the security must therefore be apportioned among the several demands, as far as the sureties have an interest -in it.” And again, “ they (the other sureties) come in for a share of the benefit so far as they are co-sureties, upon the ground that he has taken the security for indemnity against a liability common to them all, and that it is one therefore in which they have a common interest. So far as he has a security in which they have not such interest, he is entitled to hold it, and having obtained the security, without their assistance, for his own debts, as well as the other demands, he is entitled to apply it first to his own debts.”
The other questions necessary to consider were decided when the case was here before, and it is wholly immaterial so far as defendants are concerned, whether the account between Anderson & Co. and plaintiff, criticised by counsel, be correct or not, as in any. event the securities did not realize enough to cover the plaintiff’s claims outside of this bill.
The judgment is affirmed.
The other judges concur.