Court Opinion

ID: 9864644
Source: CourtListenerOpinion
Date Created: 2023-09-25 14:33:58.232689+00
Date Added: 2024-06-11T12:19:55.820487
License: Public Domain

*733THE COURT.
The plaintiff has filed a petition for a rehearing. It earnestly presses the point that the rights of the plaintiff as an accommodation party are those of a holder for value notwithstanding that -it took the note after its maturity.
At an early date the point was decided against the plaintiff. (Coghlin v. May, 17 Cal. 515.) In 1917 we adopted the Uniform Negotiable Instruments Law. (Stats. 1917, p. 1531). It was adopted by incorporating it into our Civil Code and it became division 3, part 4, title XV. As so adopted it contained four chapters. Some of the chapters contained as many as eight articles or more. When so adopted it will be noted that the Civil Code contained cognate provisions (secs. 953, 1459) and that the Code of Civil Procedure contained cognate provisions. (Code Civ. Proc., sec. 368.) We are commanded by the law-making power to read the provisions of our four codes as though all such codes had been passed at the same moment of time and were parts of the same statute, and if the provisions of any article conflict with or contravene the provisions of another article of the same chapter, the provisions of each article must prevail as to all matters and questions arising out of the subject matter of such article. (Pol. Code, secs. 4480 and 4483.) When the note in suit was executed our statutes provided as follows: In the Civil Code, section 3133 defined “a holder in due course.” That definition does not include this plaintiff. Section 3139 provided, “In the hands of any holder other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were nonnegotiable. ...” Section 1459 provided: “A nonnegotiable written contract for the payment of money . . . may be transferred . . . Such indorsement shall transfer all the rights of the assignor under the instrument to the' assignee, subject to all equities, and defenses existing in favor of the maker at the time of the indorsement.” Section 953 provided: “A thing in action is a right to recover money . . . by a judicial proceeding.” Section 368 of the Code of Civil Procedure, provided: “In the ease of an assignment of a thing in action, the action by the assignee is without prejudice to any set-off, or other defense existing at the time of, or before, notice of the assignment. ...” Section 3097 of *734the Civil Code provided: “ As between the immediate parties, and as regards a remote party other than a holder in due course . . . the delivery may be shown to have been conditioned, or for a special purpose only, and not for the purpose of transferring the property in the instrument. . . . ” There is no provision which expressly excepts accommodation paper from the foregoing rules. If it is to be excepted the exception rests in argument. Our statutes do not classify commercial paper and then state the rules pertinent to accommodation instruments. But in the Civil Code, title XV, sections 3082-3206, supra, chapter I is addressed to instruments, in general, chapter II to bills of exchange, chapter III to promissory notes and checks and chapter IV is the embodiment of general provisions. There is no chapter and there is no article addressed to accommodation paper. There is.section 3110 which defines an accommodation party and then provides: “Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party.” The plaintiff cites and relies on that section as supporting its claims. That argument fails to take into consideration a well-known fact in the history of jurisprudence. From an early date the contention was made that an accommodation party could set up as a defense, want of consideration, as against an indorsee who took the instrument for value before maturity. (8 C. J., sec. 410; Violett v. Patton, 5 Cranch (9 U. S.), 142, 151 [3 L. Ed. 61].) The provision relied on, section 3110, is apparently an enactment to settle the rule just mentioned. Nothing on its face shows to the contrary. It is in an article addressed to “consideration.” Conceding, solely for argument, that there is any conflict between that section' and other sections of the same title, the provisions of section 3139, which is contained in an article on “Bights of Holder,” will control. (Pol. Code, sec. 4483) and as section 3139 is the later in numerical order it will control for that additional reason. (Pol. Code, sec. 4484.) But we think there is no conflict and for the soundest of reasons the position of the defendant may not be disturbed. The construction which we have adopted gives force and. effect to each and all of the provisions of the statute and does not lead to an absurdity. As between the Valley Bank ■ and this defendant *735each and every defense which this defendant sought to interpose would have been sustained. (First Nat. Bank v. Reed, 198 Cal. 252 [244 Pac. 368].) But as we have just shown by the provisions of our statutes the rights of this defendant against this plaintiff are the same as against the Valley Bank. These conclusions are supported by what is known as the majority rule. (Brannan’s Negotiable Instrument Law, 4th ed., p. 286; Wilhoit v. Seavall, 121 Kan. 239 [48 A. L. R. 1273, and note, 246 Pac. 1013].) In Rylee v. Wilkinson, 134 Miss. 663, 669 [99 South. 901, at page 902], the Supreme Court of Mississippi said: “There appears no sound reason for the distinction in the two classes of negotiable paper, and it would seem that the makers, indorsers, or acceptors of accommodation paper should be permitted the same defenses as are guaranteed to the makers, indorsers, or acceptors of negotiable paper for value.” In Cottrell v. Watkins, (89 Va. 801, 817 [19 L. R. A. 754, 759, 17 S. E. 328, 333]), 37 Am. St. Rep. 897, the Supreme Court of Virginia stated the contention and then expressed itself as follows on page 906: “Why, then, subject the makers, indorsers, or acceptors of such paper to this species of outlawry by denying to them the defenses guaranteed to the makers, indorsers, and acceptors of negotiable paper for value 1
We know of no sufficient reason upon which to found any such doctrine, nor do we believe the ingenuity of man can suggest one. The reason; and the only reason, given in the books is, that it is ‘ considered that parties to accommodation paper hold themselves out to the public, by their signatures, to be bound to every person who shall take the same for value to the same extent as if paid to him personally. ’ This is no reason whatever for the distinction, as precisely the same reason is applicable to the parties to paper for value.” Finally, in the case of Bartels v. Suter, 130 Okl. 7, 11 [266 Pac. 753, 757], the Supreme Court of Oklahoma, after making an exhaustive study of the subject, reaches the conclusion that the provisions of the Negotiable Security Act “ . . . should be construed as rendering an accommodation party liable to a holder for value only when such holder or those through whom he acquired the instrument became a holder for value before the maturity of the instrument.”
The petition is denied.
*736A petition by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on August 29, 1929.
All the Justices concurred.