Court Opinion

ID: 6753120
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:24:40.973637+00
Date Added: 2024-06-11T16:02:20.582649
License: Public Domain

Gilmore, J.
This action was brought under the statute to compel the assignee of the drawers to accept as valid the claim of the plaintiff set forth in the petition. If the facts stated in the petition would have entitled the plaintiff to recover against the drawers, either the whole amount paid by him in taking up the bill, on the ground that there was an implied obligation on the part of the drawers to refund to the acceptor the money so paid, or a moiety of the amount, on the ground that the drawers and acceptor, as between themselves were co-sureties for the payees, and bound to contribute equally to the payment of the bill, then the demurrer should have been overruled, otherwise • it was properly sustained.
The first question is : Was the plaintiff, on the facts stated, entitled to have the whole amount of his claim allowed as valid against the drawers ?
It is conceded by counsel for plaintiff that if the bill of *10exchange in question had been a regular business bill for value, the acceptor would have been the principal debtor, and the drawers only sureties ; and that upon such a bill the acceptor, upon payment, would have had no recourse upon the drawers.
But the ground upon which the right to the relief asked is placed is in effect this : That both the drawers and acceptor of the bill became such without consideration, and for the sole accommodation of the payees, and that in such a case, as between themselves, the drawers must be regarded as principal debtors, and the'acceptor as a surety, and that the latter, having'paid the money as surety, may look to the former as principal debtors for reimbursement. An examination of the facts stated in the petition shows that there was no contract or understanding between the drawers and acceptor as to the terms, as between themselves, upon which they became parties to the bill. It is true that it is averred that the drawers had knowledge of the facts under which the drawee accepted the bill; but mere knowledge on the subject, unaccompanied by any word or act of the drawers, can not affect the rights or liabilities of the parties to the instrument. It follows that the bill of exchange itself was the only contract between the drawers and acceptors, and their rights and liabilities are to be determined by the legal effect of the instrument, unaffected by the other facts stated in the petition.
The contract of these parties, as evidenced by the instrument, was, on the part of the drawee and acceptor, an absolute promise to pay the bill, according to its tenor and effect, to the payees or their order; on the part of the drawers it was a conditional obligation to pay, i. e., that they would pay it if the drawee failed to accept or failed to pay it, on being duly notified of such failures. This being the nature of their respective obligations, as understood where-ever this species of commercial paper is in use, it will be seen that it would be a subversion of the law to hold that the drawer of a bill of exchange.in the usual form could by any possible interpretation of the instrument itself be*11come responsible to the drawee who had accepted and paid the bill. The claim of the plaintiff in this respect was, therefore, wholly untenable.
The second question is : Were the drawers and acceptor,, as between themselves, co-sureties for the payees, and bound to contribute equally to the payment of the bill ?
It has above been said that the facts stated in the petition, as existing in connection with the execution of the bill, do not show-that there was a contract or understanding between the drawers and acceptor, outside of the bill itself, that would have the effect of expressly changing their liabilities as fixed by the legal effect of the instrument; and theremaininginquiry is: As between themselves, will the relation of cosureties for the payees be implied from the facts stated in the petition ?
Under the general rules of commercial law the legal relations of parties to bills of exchange and negotiable promissory notes are well understood. The acceptor stands in the same relation to a bill of exchange that the maker does-to a negotiable promissory note, vi-z., both are primarily liable, and the liability of other parties to these instruments is ordinarily fixed by the order in which they became parties to them; and no implication arising from extrinsic facts will be permitted in order to change or modify the order or extent of liability as between the parties them.selves.
But in this state, while the general rules of the commercial law in this respect are applicable in determining the liabilities of parties to bills of exchange, as between themselves, these rules do not apply as between accommodation indorsers of negotiable promissory notes before they become operative by transfer, as will appear by reference to the decisions cited below.
In Douglass v. Waddle, 1 Ohio, 413, the court said:. “ Where there are two or more indorsers upon an accommodation note, all of whom indorsed before the note became operative by being transferred to some person not a party, for value received, and all of whom are charged by *12notice of demand and non-payment, they shall be treated as co-securities, and contribution shall be made between them as such.”
Although the doctrine thus laid down and applied to promissory notes is not in accord with the great weight of authority on the subject, yet the length of time that has elapsed since the decision was made, its having been subsequently recognized by this court without questioning its correctness, and the fact that the rule as to this class of commercial paper is and has been long understood in the state, all unite in requiring the decision to remain undisturbed.
It is claimed by counsel for plaintiff in error that the same rule should be applied as between themselves to parties to a bill of exchange, who became such for the sole accommodation of the payees, before the same was transferred to a third party for value. There is great force in this claim, and if the determination of the question depended upon the application of the doctrine laid down in the case above cited as to the accommodation indorsers of promissory notes, it might be urged that even stronger reasons may exist why the same doctrine should apply to accommodation drawers and acceptors of bills of exchange, where the latter accepts at the written request of the former. But the question is not an open-one in this state. In Williams v. Bosson et al., 11 Ohio, 67, the former was an accommodation indorser for the drawer of a bill of exchange, and the latter were the accommodation acceptors for the drawer.
In deciding the case, Lane, C. J., said : “ The introduction of bills, as a basis of bank accommodation, has taken place long since the decision of Douglass v. Waddle. They are of mercantile origin, and the law merchant should govern their use. The right of the indorsee to hold all earlier parties responsible to him is undoubted, and it is plainly our duty to follow these rules, unless bound by our own precedents. But we see no reason to extend the rules of Douglass v. Waddle beyond the kind of paper to which *13local usage had applied it; and it is sufficient evidence that the parties, by adopting paper of a different form, did not rely on its protection.” And it was held that, “ the indorsers of an accommodation bill are not joint sureties, but are liable to each other in the order of their becoming parties.”
It is to be regretted that the general rules of the commercial law are not applicable alike to both classes of business paper in this state, and that a difference in the mere-form of the instrument used should operate a difference-in the rights andliabilities of accommodation parties thereto, as between themselves.
Still, the distinction is clearly established in the cases, above cited, and it would be unwise now to attempt to break it down. Besides, we think the latter case furnishes the sound rule on the subject; and under it the facts stated in-the petition are not sufficient to entitle the acceptor to recover of the drawers a moiety of the amount he was compelled to pay, on the ground that they were parties for the accommodation of the payees, and, therefore, co-sureties, and bound to make contribution as between each other.
The demurrer was properly sustained to the petition.

Motion overruled.