Court Opinion

ID: 6271650
Source: CourtListenerOpinion
Date Created: 2022-02-18 15:47:31.409926+00
Date Added: 2024-06-11T08:59:55.417393
License: Public Domain

Opinion by
Smith, J.,
The liabilities of the parties to accommodation paper, in this state, have long been settled. As said by Black, C. J., in Lord v. The Ocean Bank, 20 Pa. 384, “ He who chooses to put himself in the front of a negotiable instrument for the benefit of his friend must abide the consequence. Accommodation paper is a loan of the maker’s name without restriction on the manner of its use.”
The proposition that an indorser of such a note, who has paid it after maturity, upon the maker’s default, cannot recover from the maker, for the reason that he does not receive it until after maturity, is utterly without foundation. Such an indorser is not a purchaser after maturity. He does not take the note as a purchaser. His contract of indorsement binds him to take up the note by payment upon failure of the maker to meet it at maturity, and it is under this contract that he comes into possession of the note upon payment. His right to recover against any prior party has its inception in his indorsement, and becomes complete when he has paid the note. The rules in relation to a holder by purchase have no application.
In the present case, the history of the note is fully set forth in the pleadings. It was made by the defendants September 16, *5951895, at three months, to the order of the Builders’ National Machine Mortar Company, and being indorsed by the payee, and by the plaintiff, was taken by the Central National Bank in renewal of a similar note previously given for the accommodation of the payee. It was protested at maturity, and paid by the plaintiff. The defendants, so far from denying this, say in the first affidavit of defense that “ the note matured while it was held by the Central National Bank, and was protested for nonpayment at maturity while in possession of said bank; ” and in the second affidavit they add that “ at the tune said note was made it was a second renewal for a like amount of a previous promissory note.”
Upon these facts, the right of the plaintiff to recover from the defendants is clear.
The alleged indebtedness by the payee to the defendants is not an equity growing out of the note or of the transaction in which it was given, and would in no aspect of the case be a defense to this action: Hughes v. Large, 2 Pa. 103; Long v. Khaun, 75 Pa. 128.
The allegation that the note is not the property of the plaintiff, but belongs to the assignee for the benefit of the payee’s creditors, under an assignment made December 10, 1895, is inconsistent with the other allegations by the defendants in relation to its ownership. It is evident, from the affidavits of defense, that the note was indorsed by the payee to the Central National Bank, at or about the time of its date, in renewal of a previous note, and that it was held by that bank until its maturity. The note being thus owned by the bank at the date of the assignment, the payee had then no interest in it to assign. In relation to the note, its position was that of liability as first indorser, instead of ownership.
Nothing is shown in either affidavit of defense to defeat the plaintiff’s right to recover, and the judgmentis therefore affirmed.