Court Opinion

ID: 6632707
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:38:21.390999+00
Date Added: 2024-06-11T15:58:59.234515
License: Public Domain

DISSENTING OPINION.
STURGIS, J.
I dissent from the majority opinion herein. The release of an accommodation maker of a note by reason of the surrender by the payee of security held by him is placed on the same ground as a. release of such a maker by reason of the payee making’ a binding agreement for an extension of time. Both the plain reading of the negotiable instrument act and' the great weight of authority is against the proposition that, as between the original parties to a negotiable note, an accommodation maker is discharged by reason of the payee, knowing him to be such, making a valid agreement without his consent to extend the time of payment.
It will be noticed that the negotiable instrument act dispenses with many of the terms and distinctions theretofore used and applied in the law relating to negotiable paper. The word “surety” is nowhere used. Section 10161 of this act, Revised Statutes 1909, di*655vides the parties liable on á bill or note into two classes, to-wit, those primarily liable and those secondarily liable. A person primarily liable is one “who by the terms of the instrument is absolutely required to pay the same. All other parties are secondarily liable. By section 10000, an accommodation party is defined to be “one who has signed the instrument as a maker, drawer, acceptor, or endorser, without'receiving value therefor, and for the purpose of lending his name to some other person,” and such a maker is made primarily liable, i. e., under section 10161, “absolutely required to pay the same.” The payee’s knowledge that one or more makers are accommodation makers makes no difference, for it is expressly provided by section 10000, supra, defining an accommodation maker, that: ‘ ‘ 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.” A holder for value is defined by section 9997, and there is no doubt but that the original payee of a note is a holder for value where the instrument represents a valid indebtedness. Section 10030, provides that: “The maker of a negotiable instrument, (which includes an accommodation maker) by making it, engages that he will pay it according to its tenor;” Section 10040, provides that: “Presentment for payment-is not necessary in order to. charge the person primarily liable on the instrument,” and no one doubts but that this includes an accommodation maker as well as the real maker. [Rouse v. Wooten, 140 N. C. 557, 53 S. E. 430.] By section 10048, presentment must be made to all persons primarily liable.- By section 10054, where a note is dishonored by nonpayment, a cause of action accrues to the holder against all parties secondarily liable.
It will thus be seen that should parol evidence be admitted to show that one who is primarily liable ac*656cording to the terms of the instrument is in reality only secondarily liable many complications will arise. It seems plain that by the force of these statutes, an accommodation maker is a maker, a person primarily liable and “absolutely required to pay the same,” one who “engages to pay it according to its tenor.” This is true as between the original payee and all those signing as makers, and it does not matter that such ■payee knew when he took the note that one or more of the parties in fact signed as accommodation makers. As stated by the Supreme Court of Massachusetts in Union Trust Co. v. McGinty, 212 Mass. 205, 98 N. E. 679, 28 Am. Cas. 525: “It (Negotiable Instrument Act) determines the liability of the various parties to the negotiable instrument on the basis of that which is written on the paper. The obligation of all makers, whether for accommodation or otherwise, is to pay to the holder for value according to the terms of the bill or note. Their obligation is primary and absolute. [Sections 77, 208.] The act makes no provision for the proof of another and different relation than that expressly undertaken and defined by the tenor of the instrument signed. The fact that one is an accommodation maker gives rise to a duty no less or greater or different to the holder for value than that imposed upon a maker who received value. This is expressly provided by the act, even though such holder knew at the time that the maker was an accommodation maker. ’ ’
In the present case the note reads that: “We promise to pay” etc., and is signed by all the defendants. Our laws make all such contracts joint and several, and the contract of these parties is the same as if it read: “We jointly and each of us severally agree to pay” etc. There are many cases holding that a party cannot vary the terms of such a written contract by parol evidence regardless of the negotiable instrument act; and certainly the Legislature has power to *657say that such shall be its force and effect. [Earle v. Enos, 130 Fed. 467; First Nat. Bank v. Asel, 154 Mo. App. 228, 134 S. W. 110; Willard v. Crook, 21 App. D. C. 237; Gerli v. Nat. Mill Supply Co., 78 N. J. L. 1, 73 Atl. 252.]
A strong argument in favor of the rule here contended for is found in the fact that section 10089, making provision for the discharge of those primarily liable on a note, does not include an extension of time by the holder, while section 10090 does so provide in case of one secondarily liable.
All these provisions of the negotiable instrument act, which are now in force in most of the States, have received careful attention and construction by many of the courts of last resort; and the majority opinion here is not only in conflict with the decisions of both the other Courts of Appeals in this State, but with the decisions generally. In 3 R. C. L. 506, it is stated: “Under the Negotiable Instruments Law it may be regarded as well settled that the accommodation maker or acceptor is primarily liable and is not discharged by any extension of time given to the indorser, drawer, or comaker, for whose benefit he became a party to the instrument, without regard to whether the party suing on the instrument is a party thereto as a payee, and had knowledge of the relation subsisting between the accommodation maker and the principal debtor. ’ ’ See cases there cited. In the late case of Cowan v. Ramsey, (Ariz.) 140 Pac. 501, the court announces the rule here contended,for, quoting from the Massachusetts case,supra, and says: “The rule expressed in the above quotation is that adopted by all the courts that have had occasion to pass upon the negotiable instrument law, (citing cases from seven States) except the lone case of Fullerton Lumber Co. v. Snouffer, 139 Iowa 176, 117 N. W. 50.” In the leading cases of Vanderford v. Farmers’ & Mechanics’ Nat. Bank, 105 Md. *658164, 66 Atl. 47, 10 L. R. A. (N. S.) 129; Cellers v. Meachem (Lyons), 49 Ore. 186, 89 Pac. 426, 10 L. R. A. (N. S.) 133, 13 Ann. Cas. 997; and Richards v. Market Exch. Bank Co., 81 Ohio St., 348, 90 N. E. 1000, 26 L. R. A. (N. S.) 99, and the notes thereto, the cases are collected and discussed and the rule here contended for is announced as being the law in all the States. So too, in' the note to the Massachusetts case, supra, 28 Ann. Cas. 525, 528, the authorities are collected and it is shown that this is the well-established rule. [See also Chambers v. McLean, 24 Pa. Supp. Ct. 567, and Willard v. Crook, 21 App. D. C. 237.]
The case of Spencer & Co. v. Brown, 143 N. Y. Supp. 994, is cited in the majority opinion as supporting the contrary rule adopted in that opinion, but that-case will be found to deal with the question of “want of consideration.” That case does not purport to be, and I think is not, in conflict with the case of Nat. Citizens’ Bank v. Toplitz, 81 N. Y. Supp. 422, where it is held that ‘ ‘ the maker is liable primarily notwithstanding the knowledge of the holder that she was an accommodation maker only.”
It is highly important that, as the Legislatures of the various States have adopted uniform laws on the subject of negotiable instruments, the courts should give a uniform construction to the same and that this State should keep in line on this question.
Most, if not all, of the cases cited deal with the question of the release of an accommodation maker because of the holder making an agreement for the extension of time; and the majority opinion has not discussed, nor will I do so, whether or not a- discharge by reason of the holder releasing securities held should be placed on a different basis as being a subject not treated of by the negotiable instrument act, and the further question of defendants’ .equitable rights against the holder, conceding that all the parties to this note are makers and primarily and absolutely bound *659to its payment, because of Ms surrendering or appropriating to the payment of another note the security held by him from one of the makers of. this note. See on this point Woods v. Finley, 153 N. C. 497, 69 S. E. 502.