Dorsey v. Their Creditors
Dorsey v. Their Creditors
Opinion of the Court
delivered the opinion of the court
The appellant contends there is an error in the . . . , tableau ot distribution, because he was not placed thereon, for the damages on certain 0
The evidence on record shews the indorse-noent to have been made for the accommodation of the drawers. The case therefore differs in no important circumstance from that decided last summer in this court, in the suit of Nolte & Co. vs. their Creditors, except that in this instance the indorsement was made in the state Of Pennsylvania. Ante, p. 9.
The court of the first instance rejected the claim for damages. Here it has been contended that decision should be reversed and a different one rendered, from that given in the case just cited. First, because the statute of Pennsylvania differs from ours—and, second, because in that case, the conclusions to which the court came were incorrect, and unsupported by law.
I. We have been unable to discover any material distinction between the legislative provisions of our own, and our sister state on the subject.
The act of this state, declares: “That if any person shall draw or indorse any bill or bills of exchange upon any person or persons liv-
The Pennsylvania statute provides “That whenever any bill of exchange hereafter to be drawn or endorsed within this commonwealth upon any person or persons, or body corporate, of, or in any other state, territory, or place, shall be returned unpaid, with a legal protest, the person or persons to whom the same shall or may be payable shall be entitled to recover and receive of and from,” éfc. Sfc.
The terms used appear to us equally comprehensive in each of the enactments:—the language is broad enough in both to cover the ease oí the appellant, and we are unable to think of a single argument deducible from the literal terms of the law, that does not apply with the same force to the one act, as to the other.
No decision of the courts of Pennsylvania putting a construction on their statute, in a case such as that before us, has been shewn, nor
If the decision in the case of Nolte & Co. be correct, it settles the rights of the parties before us. We feel gratified that the zeal of the counsel for the appellant has enabled us to examine again attentively thedoctrine there established, and though we are far from thinking the case free from difficulty, we believe the weight of authority, and of reason too, in favor of the principles which guided us in its decision.
Looking beyond the form in which this contract is clothed, and considering it on the evidence adduced, and the admissions made on record, we have presented to us the case of an indorser of a bill of exchange who put his name on it for the accommodation of the previous parties, and to enable them to raise money on it. He has done so without paying damages, and yet requires the parties to whom he lent his name shuuld pay them to him. We
Were the appellant the holder of a bill of exchange taken in the due course of trade* and negotiated by him, we believe it would not be necessary for him to shew that he bad paid the damages, the law merchant consider* ing the liability to pay them sufficient to enable the holder of a bill to recover them from previous parties.
But we considered in the former case that he was not the holder of a bill of exchange in the sense in which that term is used in the law merchant: that though as to all parties who came after him on the bill, the lex mercatoria applied in full force, and made him responsible under its rules, yet that as between him and those he engaged to accommodate with the use of his name, the contract was an ordinary one of suretyship.
The correctness of our former decision depends on the accuracy of considering the endorser as surety. To support that view we are aware that it is necessary we should be au-thorised to look beyond the form in which the
If then we are correct in concluding that the court are not bound by the terms in which parties on a bill of exchange have cloathed their contract, and that we may look into the real nature of the transaction, to ascertain the
In opposition to this, it was contended, the indorser could not be considered as surety, because he was liable in the first instance on the bill, to the holder, and that he could not, as sureties can, claim the right of discussion. But we understand it to be an elementary, as it certainly is a familiar doctrine of our law, that the contract of suretyship may exist between the principal and surety, although as
Having thus seen that the contract was one of suretyship, let us next consider whether that of a change was also formed between the parties. In making this enquiry we have been unable to find a single feature of the latter, unless in the form of the contract. The bills in question never were passed to the appellant: they were not received by him in course of trade—they were not negotiated by him. He merely lent his name to enable the previous parties to put them into circulation. In no part of the lex mercatoria can we find any thing which will authorise us to say, that a person who thus becomes a party to a bill, is entitled to the rights of a holder who has taken and negotiated it for the purposes for which this contract was first introduced among men, and subsequently recognized and sanctioned by law. It cannot be contended that the form of the contract is to control the substance of it; if it did, the agent to whom a bill was passed for collection might, with equal success, urge that the indorser’s rights and obligations
It is said the authorities in the commercial law do not sustain us in the position assumed* It is certainly true that the point is no where expressly decided, and it is equally true, that there have not been many cases which furnish analogies on which the court can sustain the doctrine it believes correct; but those which come nearest to it in principle, do in our judgment completely support the position assumed.
Bayley, in his treatise on bills, in speaking of the remedy by an accommodation party» states “ if the bankrupt were the person to whom the instrument is lent, in which case the endorser is a mere surety, he will be entitled, under 49th G. 3. on taking up the bill or note, to stand in place of the holder, if he had proved under the commission, and to prove himself if the holder had not Bayley on bills, 296.
Again, on the authority of a case in 4 Ve~ sey, the author states, that mere reciprocal accommodation without any specific exchange of bills or notes, will not create a debt on
Eden, in his work on bankruptcy, states '• whatever be the situation on the bill of the person lending his name, whether he be acceptor, drawer, or indorser, he is substantially a surety for the person who has received con-«ideration for it, and as such, is entitled to be indemnified by the estate of the principal.
Page, 149.
These authorities we think clearly establish, that in England the party who lends his name is considered as surety; and that his right to recover does not depend on the mere fact of his holding the bill, but his having paid it. If then his right to recover depends on paying, that right must be limited to the sum he has paid. The obligations of the principal, cannot be extended beyond the injury the surety has sustained.
The strongest authority against this opinion is contained in the late commentaries of Chan-
The opinions of this eminent jurist and judge, are entitled to great respect, and when found different from our conclusions on a legal question, they well authorise further reflection before a decision is pronounced. In this instance, however, we do not believe that learned person had any such ease in contemplation as that before us. Immediately before the sentence quoted, he is treating of the obligations of the acceptor, and in opposition to a novel doctrine first enounced by Lord Ellen-borough, some years since, that the acceptor was not liable to the indorser, he continues to say, “ He is bound though he accepted without consideration, and for the sole accommodation of the drawer; accommodation paper is now governed by the same rules as other paper.” It is clear to us that the obligations of the acceptor to the other parties to the bill,
As to the observations which fell from the court in the case of Harrod vs. Lafarge, they are nothing more than the enunciation of the general principle, and as to all other parties to the bill but the person for whom the accommodation was made, they are correct, and still express the opinion of this court. The case before the court is quite different from that, and our decision now, does not in any respect conflict with it.
But the appellant claims interest on the drafts which were duly protested, and which were not given by the judgment of the district court—this must be altered. It is therefore
Reference
- Full Case Name
- DORSEY & AL. v. THEIR CREDITORS
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- Published