Cowan v. Hudson

Mississippi Supreme Court
Cowan v. Hudson, 105 Miss. 507 (Miss. 1913)
62 So. 275
Reed

Cowan v. Hudson

Opinion of the Court

Reed, J.,

delivered the opinion of the conrt.

E. L. Cowan, who was a member of the firm of Cowan Drug Company, which failed and went through bankruptcy, promised to refund to A. Hudson an amount paid by him as indorser on the firm’s notes. In accordance with the promise, he signed and delivered to Hudson a note for six hundred and eighty-three dollars and thirty-one cents. Thereupon Hudson took the note to R. Gr. Cowan, the father of E. L. Cowan, and got him to sign it also.

Mr. Hudson testified that R. Gr. Cowan promptly agreed to sign the note when the matter was explained to him. R. Gr. Cowan testified that Mr. Hudson told him, if he would sign the note, it Avould help him (Hudson) out “in a tight,” and that he signed it for that purpose, and did not receive any consideration whatever for so doing. In his testimony, Hudson, when questioned if he had told R. Gr. Cowan that he only wanted his signature to help “out in a tight,” answered “I told him it might help out at the hank.”

E. L. Cowan stated in his testimony that Mr. Hudson asked him to get his father to sign the note, and that he declined to do so, and stated that his father was in just “as bad financial condition as he ivas.” It does not appear that the note was ever used in hank, hut it was held by Mr. Hudson, who brought suit thereon against both E. L. Cowan and R. Gr. Cowan.

After the testimony was all introduced, the court gave a peremptory instruction for the plaintiff. R. G. Cowan became surety for E. L. Cowan when he signed the note. In effect, he was in the position of an accommodation in-dorser.

Referring to suretyship on commercial paper, it is stated in 7 Cyc. 739, that “the contract of a surety requires a consideration, and, if it is subsequent to the original contract, a fresh consideration.”

It was decided in the case of Clopton, Executor, v. Hall, 51 Miss. 482, that “the liability of a compromisor, surety, *512or guarantor, to a promissory note, rests upon the presumption of participation in the original consideration; and the signing of a note after its delivery, after the execution of the contract, is independent of the original contract, and disconnected from its consideration, and the liability incurred for payment must depend upon some other inducement or consideration valuable in law.”

It appears from the testimony that R. G. Cowan signed the note to help Mr. Hudson ‘ ‘ out of a tight, ’ ’ and, from Mr. Hudson’s own statement, to help him “out at the bank. ’ ’ Mr. Hudson did not use this paper in the bank, the particular purpose for which it was given. He never •discounted the note given for his benefit and accommodation. He never passed it to the hands of a holder for value. The purpose for which it was given has not been carried out; but, on the other hand, it has been used for a different purpose. He simply held it, and is now endeavoring to use it by suit to collect an amount which the original maker promised to pay him.

Counsel for appellee relies upon the case of Pearl v. Cortright, 81 Miss. 300, 33 So. 72. That case is unlike the one now before us for decision. Therein an agreement was made between the payee and the original maker that Cortright should indorse the notes and become surety thereby for the payment thereof. In the present case there was no agreement between E. L. Cowan, the maker, and Hudson, the payee, to the effect that R. G. Cowan was to become' the surety. On the other hand, E. L. Cowan opposed R. G. Cowan’s becoming comaker with him. Mr. Hudson withheld this information from R. Gr. Cowan. We can hardly conclude from the testimony that E. L. Cowan expected his father would be asked to sign the note. He certainly did not agree that it should be done.

The trial court erred in granting the peremptory instruction.

Reversed and remanded.

Reference

Full Case Name
R. G. Cowan v. A. Hudson
Status
Published
Syllabus
Bills and Notes. Accommodation endorser. Consideration. Where the maker of a promissory note delivers it to the payee who afterwards without the maker’s knowledge procures another party without a new consideration to sign the note by telling him it will help the payee at the bank and the note is never presented to the bank, on a suit by the payee against both the signers of the note, the second signer cannot be held liable, as in effect he is simply an accommodation endorser without separate consideration.