Wright v. Garlinghouse
Wright v. Garlinghouse
Opinion of the Court
The principal question to be considered is, whether the defendant was liable to Messrs. Hicks & Hathaway, the drawees, and acceptors of the bill of exchange in this case after they had paid the same at its maturity to the holders. It is not contended by any one that either the principal drawer, L. B. Garlinghouse, or either of the other two persons who signed it, are liable on the bill as a written contract.
The particular question in this case, then, is, whether the formal request contained in the bill which the defendant signed, as the surety of the principal drawer, L. B. Garlinghouse, connected with the facts offered to be shown that L. B. Garlinghouse had dealings with the acceptors, and that, in the
In Griffith v. Reed (21 Wend., 502), a case was presented in its essential features precisely like the present. One Dixon was the principal drawer of the bill, and he had had dealings with the plaintiffs, the drawees, of the same kind as those offered to be proved in this case, and he was accustomed "to draw on them and to have his bills accepted and-paid with out having funds in their hands. The defendant, Beed, subscribed his name to the bill then in question under that of the drawer, adding thereto the word “ surety.” The form of the bill, like the one in the present case implied that the principal drawer was alone interested in the money which the bill represented. The drawees were to charge the amount • to his account and not to the account of both drawers generally. The plaintiffs accepted and paid the bill and brought their
The Supreme Court did not consider that these circumstances distinguished' the case from Griffith v. Reed, and acquitted the surety as they had done in that case. This judgment was reversed by the Court of Errors, but not, as I think, upon the ground that the former case of Griffith v. Reed had been wrongly decided. I may remark in the first place that the able counsel for the plaintiffs, Mr. George Wood and'Mr. Bid well, distinguished the case from Griffith v. Reed by the circumstances I have mentioned. They said the form
The judgment of the Supreme Court must be reversed and a new trial ordered.
Dissenting Opinion
The counsel for the respondent insists that Suydam v. Westfall (2 Denio, 205), decided by the late .Court for the Correction of Errors, is decisive of this case; and the counsel for the .appellant claims that the cases are distinguishable, and that Griffith v. Reed (21 Wend., 502), is precisely in point, and that it was not overruled as»an authority by Suydam v. Wesfall. He states with much care what he claims to be the differing facts and argues that they are such as, upon sound principles, lead to different results. It will be proper to notice these cases. Griffith v. Reed, was decided in 1839, by the Supreme Court, upon the opinion of Bronson, J. The case, in its material circumstances, is precisely like the present case with an exception, not perhaps material, viz.: that it does not appear that there was any previous arrangement between Dixon, the principal • drawer and the plaintiffs, that the latter should accept and pay without funds. The next case is Suydam et al. v. Westfall in the Supreme Court (4 Hill, 211), in which Cowen, J., delivered the opinion. • In this case business relations had existed, commencing in 1838, between Norton, Bartle & McNeil, a firm doing business in Ontario county, and the plaintiffs, commission merchants - in New York, the latter often accepting and paying the time .drafts drawn upon them by the former, under an arrangement not necessary to be noticed here. In June, 1839, the plaintiff required that Norton, Bartle & McNeil, should procure an undersigner upon drafts drawn by them upon the plaintiffs. And the bill in question addressed to the plaintiffs, was drawn payable to the order of one Cook, requesting the plaintiffs to pay and charge to the account of your obedient servants, and signed. “Norton, Bartle & McNeil. Albert Westfall.” It was discounted by Cook, and then accepted and paid by the plaintiffs without funds, and the action was against Norton,
The next case in the Supreme Court is Wing v. Terry et al. (5 Hill, 160), in which Bronson, J., delivered the opinion of the court. In this case the like business relations existed Between Terry & • Post, the country manufacturers of flour, and the plaintiff, a commission merchant in Albany. The latter became unwilling to accept further for the former, unless they would get sureties. The time draft in question was made, requesting the plaintiff to pay to “our own order” “and charge the same to the account of your humble servants.” It was signed “Terry & Post,” “Z. W. Gurney, Jotham Post,” and indorsed by them. It was accepted by the plaintiff and paid without funds, and the action was against all the signers of the bill, to recover for money paid. In these cases no change was made by the acceptance in the mode of keeping the account. The court held that there could be no recovery by the plaintiff against Z. W. Gurney and Jotham Post. (Griffith v. Reed and Suydam v. Westfall, supra.)
One of the differences between Suydam v. Westfall and the case under consideration, is, that in the former case the direction to the drawer is to charge to the account of your obedient servants, in the plural; and that in the latter it is charged to “ the account of your obedient servant,” in the singular. The argument is that in Westfall’s case all the signers of the bill directed the' drawer to charge the sum- paid to their account, that is, to the account of all. of them, thus showing that they were all joint drawers, directing that money should be paid for their joint benefit, without regard to any account between Suydam & Co., and Norton, Bartle & McNeil: while, in the case under consideration, the request being, in effect, to charge to the account of Leman B. Garlinghouse, it is clear that no money was or could be paid by the drawers to and for the use of any person other than Leman B. Garlinghouse. No question is or can be made that Westfall was in fact a surety for Norton, Bartle & McNeil, and that Suydam & Go. so knew.
No notice of this circumstance is taken by Bronson in his opinion, but he puts the decision upon other principles holding that Beed was not liable, which principles will, in a moment, be noticed. Another- (distinction claimed as material is, that in Westfall’s case it did not appear on the face of the paper that he was a surety, and this so appeared in Seed’s case. It does appear in Westfall’s case that he was surety, and that Suydam & Co. knew this fact, and their knowledge constituted the material question. Judge Bronson says, in Seed’s case, “ when it does not appear on the face of the paper that the, party is a surety, notice of the character in which he contracted must, of course, be brought home to the holder before he can be affected by it. In this case the character in which Beed contracted appeared on the face of the bill, and every one into whose hands it came, was bound to know that Dixon was the principal and Reed his surety.”
It is said by the counsel, that it was assumed by the court in Westfall’s case, that he knew that Norton, Bartle & McNeil did not draw against funds and that great weight was given to those facts. It was so argued that he had such knowledge by one of the judges, from facts common to that case and this case, viz.: that the bill was a time bill, four 'months. In this' case the bill is a two months’ bill. I am not aware, however, that much importance was attached to such fact.
It is also added by the counsel that in this case the defend
It thus appears that this and the Westfall case, are alike in the only circumstance in which this case differs from the Beed case, a circumstance which I regard as immaterial.
I do not think that such arrangement precludes the idea that in fact the drawees in Boston gave any credit to the sureties. It was such a bill as the one here, that they agreed to accept and pay for the accommodation of Garlinghouse. Why require sureties if the sureties were not to be liable'!
Let us now see upon what principles Griffith v. Reed, Suydam v. Westfall, and Wing v. Terry, were decided by the Supreme Court, and then look into Suydam v. Westfall in the Court for the Correction of Errors.
These cases were all decided upon the elementary principles and theories of the nature of the contracts of parties to a bill
Such bills were, and are, however, accommodation' bills. Now, as in the cases decided by the Supreme Court, it appeared that certain persons had signed the bills as sureties for the drawer who was to be accommodated, and the fact of surety-ship was known to the drawee, and as such sureties were to have no money paid for their use, it was held that they could not be made liable to the acceptor for money paid, to and for their use. None of the drawers of the bill were liable upon it, for it contained no promise to pay money to any one. It is a direction to pay to another to charge over. It was held that such sureties were liable to the payee or any indorser who paid for the bill, in case the drawee refused to accept, or failed to pay. In short, their liability was that of surety to their principals who drew the bill, and arose upon their express contract, to wit, that the drawee would accept and pay, and that the acceptor, knowing all .the facts, could not resort to them, upon any implied contract to reimburse him for money paid,' for the use of their principal. Those were the principles, in short, upon which the Supreme Court decided the cases. Suydam & Co. v. Westfall was taken to the Court for the Cor
In all these cases, those who, as between the drawers of the bill were the principals, received the avails of the bill, and the account of the acceptor was kept exclusively with them. Ho new account was opened. Suppose, in Suydam v. Westfall, Norton, Bartle & McNeil had had ample funds in the hands of Suydam & Co. to pay the bill at maturity, could Suydam & Co. have maintained an action against Horton, Bartle, & McHeil and Westfall, upon the ground that they had no funds in their hands? The answer will be at once, no; and why ? Because Suydam & Co. knew that Westfall was a mere surety. If in. truth' .there had been a firm composed of Norton, Bartle, McNiel and Westfall, and they had drawn the bill as it was drawn, and they at maturity and payment had had no funds in the hands of Suydam & Co., the latter could have maintained the action, though Norton, Bartle & McNeil had had ample funds in their hands. Indeed, they would not, without permission, have been justifiable in appropriating any funds belonging to Norton, Bartle & McNiel, another firm, to the payment of such bill.
It remains to consider the relations between the defendant, Joseph Garlinghpuse, who signed the bill adding surety to his name, and the plaintiff, Wright, 'who signed the bill adding to his name “ surety for the above surety,” without the knowledge or privity of the defendant, but at the instance, as I infer, of Leman B. Garlinghouse, for whose benefit it was discounted by Lester. It is argued that there was no contract, express or implied, or privity, between the plaintiff and defendant ; that the defendant does not stand in the relation of principal to the plaintiff, and that the relation of principal and surety cannot- arise except by mutual arrangement, or upon request. It is undoubtedly true, as a general rule, that no one can make himself the creditor of another, without his consent or against his will But when one is compelled to do for another what such other ought to have dene, and was bound by law to do, the law will imply not only a previous request to do the thing, but a promise to pay for doing it. (2 Parsons on Cont., 392.)
In Pownal v. Ferrand, Lord Testerden states it as a general principle, that one man, who is compelled to pay money which another is bound by law to pay, is entitled to be reimbursed by the latter. In Exall v. Partridge (8 Term, 308,) three lessees had covenanted to pay rent, and two of them had assigned the lease to the other; the plaintiff’s carriage ’ was upon the premises and the landlord distrained it for rent, and the plaintiff paid the rent and sued all the lessees for money paid to their use, and it was held that he could recover; that as- all the defendants were liable upon their covenant to pay the landlord, and as the payment by the plaintiff was $ compulsory, the law implied a promise by all the defendants to pay him. In this case the plaintiff was liable to Hicks & Hathaway for a demand which it was the duty of the defendant to pay. The plaintiff paid the debt, not voluntarily, but in consequence of a legal liability, and the law implies a promise by the defendant to reimburse the plaintiff.
The principal may obtain any number of sureties, and those who first become sureties may not know that others are also to become sureties, and the doctrine of contribution applies to all co-sureties, and this, too, whether they became so upon the same or divers obligations, and at different times. They must, of course, be sureties for the same debt or demand, and for the same principal., In this case, however, the.question is, can'one become,surety for one who has'already become surety? I have found no case like this. It is well settled that a co-surety may, by his contract, qualify the extent of his liability. (Dearing v. The Earl of Winchester, supra; Craythorne v. Swinburne, 14 Ves., 160.) In the latter case, the defendant applied to a bank for money, for his nephew, upon a bond executed by the nephew and the plaintiff, who was surety. The bank declined to advance the money without further security, and thereupon the defendant executed to the bank his bond, by the condition of which, as construed, he became surety for his nephew and the plaintiff, the surety of the nephew. The plaintiff was obliged to pay the bank, and he then "filed his bill against the defendant, claiming that he, by his bond to the bank, became a co-surety, and that he was therefore liable to contribute. The Chancellor held that the defendant became the surety of both the parties to the other bond; that he was a surety for the surety of the nephew, and for the nephew, and with this construction of the bond dismissed the bill. The case is interesting and instructive upon the doctrine of surety-ship and contribution. It was fully argued and much con
If it is necessary to show the assent of the defendant to the plaintiff’s becoming surety in the manner he did, it seems to me that such assent may be implied. Leman B. Grarlinghouse desired to raise money, and he drew and signed the bill, and took it to Joseph, the defendant, and he signed, adding surety to his name, and then Leman took it to the plaintiff, who signed it, adding “ as surety for the above surety.” The object of making the bill was to raise money, and the defendant signed it to enable Leman to raise money upon it, and Leman had a right to negotiate it as it then was, if he could, or to procure any additional names. The bill was still in his hands with the right to procure other sureties, and, as I think, an implied authority from Joseph to obtain additional security in any form which should not increase or change his liability upon the paper. If no additional name had been obtained by Leman, the defendant would have been liable, as sole surety, for the whole debt, and had he paid it, would' have had no one but his principal to resort to for reimbursement. He has not been injured, therefore, by his principal’s procuring the plaintiff to become his surety, and I think, the authority of the principal to strengthen the paper, by procuring a surety, for Ms surety, the defendant, may be implied. In Craythorne v. Swinburne (supra), the defendant was acting as the agent of his nephew in procuring the money from the bank, and, if the question I am considering is doubtful upon general principles, it may be that it was not raised in that case for the reason that the principal had the right to give additional strength to the bond, by procuring another surety for himself, .and his surety. My attention has been called to Warner v. Price (3 Wend., 397.) The principal made a note and procured three sureties to sign it. It not being satisfactory to the bank, he took it to the plaintiff, who signed the note adding “ surety ”
This is'not the case of one signing a note as the surety of the maker, without his consent or knowledge, and thus attempting to establish the relation of principal and surety. In such a case, the note having become operative as a note, the liability of the maker cannot be changed. But suppose A lends his note»to B, to enable the latter to raise money upon it, may not B procure an additional signer before using the note ? and may he not procure such additional signer as surety for A, thus making the note stronger, so as to enable him to accomplish the object for which A signed it, to wit, the raising of money upon it? It seems to me that he may, and that such authority may well be implied.
Upon the whole, I think the case was properly decided by the Supreme Court, and that the judgment should be affirmed.
Judgment reversed, and new trial ordered.
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