Union Bank v. Philips
Union Bank v. Philips
Opinion of the Court
delivered the opinion of the court.
This is an action of assumpsit, brought against the defendant as a joint drawer of a promissory note, made in the name of Hale & Philips: defendant pleads non est factum. Upon the trial it appeared that Dale & Philips were partners in merchandize, trading as such, and as such became indebted to the Union Bank in a sum, for which they executed their note with G. Frierson & Co. as endorsers; that this note falling due, another was drawn by E. W. Dale in the name of the firm, to be sub
Upon this statement of facts, the Circuit Judge charged the jury, “that the endorser of a bill or note transferable by endorsement, must in an action against the acceptor, or drawer, prove that the bill was endorsed by the person to whose order it was intended to be made payable; that if the jury should believe, that the endorsement of G. Frierson & Co., on the note sued on, was an accommodation endorsement, known to be so by the plaintiff at the time it took the note, and the jury should also believe, that if G. Frierson made the endorsement without the knowledge of his co-partner, Hughes, it would not be binding upon him, unless he assented thereto; and not being binding upon him, the legal title to the note would not be passed thereby to the plaintiff; and so it would likewise be, if it were made by Hughes, without the knowledge of his co-partner, Frierson, unless he assented thereto.”
Upon this charge the jury found a verdict for the défendant, and could not have well done otherwise upon the proof. But was the charge correct? We think most assuredly not, both upon principle and authority. The proof shows most conclusively, that the paper was not real, but accommodation, put into circulation by the makers, and not by the endorsers. What is the consequence of this upon principle? It has been repeatedly held, not only by this court, but others, that where the paper is real, in a suit against a maker, or drawer, or acceptor by an endorsee, upon proper pleading, the endorsement must be proven, and why? Because, in the first instance, they pay at their peril: and in the second, because the endorser has an interest in the paper, puts it in circulation, and shall not be deprived of his right, in a proceeding to which he is no party, without proof satisfactory to the court and jury, that he has parted from
For an able view of this subject, conforming in every thing, with what we have said, see the case of Meacher vs. Fort, 3 Hill’s So. Car. Rep. 227. Well, now apply these principles to the case under consideration. Dale & Philips owe the Union Bank by note; the note is due; Dale & Philips execute a new note to G. Frierson & Co.; one of that company endorses the note without the knowledge of the other, and the Union Bank, with knowledge of the fact, takes it upon discount, and delivers up their previous note. What is the consequence? Under the decisions upon partnership liability, the Union Bank has lost its security. But what has Dale & Philips lost? What has G. Frierson & Co. lost? Nothing. G. Frierson & Co. are discharged from liability as endorsers; they never had any interest in the note. Dale & Philips have lost nothing by the discharge of G. Frierson & Co.; their note is outstanding; it has been received in payment of a previous obligation, which is a good consideration; and to permit them to shield themselves from its payment, upon a principle of law, made to protect partners from mutual abuses of trust, a principle having nothing to do
As we have said, it is at war with both principle and authority. The makers are estopped to say, that was not genuine, which they had represented to be so, by putting it in circulation.
The judgment must, therefore, be reversed, and the case remanded for a new trial.
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