Mayers v. Bank of Bladen

Adams, J. As revealed by the complaint the plaintiff’s theory of the case is substantially as follows: L. B. Squires bought two tracts of land from George Currie and had the deed made to his son Rexford Squires, who held the legal title as agent or trustee for his father; the debt secured by the mortgage executed by Rexford Squires to the Bank of Bladen was the debt of L. E. Squires; the notes endorsed to the bank by L. E. Squires and Rexford Squires were executed by Joe Daniel, the plaintiff’s testator, without receiving value, and for the accommodation of the payee; the bank knew that the notes were accommodation paper; at most Daniel was only a surety; the bank extended the time of payment without the knowledge or consent of Daniel, and permitted L. E. Squires to cut the timber from the mortgaged land and dispose of it without applying it on the debt, thereby releasing Daniel from liability on the notes; and for these reasons the plaintiff is entitled to a cancellation of the judgment which is a lien on the testator’s real estate. The evidence does not support this theory. Daniel executed the two notes 1 May, 1920; the bank bought them 15 or 16 September, 1920, and required a mortgage which was then given by Rexford Squires as addi-‘ tional security. Ostensibly, then, Daniel was the primary debtor. Under the Negotiable Instruments Law the person primarily liable on an instrument is the person who by the terms of the instrument is absolutely required to pay it, and all other parties are secondarily liable. C. S., 2977. An accommodation party is one who has signed the instrument as maker, drawer, acceptor, or endorser, without receiving value therefor, and for the purpose of lending his name to some other person. O. S., 3009. The accommodation party referred to in this section is regarded as the one primarily liable under the provisions of section 2977. 5 Uniform Laws Annotated, 528. The position that by execut *544 ing an accommodation note tbe maker merely lends bis credit to tbe payee and does not become liable to bim does not warrant tbe conclusion that tbe maker is not liable to a bolder for value. • By tbe terms of tbe statute an accommodation party is liable to a bolder for value, notwithstanding sucb bolder at tbe time of taking tbe instrument knew bim to be only an accommodation party. C. S., 3009. A bolder for value is not necessarily a bolder in due course. 5 Uniform Laws Annotated, 212. Tbe general rule is that tbe maker of an accommodation note is liable to a bolder for value with or without notice of tbe character of tbe maker’s obligation. 5 Uniform Laws, Supplement 1928, page 80. It follows that knowledge of an endorsee for value that tbe note was given for tbe accommodation of tbe payee is not a defense to an action by tbe endorsee against tbe accommodating maker. Bran-nan’s Neg. Ins. Law, 4 ed., 270. But there is evidence tending to show that tbe Bank of Bladen was not only a bolder for value, but a bolder in due course. C. S., 3033. Tbe bank denied that tbe notes were accommodation paper, but if it be granted that they were, tbe fact cannot under tbe circumstances disclosed by tbe evidence avail tbe plaintiff as ground for relief. It is manifest from what has been said that tbe plaintiff’s position with respect to tbe alleged suretyship of bis testator is not meritorious. It is an extension of time given by a creditor to tbe principal debtor which under certain conditions discharges tbe surety from liability, but a release of tbe surety does not usually affect the liability of tbe principal. Tbe debt due tbe bank may have been tbe debt of L. E. Squires; but as between tbe bank and tbe maker of tbe note tbe question of primary liability is fixed by tbe terms of tbe instrument. ¥e find no evidence whatever that tbe bank by extending tbe time of payment to tbe mortgagor or by permitting timber to be removed from tbe land intended to do anything, or did anything, to impair its right to bold tbe maker of tbe notes to bis primary liability for tbe debt. Tbe mortgagor failed to pay tbe taxes due on tbe land described in tbe mortgage executed by Rexford Squires to tbe Bank of Bladen, and tbe county of Columbus brought suit against tbe bank and others for tbe collection of tbe tax. Commissioners duly appointed sold tbe land and tbe bank became tbe purchaser. Tbe plaintiff contends that as tbe mortgagee purchased tbe mortgaged property at a tax sale and received a deed for it tbe mortgagor can elect to have tbe mortgagee credit tbe mortgage debt with tbe value of tbe land. It will be noted, however, that tbe mortgagor has not appealed. He seems to be content with tbe judgment. Tbe plaintiff’s testator, as we have seen, was primarily liable to tbe bank, and tbe plaintiff is not in a position to be subro-gated to any rights tbe defaulting mortgagor may have bad. *545 Tbe record is inconsistent with tbe plaintiff’s contention. Tbe testator not only suffered judgment to be entered against bim on tbe notes; after tbe judgment was docketed be borrowed money from tbe bank and secured both tbe amount borrowed and tbe docketed judgment by bis own mortgage and bis assignment of other securities to tbe bank. With knowledge of existing conditions be admitted bis indebtedness and attempted to make tbe bank secure. We bare discovered no valid reason in law or equity for granting tbe relief sought by tbe plaintiff upon bis complaint and bis evidence. Judgment affirmed.