First National Bank v. Dick

Opinion by Smith, J., The liability assumed by the defendant, in giving the note in suit, is to be determined by well settled legal principles. The making of an accommodation note is a loan of the maker's credit, with no restriction on its use. In this state, for half a century, at least, this principle has stood unquestioned: Lord v. Ocean Bank, 20 Pa. 384; Carpenter v. National Bank of the Republic, 106 Pa. 170; Hart v. United States Trust Co., 118 Pa. 565; National Union Bank v. Todd, 132 Pa. 312; Penn Safe Deposit, etc., Co. v. Kennedy, 175 Pa. 160. Hence, in'all action on such note, by an indorsee for value before maturity, want of consideration, even though known to the indorsee on receiving the note, is no defense. And while under certain well defined conditions, a written instrument may be reformed by parol evidence, this is only as to matters omitted through fraud, accident or mistake, since the purpose of reformation is to mould the contract in conformity with the intention of the parties. It does not extend to matters which the parties have designedly omitted. Nor can the legal effect of a written instrument be defeated by a contemporaneous parol provision in absolute contradiction of its essential terms. Revocation is not reformation. A written contract must be sustained, against a parol stipulation, purposely omitted, which is in effect a rescission : Martin v. Berens, 67 Pa. 459; Commercial Nat. Bank v. Henninger, 105 Pa. 496; Clarke v. Allen, 132 Pa. 40; Ziegler v. McFarland, 147 Pa. 607; Union Storage Co. v. Speck, 194 Pa. 126. In the present case, the affidavits of defense are of such a [449] character as to leave it uncertain whether the note in suit was discounted for the maker or for the indorser, and whether the matters set up as a defense were known to the plaintiff bank when it took the note. Since matters not distinctly set forth are to be deemed nonexistent, we might properly eliminate these questions, and regard the affidavits as alleging only a want of consideration, which in this action is no defense. But, viewing the case so far as disclosed, it is obvious that as to either the maker or the indorser, the note was accommodation paper, and knowledge of this by the bank would in noway affect the liability of the parties. If the note was discounted for the maker, that, as to him, was the consideration, and none was necessary between maker and payee; hence the failure of the latter to furnish the stipulated consideration, alleged in the affidavits, has no bearing on the maker’s liability to the bank. If discounted for the indorser, this was done not only on his credit, but on the credit of the maker, loaned to him, and the case is governed by the rule respecting liability on accommodation paper. It is difficult, indeed, to understand the affidavits as importing that the note-was discounted for the indorser. According to these, the plaintiff told the defendant that the endorser, Titman, “ had considerable money, and was a depositor in their bank,” and that the bank would not look to the defendant for the note but would collect it of Titman; explaining, further, that “ Titman owed the bank money, and this was one way to get the amount of money, as stated in the note.” This is scarcely intelligible. If Titman owed the bank, and was a depositor, the bank could set off his indebtedness against his deposit; and if the note was discounted for him, the bank, in collecting it from him, would only receive payment of the loan. If the note was discounted for the maker, and collected by the bank of the indorser, the latter could thereupon recover it from the maker : Van Brunt v. Potter, 2 Pa. Superior Ct. 591. In an action for that purpose, the failure of consideration alleged in the affidavits would have no place. Thus, in any view of the transaction, the defendant is liable to the bank for his own debt if the note was discounted for him, and as an accommodation maker if it was discounted for the indorser. In some respects this case resembles that of Clothier v. Webs [450] ter Foundry Sand Co., decided by this court last November, and reported in 21 Pa. Superior Ct. 386. On the point, however, on which that case was decided, there is a very material difference. In the case cited, besides averring that the plaintiff was not a bona fide holder for value, without notice, etc., the affidavit alleged that the note was given without consideration for the accommodation of the plaintiff and the indorser; and since a party for whose accommodation, either in whole or in part, a note is given, cannot recover of the accommodating party, the defense thus alleged was obviously sufficient. bhit while, in the case before us, it does not clearly appear whether the note was given for the accommodation of the maker or of the indorser, it certainly was not given for the accommodation of the plaintiff, nor is there any allegation that it was so given. The plaintiff, having discounted the note for one of the parties to it, is a holder for value, and his right to recover from either party is not affected by his knowledge that it was accommodation paper. The alleged parol agreement that the bank would not look to the defendant for the note, but would collect it of the indorser, can avail nothing; being omitted by design, it affords no basis for reformation, and, in effect, it was a total revocation of the note. When a written instrument is accompanied by a parol stipulation, purposely omitted, by which it is absolutely canceled, it is the parol agreement, and not the written one, that is void. Like an exception coextensive with the grant, such a stipulation is a nullity. It is not material that when the note matured the maker had on deposit, in the bank at which it was payable, an amount sufficient to meet it, unless this was lost through failure to present the note for payment. As this is not alleged, no ground of defense is presented. Judgment affirmed.