Talmage & Co. v. Millikin & Meigs

McCLELLAN, J. Milliken, át the request of Burbage, for his acommodation and to enable Min to raise money on the paper by indorsing and delivering it to some third party, signed a bond and delivered it to Burbage. The latter, in consonance with Milliken’s intention, indorsed, transferred and delivered the bond to Talmage & Co. for a valuable consideration passing at the time to him, Burbage. Talmage & Co. bring this suit, against Milliken on that bond. Milliken defends on t’he ground that there was no consideration for the obligation as between Mm and Burbage, and insists that he being the payor and Burbage the payee and the paper not being commercial, he is entitled to make this defense against Talmage & Co. under section 2594 of the Code (1886) ; and this defense was. allowed in the court below. The trial court fell into error in this matter. The paper in the 'hands of Burbage, the accommodated party, was not a bond, or obligatory contract in any sense, nor was Milliken in respect thereof a payor, nor Burbage a payee. It was only when Burbage, in line with Millilcen’s purpose in signing the paper for the accommodation of Burbage, indorsed and delivered it for value to Talmage & Co. that the paper became a contract at all, and then it became the contract of Milliken as payor and Burbage as indorser to pay the sum nominated in the bond to Talmage & Co. as payees, and they are and are to be considered for all purposes, so far as Milliken’s liability is concerned, the payees of the bond; and the consideration, which actually passed between them and Burbage, passed also in legal contemplation between them and Milliken, and supports the latter’s promise to pay as fully as if he had in the first instance received value from Burbage. Accommodation paper is not within that provision of the statute referred to which gives to the payor as against the transferee any defense which he would have had against the payee, because the transferee is himself ¿he real and only payee, and the nominal payee is not a payee at all in legal contemplation or in fact. We have treated the action as being against Milliken alone, because it is clear on the evidence that neither Meigs nor the partnership of Milliken & Meigs was at all bound by the subscription of the partnership name by Milliken to the bond. Reversed and remanded.