Wood v. Repold

Buchanan, J: at this' term delivered the opinion of the court (a). Jlquila Drown, a merchant of Baltimore, wishing to raise a sum of money,- drew a bill of exchange on a house in New-Yorh for 83780,- in favour of Gabriel Wood and Company,- at sixty days, and took it to Woodj who at his request; and without any consideration, but solely to enable him to faisemoney on the bill, endorsed it in blank, and returned it to BrovJn. Brown then took it to Re* pold, who also, at his request,- but without consideration, and to give a further credit to the bill,endorsed it in blank, and delivered it back to Brown, who look it to the Bank of Baltimore, and got it discounted. No money consideration passed between Repaid and Wood; there was no communication or understanding on the subject between thean, nor had Wood any knowledge that Repaid was to endorse after him. The bill was afterwards regularly protested for nonpayment. "Whereupon, Rcpold paid one half of the amount to the Bank of Baltimore, and obtained, possession of the bill, and then brought suit against Wood, as his endorsor, to recover back the sum so paid by him. to the bank. The declaration contains two counts, the first., the common count on a bill of exchange by an endorsee against an endorsor; the other a money count for money laid out, expended and paid, for the use of Wood. It is objected that the plaintiff below is not entitled to recover,, on two grounds — First. That he and Wood, by their endorsements, became co-securities for Brown, and was . each to contribute his proportion. Secmid. That an endpr — 131 — see cannot recover against his immediate endorsar, unless a money consideration passes at the lime of the endorsement; and that in this case no money consideration did pass, the endorsementby .each being only to enable Brown to raise money op the bill. If Repaid anil Wood could be considered as standing in tbs lplation of eo-securities for Brown, the first objection would be fatal; for in the capacity of co-security. Repaid could not recover on the first count in the declaration, but must rely upon the money count, and having paid but one half of the amount of the bill in question to the Bank of Baltimore, he could not, on the second count, recover back from Wood the sum so paid, being only what he himself, as a co-security, would bo bound to contribute. But I am at a loss to imagine pa what principle Wood and Repaid are to be viewed in the light of co-securities. There is no doubt, that two or ipore may jointly endorse a bill of exchange; and ip such case, each would be bound to contribute his just proportion of the amount; but then the endorsement itself must be joint, and not several and distinct, or at least, to creáis between two successive eudorsors a liability to contribution, there must be a correspondent understanding between them, But here the endorsement does not purport to be joint, qr hear in itself any evidence of a joint understanding between tho eudorsors, nor does there, in any manner, appear to have been any such understanding between them; on the contrary, when Wood endorsed the bill there had been no com - munication between him and Repaid, and he did not know, or even suppose, that Repaid was to endorse it after him, and I can perceive no resemblance between their relative Situation, and that of co-securities in a bond. Every man who signs an instrument of writing, is considered as understanding the nature ot the obligation or contract into which he enters, and by his signature, subjects himself to the operation of the law governing such instruments. If two or more persons become securities for another in a bond, the law imposes upon them a joint undertaking or liability; and if one pays the debt of the principal, he may recover from each of the co-securities his aliquot proportion of the sum paid; and in such transactions, it is not necessary, to constitute a co -securityship, that they should all execute the bond at the same time, or that there should beast understanding between them; the nature of the in — 132 — strument, and the law operating upon it, create the joint liability. Therefore, if one signs a bond, as security, at onetime, not knowing who, or that any person is to come after him, and another signs it at a different time, by operation of lato they are co-securities, and either who pays the whole, may call upon the other for his contribution. But not so with respect to the endorsors of a bill of exchange. Every endorsor is considered in law as a several and collateral security, and is as a drawer to his endorsee. An endorsement presupposses a consideration passing from the endorsee to. the endorsor, and of necessity precludes the presumption of a joint undertakingjfor the law is consistent, and both presumptions cannot stand together. But in the case of- the securities in a bond, there Is not only no presumption of any consideration moving from one security to the other, but the fact is directly contrary, and the very nature of. the transaction excludes thq idea. I cannot, therefore, entertain the first objection, .but think, that the endorsements of Wood and Eepold must be considered as several ancl successive, to be operated upon by the law regulating such transactions. Not can I perceive that the second objection is better supported. The bill in question, though drawn and endorsed for the accommodation of. the drawer, to enable him to raise money- upon it, must be considered as if it had been made in the ordinary course of business, subject to all the lav/ and incidents attending bills of exchange, endorsed and passed in a regular course of negotiation. The same principles of law, and the same rules of evidence, equally apply to both, and when so considered, the objection; that Wood, received no money consideration at fh.e time of his endorsement, appears to me to have no weight. The position.that, as between the immediate parties to a bill of exchange, as the drawer ancl acceptor, the payee and drawer, the endorsee and his immediate endorsor, the want of consideration is a sufficient defence to an action on the bill, Is certainly a correct one, and extends to all bills of exchange, whether for accommodation, or otherwise. But that principle, when tested by. the established practice and settled forms of ¡proceedings in actions on bills of exchange, will, I think, be found applicable only to that particular stage of the negotiation at which the bill has' stopped in the hands of the party suing, who having never passed it — 133 — away, has consequently been obliged to pay nothing upon it, nor has created any liability on himself to pay, and therefore can only recover, in virtue of a consideration passed by him to the party from whom he received it; and in such case, it is that consideration alone which gives him a right of action. And although the law supposes a consideration, and the plaintiff is under no necessity to prove one, yet if none did pass, it was a naked undertaking, of which the defendant may discharge himself at the trial, by showing a want of consideration, or that it was an illegal one; but the same principle does not apply to this, or any case of an endorsor, or intermediate endorsee, who under his liability on his endorsement has been obliged or pay or take up the bill. If it did, there never could be a recovery on a bill of exchange by an endorsor, or intermediate endorsee, against the drawer or immediate endorsor; for every endorsor, by his endorsement, discharges the preceding parties as to himself, and constitutes his endorsee the payee. No consideration, therefore, which he may have originally paid for the bill, can afford him a ground of action; for having parted with all his interest in it, he is. presumed in law to have received a valuable consideration for it, and can have no right to the money a second tipie. lie capnof then recover, in consideration of what he may hayo originally given for the bill; nor could he have an action on the bill, ip consideration of payment by him in virtue of his endorsement, as such payment is not a consideration originally given for the bill, but must be subsequent, yyhich ¡s contrary to every day's experience; for no action is more common than that by an endorsor against a drawer, or an intermediate endorsee against his endorsor, in which the, plaintiff can only recover, on proof, of payment by him to the bor,.a fule holder of the bill; which payment gives him a new title to receive the money from the antecedent party, apd is the very foundation of the suit, and the consideration money between them, as immediate parties to the bill, is never made a subject of inquiry, and if proved, could not ai4 the plaintiff, flow then can that be deemed necessary, to entitle a party to recover, which, if proved, cap avail, him nothing? And this shows, that the principle, that as 'between the immediate parties to a bill of exchange the want of consideration is a sufficient defence, is only applí» — 134 — cable where a payee or endorsee has never parted with the bill. In such case, if he has given nothing for it, he cannot be entitled to recover any thing upon it; and that it does pot apply to any party to a bill, who, on its being protested, has been obliged to take it up; in which case it is pot the consideration originally moving from him, which entitles him to recover, but it is the subsequent payment alone on which the law raises the promise, and gives him a new cause of action, and he sues in the capacity in which'he paid the bill, and not that in which he received it. This application of the principle contended for, clears the case before us, J think, of all difficulty. The blank endorsement by Wood was an un» dertaking to pay the whole amount of the bill, if the acceptor or drawer should not, and it gave Brown authority to carry his credit into market, and to pledge it to all the •world. On the faith of that pledge, Repold put his name on the bill, and thus incurred a liability, under which he has been obliged to pay one.half of the amount of it to the Bank’of Baltimore, where it was discounted; and it does not now lie in the mouth of Wood to say that he received nothing for it. Wood, by his endorsement, became liable fo.r the whole ampunt of the bill, which liability was not in any manner lessened or impaired by Repold’s endorsement, for the'bank might have stricken out Repold’s name, and recovered the amount from Wood. If then his liability was pot extinguished by Repold’-s endorsement, what has since extinguished |t? Surply not the payment by Repaid, who certainly is entitled to indemnity from some of the antecedent parties. Wood was as a security, that if the acceptor or drawer should not pay the money, he would, They have both failed to pay it, and he, as tlieir security, now stands responsible to Repold for so much as lie has paid. But it |s said, that as Repold was himself also a collateral security, the payment by him was only in discharge of his own pledge, and therefore gives him no cause of.action against flood; but that argument goes too far; for suppose Wood on Ids liability had paid the money to the bank, would it pot equally have been in discharge of his pledge? And yet it will hardly said, that he could not, in that case, have recovered in action on the bill against Brown, {if he was solvent,) — 135 — jh considévation of such subsequent: payment, though no money or other valuable consideration originally passed from him to Brown. And if Wood; on redeeming his pledge, could have sustained atl action on the bill against Brown, oii what principle is it, that Repold, having redeemed his, cannot sustain an action against Wood; who as to him, is the drawer of {he bill; and to whom Repaid stands in the samé relation as he to Brovin? And again, if a subsequent payment will give one immediate party á right ©f action on a bill of exchange against another, without'any money consideration having originally passed between them, how can it be that the same principle does nb’{ extend to all? Nor is there any hardship in the cáse; Wood ivas baund'for the whole of the money, and Repold; having paid á part of it, there is nothing unreasonable in his recovering it back again. Chase, Ch. J. As I do not concur in opinion wifh the court, respect and deference for théir judgment, and what is due to myself, impel me to communicate the principles and reasons on which my dissent is grounded, and [ have endeavoured to draw my opinion up in a plain and perspicuous manner, that my reasoning, and the principles and. positions of mercantile law, on which it is founded, may be clearly discerned and understood. A bill of exchange is assignable, and carries internal evidence of a consideration, in order to- facilitate and strengthen that commercial intercourse which is carried on through its medium. The endorsement on a bill of exchange carries the same internal evidence of a consideration, and creates a liability or obligation to pay the money to the fair holder of it, who. after due diligence used, and the precautionary steps have been taken, can resort to the drawer or any of the endorsers, for payment of the money. All the endorsers are equally liable on their respective ami several endorsements, and the holder can support an action against either, without regard to the order in which their names stand on the bill. Every endorsement is in the nature of a new bill. The considerationof a bill of exchange may be inquiredinto between the immediate parties to it, as between the drawer and payee, the drawer and acceptor, and the endorsee and his immediate endorser, — 136 — As a bill of exchange, and the endorsement oil it, carry with them internal or prima facie evidence of considera» tion, the onus probandi of the want of consideration is imposed on the defendant in both cases. In this case it is admitted no consideration passed from Repaid to Wood-, as a motive or inducement for Wood’s endorsement, except such as might arise in law from the previous endorsement of Wood. It is also stated, that Wood and Repaid endorsed the said bill, at the request of Jlquila Brown, to give credit to it, and to enable him to receive the money on it for his own use and benefit, and that at the time of said endorsement no communication had taken place between Wood and Repold respecting the said bill or endorsements, or respecting any endorsements to be made by them, or either of them. This is a suit brought by the endorsee of a bill of exchange, against his immediate endorsor, to recover the money paid by him to the Bank of Baltimore, and which he was compellable to pay. It cannot make any difference in this case, as to the question of consideration, whether the bill is considered as an accommodation bill, or as passing in the ordinary course of mercantile transactions; the essential properties and qualities appertaining to bills of exchange attach to each, and the usual forms and requisites must be complied with to establish a right of recovery against the drawer and endorsors. Every endorsor of a bill of exchange becomes a collateral security, and by his endorsement engages to pay the money, if the drawer or acceptor does not. The endorsement of a bill of exchange, without consideration, is a nudum pactum, as between the endorsor and his immediate endorsee, and no action can be supported on it by such endorsee. The endorsement of a bill of exchange creates a liability in favour of every fair or bona fide holder of it, and such liability results, by operation of law, from the nature of a bill of exchange, and therefore an inquiry into the consideration in such case is precluded. The inquiry into the consideration of a bill of exchange, or the endorsement, being confined to the immediate parties to it, cannot restrict the negotiability of the bill, nor can any evils Sow from it. — 137 — The payment of the money to the bank by Repaid, was certainly not any consideration moving from Repaid to Wood; nor could any liability from Wood to Repold be created by it. The consideration must exist at the time of the endorsement. The money was paid by Repold to the bank, in consequence of his own endorsement, and thereby he acquired a right of action or remedy against Brown, the drawer, but not against Wood, because Wood had received no consideration for his endorsement. Wood’s name being on the bill, although it might be an inducement with Repaid to become an endorsor, as the risk of his securityship might be diminished by it, was not, most assuredly, a request by Wood to Repold to become an endorsor, nor could it, in law, render him liable to Repold. To give validity to an endorsement, and make it operate as a transfer to the endorsee from his immediate endorsor, there must be an existing consideration, at the time of the endorsement, of money, or something of the value of money, moving from the endorsee to the endorsor. The priority of the endorsement, independent or exclusive of any other circumstance, cannot create any liability. If the endorsement ol itself created a considerado;;, it would be conclusive evidence in all cases, and the principle of law, which allows of an inquiry into the consideration between the immediate parties, would be infringed, and become a nullity. It is stated in the case, that no consideration was received by Wood from Repold, except such as might arise by operation of law from the previous endorsement. It has been contended by the counsel of the appellee, that as Wood endorsed the bill at the request of Brown, and delivered it to him for the purpose of enabling him to procure money on it, that Brown, by implication of law, became the agent of Wood, to use all necessary means to obtain the money, and that the request of Brown to Repold, to endorse the bill, was the request of Wood, and that the subsequent payment of the money by Repold to the Bank of Baltimore, coupled with the request, created a good and valid consideration. There can be no doubt but that, by these acts of endorsement and delivery, the credit of Wood was pledged to any person who would pay money on it, and that W'ood would have become liable to such persons but surely they — 138 — could not constitute Brown the agent of Wood; or impart any authority to Brown to request Repaid; or any other person,' to endorse the bilk The full extent of Wood’s engagement was to be responsible to any person who would advance the money on his credit. An agent cannot be iíiadé by operation of law; and more especially when he is to do an act, in that capacity, for his sole and exclusive benefit.' The case stated excludes all agency to make a request, because it states there was no consideration but what might arise by operation of law from the prior endorsement; and also states, that Repold endorsed the bill at, the request of Brown, and does not state that it was done at the request of Brown,' as the agent of Wood. Both thgjendorsors’ names were on the bill before the bill was negotiated; ánd the discount was obtained; and they both signed for the express purpose of giving credit to the bill, and enabling the drawer to get the money on it. No money , passed from Repold to Wood, nor any other consideration; they were both collateral securities for the drawer, that the drawee should pay the bill; on the failure ■of the drawee to pay the bill, and on the holders complying with the usual requisites, they became liable on their respective endorsements to pay the money to him. On the admission that Repold paid t)ie .money to the bank, he could have resorted to the drawer, bu.t Wood, his immediate endorsor, is not liable to pay the money to him, for want of consideration, and this' oil-ill e supposition that it was a bill which had been tr||f§ferfed by Wood to Repold in the ordinary course of itfeypantile business, without consideration. The payee of a bill of exchange cannot transfer it unless by a special endorsement, oran endorsement in blank, and delivery to the endorsee. In this case the endorsement by Wood was in blank, and the delivety was to Brown, and not to Repold; so that there was not any transfer from Wood to Repold. The bill came to the possession of Repold by delivery from Brown, not for the purpose of transferring it to him, but for the special purpose of his endorsing it to give it further or additional credit, and was, after endorsement by Repold, redelivered to Brown, for the sole purpose of enabling him to obtain money on it for his sole benefit. If a real bill, on what prin — 139 — ciple oflaw is it that the first endorser is legally responsible to the secopd without any transfer or consideration? Considering it as Sn accommodation bill, (of which there can be no doubt,) and that as such, it has all the qualities and properties incident to a bill of exchange negotiated in the accustomed mercantile manner, what is there in this case to prevent the want of consideration from being a bar-to the recovery? I think there is not any thing in this case to distinguish it from the common action of an endorsee against his immediate endorsor, who endorsed without consideration. As to the question of contribution on the ground of its being an accommodation bill: Wood and Repaid are col - lateral securities; their names • are on the same bill as endorsers, and they both signed prior to jh? obtaining the money by discount; they became securities for the drawer that the drawee would pay the money. It is not necessary that both securities should sign at the same time, one may sign ope day, and the other on another day; nor js it necessary they should have a previous conference as to their intention of becoming securities, in order to render them liable to contribution. The liability to contribute results, as a consequence of law, from their having entered iqto the same engagement for the same person, and to do the same thing; the one having paid the whole money, it is on a principle of justice that the other is compellable to contribute his proportion. The action for contribution cannot be Supported on the bill of exchange as such; but to entitle the parly to a recovery it must specially set forth all the circumstances of the case as the ground of the action. I can see nothing to distinguish this case from the common cases of securities on bonds and notes, the liability is similar, and the principle of justice js the same. Earle, J, The contending parlies in this suit are the. only endorsors of a bill of exchange, endorsed by each, at the request and for the accommodation of-the drawer, to enable him to raise money for his own use and benefit; and the action is brought by the last against the first endorsor, on the ground of his having paid the bill to a fair holder» The principal questions, arising out of the, case are: Whether there is a consideration between the parties sufficient to maintain the action? And — 140 — Whether a want of consideration is a defence that maybe used against the present appellee? As I agree with the chief judge on all the points he has touched in delivering his opinion, it seems unnecessary for me to give the result of my reflections upon any of them. I must, however, he allowed to make some short remarks on the two adjudged cases referred to in the argument, as decisive of the above questions. The cases alluded to are those of Seddons vs. Stratford, and Russell vs. Langstaffe, neither of which, it appears to me, can be assimilated'in circumstances or principles to the case before us, The'firstis the case of an endorsor, who endorsed for accommodation, and having paid the note to a fair holder rested his claim upon his payment; but his suit was not against his immediate endorsor, nor did the defendant endorse solely to accommodate and raise money for another. The note was passed for premiums of.insurance, and endorsed by Stratford, the payee, to Clode, who, as I understand the Reporter, endorsed to Seddons. The plain tiff'and defendant being remote parties in the negotiation of (he paper, between them the consideration could not be inquired into; and if they were immediate parties, the want of consideration was no defence for Stratford, because he had received value at the time of the endorsement — at all events he had not endorsed for accommodation. The situation of Wood in this transaction is far different. He endorsed immediately td Repaid, and received value from no person; and It is therefore open to him to inquire’into the subject of consideration, and show the total want of it.' Russell vs. Langstaffe resembles the case before us still less. The defendant had endorsed to raise money for another, and the plaintiff 'was his immediate endorsee, but Russell gave value for the note, and claiming merely as endorsee, founded his demand upon the money he had advanced to accommodate Galley. The money he advanced was the consideration he gave for the paper,' and Langstaffe was not at liberty to defend on the ground'fliat'hehad received no consideration when he endorsed, because he undertook-to pay the note if Galley did not, to any p'erson who would furnish the maker with the money.'' In no respect is the situation of- Repold to be compared to that of Russell. He is endorsor as-well as endorsee; and in his — 141 — action insists on an act done by him as emlorsor. He did not give a consideration for the bill, but only paid to the person who did give a consideration for it; and instead of advancing to accompodate, he as a debtor, paid to fulfil his own engagement. His case is not within the contemplation of the understanding of Wood tp pay to those who should advance for Brown, ant] it therefore seems to me, to be competent to Wood to show that there is no consideration between him and the appellee. Not being able to discover how the payment of Repaid can be viewed as a consideration, and.it appearing to me that the want of consideration may be shown between the parties to this action, it is my opinion that the court below erred m refusing to give to the jury the directions prayed for. I am for reversing the judgment. JUDGMENT ABÍJEME». Footnotes [(a)] J Folk and Gantt, 3. concurred.