Bank of Newbury v. Rand

Eastman, J. The principles governing the decision of this ease must be regarded as settled by several adjudged cases in our own Reports. In Elliott v. Abbott, 12 N. H. 549, the note was made payable to the Ashuelot Bank, or order, and offered at the bank for discount. The b'ank was not discounting at the time, and the note was accordingly refused, but the cashier referred the principal on the note to the plaintiff, who discounted it; and it was held that the note might be declared [168] on as a note made payable to the bank, giving to the bank an indemnity for costs ; or that the holder might declare upon it as made payable to himself by the name of the bank. It was also held that if the holder could obtain a valid indorsement by the bank, he might maintain an action as indorsee. In Cross v. Rowe, 22 N. H. (2 Fost.) 77, it was held that a negotiable note, made payable to a bank, or order, but not discounted by the bank, might be indorsed to the holder of the note by a vote of the directors of the bank; and that where such note is made to raise money, the sureties upon it cannot object that, by so doing, the note has been turned from its legitimate purpose, so as to discharge them from their liability. The note in that case was made payable to the South Berwick Bank, or order, in sixty days from date, but was not discounted by the bank, nor was it indorsed to the plaintiff till two or three months after it fell due. The note was made to raise money to pay the plaintiff a debt due him from the principal. In Hunt v. Aldrich, 27 N. H. (7 Fost.) 31, a note was made payable to the Cheshire Bank, or order, to raise money. Thompson, the principal, applied to the bank, and failing to get the note discounted, went to the plaintiff, who let him have the money. Some time after the note fell due, Aldrich, the other signer, became aware that the plaintiff' had discounted the note for Thompson, but he did not assent to it, nor did he acknowledge any liability to the plaintiff. The note was never held by the bank, nor had it been indorsed to any one. The note was declared on as payable to the plaintiff by the name of the Cheshire Bank, and it was held that the action could be maintained. These decisions are sustained by authority. In Bank of Chenango v. Hyde, 4 Cow. 567, Hyde, Johnson and "Whitney, the defendants, made a note to be discounted at the [169] bank, and payable to the bank. Hyde took the note to the bank, bnt they declined to discount it. Hyde then applied to one Birdsall, who advanced the money, and the note was lodged at the bank, as agent of Birdsall, for his security. In a suit in the name of the bank, for the benefit of Birdsall, it was held that, as the note was made to raise money, it did not change the liability of any of the parties to it, that the money was advanced by Bkdsall instead of the bank. In Bank of Rutland v. Buck, 5 Wend. 66, a note was made to enable the principals to raise money for their own accommodation, and signed by Buck as surety. It was offered at the bank for discount, and declined. Subsequently, and prior to its becoming due, it was delivered by the principals to House and others, as collateral security for the payment of a judgment in their favor against the principals; and it was held that the surety was liable for the payment of the note. Savage, C. J., in delivering the opinion of the court, says : “ It was immaterial to the surety who advanced the money, provided the principals had the benefit of it. It did not alter his responsibility, nor was there any fraud in House & Co., in taking the note for a debt due to them. It passed to the credit of the principals.” And again : “ Had the principals obtained a discount at the bank, they might have paid the money to House & Co., and Buck’s liability would have been the same ; his situation is not changed, nor is there any fraud.” To the same effect ai’e Powell v. Waters, 17 Johns. 176; Marvin v. McCullum, 23 Johns. 288, and others that might be cited. The principle of the ease is this, that where a note is made to raise money, it does not change the liability of the parties to the note that the money is advanced by a third person instead of the payee; and the holder may maintain a suit upon the note, declaring upon it in the [170] name of the payee, giving him an indemnity for costs, or he may declare upon it, as made payable to himself by the name of the payee. The present case finds that the note in suit was made to raise money; that it was put into the hands of Goodall and Morse for that purpose, with the expectation, it is true, that it would be discounted by the bank, but with no restriction upon its being otherwise used. The object was to obtain money for the road. The bank declining to discount it, Goodall and Morse, to whom it was entrusted, made an arrangement with Hutchins and others to advance a larger sum, upon other security united with this. The note in this way was made to answer the end for which it was signed. It was payable at the bank, and there it would be found at maturity; and whether discounted by the bank or pledged with Hutchins for the money, it could make no difference with the defendants, so long as it answered the object of obtaining money for the use of the road. It could have been paid at the bank with equal convenience to the defendants, whether discounted by the bank or individuals. And the notes of the corporation, for the payment of which this note was pledged, have not been paid. The case cannot be distinguished in principle from those already decided in this State, and which we regard to be law; and according to the agreement of the parties there must be Judgment for the plaintiff.