Harrah v. Doherty ( 1896 )

Montgomery, J.

On November 10, 1894, one John T. McKeown made a note fpr $230, payable to the order of plaintiff. This note was indorsed by plaintiff for Mc-Keown’s accommodation, and was subsequently indorsed by defendant, also for the accommodation of the maker; both indorsements being made before the note was discounted. When the note matured, it was protested for nonpayment, and notice given to the indorsers. Plaintiff afterwards paid the note, and seeks to recover contribution from the defendant. The testimony offered by plaintiff tended to show that, before he indorsed the note, McKeown agreed to procure another indorser; but there was no evidence that this agreement was brought home to the notice of defendant, or that defendant in any way undertook to bind himself in other form than as the indorsement indicated. The plaintiff also offered testimony tending to show that after the note matured, the maker having in the meantime died, the defendant agreed with him,-the plaintiff, to pay one-half of the note, but ^that he subsequently failed to do so, and that plaintiff thereupon made the payment and brought this suit.

The circuit judge charged the jury as follows:

“The evidence is conclusive that subsequent to plaintiff’s indorsement, at a later time and date, when plaintiff was not present, but very likely at his request, McKeown, the maker, solicited and obtained the indorsement of defendant, Doherty, who also indorsed it as an accommodation to McKeown.. * * * Upon the note itself their names appear as successive indorsers. I think the law of Michigan, as it now stands, will hold them to be indorsers, and not cosureties. In my view of the case as it stands, the verbal statements and understandings of each of these parties, as testified to and had with McKeown when the indorsement was had, are of no importance. The note itself appeared to be drawn when the note was negotiated by McKeown at the bank. The defendant, therefore, would not, upon the note itself, or by reason of the conversation with McKeown, be in law held liable to contribute or refund in this suit one-half its amount.”

This view of the law is fully sustained by the decisions of this court. In McGurk v. Huggett, 56 Mich. 187, upon facts almost identical with those in the present case, the plaintiff sued as a last indorser, and was permitted to recover. It was said:

“Successive indorsers to commercial paper do not, in this State, by virtue of such relation alone, stand in the situation of sureties to each other, and are not liable to contribution.”

This is not only the rule in Michigan, but is the general rule elsewhere. In'l Daniel, Neg. Inst. § 703, the rule is correctly stated:

“When several persons indorse a bill or negotiable note in succession, the legal effect is to subject them as to each other in the order they indorse. The indorsement imports a several and successive, and not a joint, obligation, whether the indorsements be made for accommodation or for value received, unless there be an agreement aliunde different from that evidenced by the indorsements.”

While there is no doubt that it may be shown that the undertaking of the several indorsers is that of joint indorsers (see Phillips v. Preston, 5 How. 288; Farwell v. Ensign, 66 Mich. 600), yet in the present case there is no evidence bringing notice home to Doherty of any attempt by the plaintiff to limit his responsibility, as it was evidenced upon the face of the paper.

The circuit judge, however, after giving the rule as above stated, further charged that if defendant recognized his liability, and saw fit to obligate himself to share the loss of plaintiff, plaintiff would be entitled to recover one-half the amount paid by him on the note. Plaintiff’s counsel rely, to sustain this instruction, upon the cases of Phillips v. Preston and Farwell v. Ensign, above cited. These cases fall short of sustaining plaintiff’s contention. In Phillips v. Preston it appeared that there was an agreement between the plaintiff and defendant to become indorsers of certain notes, and divide between them any loss. As was said:

“ The whole claim proceeds on the collateral agreement, and there is no pretense of grounding the suit, as holder or indorsee, on any promise contained in. the notes, or in the indorsements on them. There is also a good consideration for this collateral agreement. It is the promise of the plaintiff beforehand to lose one-half if the defendant would become surety with, him and lose the other half, and the actual payment afterwards of the whole by the plaintiff.” *

The case of Farwell v. Ensign was similar. But in the present case there was no agreement whatever between the plaintiff and defendant until the liability of both became fixed. The relation of plaintiff to the note was in no way changed by the alleged promise of defendant. His obligation remained the same as before. There was no consideration upon which to base the alleged promise, and the court was in error in submitting the case to the jury upon this theory.

Plaintiff offered testimony to show that, after the note matured, Doherty went to the bank in which it was held, in response to a letter, and said, in a conversation with the president of the bank, that he was going over to see Harrah, and make arrangements so that he (Doherty) and Harrah would pay the note; and it is contended that this conversation amounts to an admission that he (Doherty) had signed the note under an agreement to become liable as cosurety. It is sufficient answer to this to say that the circuit judge did not submit the case to the jury on any such theory, and that, as the testimony was disputed, we are not able to say that the jury found that such a conversation occurred; but, further than this, we do not think the testimony of itself sufficient to establish that there was any agreement to share the responsibility. There was no other evidence, aside from this, of any agreement of that nature. Under his indorsement, Doherty was primarily liable to the bank, and the statement which he made is entirely consistent with his true relations to the paper.

The case of Shufelt v. Moore, 93 Mich. 564, it is urged, should be decisive of the present case. But that case is clearly "distinguishable. Coolidge was surety for Moore on a pre-existing debt. It was desired to get a further accommodation. Coolidge refused to indorse unless Moore should secure a cosurety. • The opinion, at page 568, states:

“Coolidge did not consent that his liability upon the judgment should stand, nor did he contemplate that he should be the sole surety upon the note in question. Shufelt did not become surety because the creditor refused to accept of Coolidge, but because Coolidge refused to take the entire responsibility. He did not become surety for Moore and Coolidge, but Coolidge and Shufelt became cosureties for Moore. In fact, Shufelt first signed the obligation of suretyship, which was individual in character.”

In that case there was an agreement antedating the indorsement, fixing the responsibility of the indorsers, and the case falls within the principle announced in Phillips v. Preston and Farwell v. Ensign. In the present case no such agreement was found by the jury, but a recovery was permitted on a naked promise, made after the liability was fixed, and upon no consideration passing to defendant.

The judgment will be reversed, and a new trial ordered.

The other Justices concurred.