Grubb v. Cottrell , 1869 Pa. LEXIS 207 ( 1869 )

The opinion of the court was delivered,

by Sharswood, J.

These are writs of error taken by the plaintiffs and defendants below respectively to a judgment rendered by the Court of Common Pleas of Lancaster county on a case stated in an action in which Haldeman, Cottrell & Eagle were plaintiffs, and Haldeman & Grubb defendants. The declaration contained two counts, one by the plaintiff as payees against the defendants as drawers of a bill of exchange, and the other the common count for money paid, laid out and expended.

It seems very clear, both upon principle and authority, that if the draft, which was the foundation of the suit, had never been discounted by the Bank of Middletown, no action could have been successfully maintained upon it by Haldeman, Cottrell & Eagle as payees against any of the previous parties. It was drawn and accepted without consideration, and although the burthen of proving such want of ■ consideration was thrown upon the drawers, yet when established it was unquestionably an available defence to them. Between the original parties the consideration of a bill or note can always be inquired into: Byles on Bills 115, note; 3 Kent 80. Want of consideration may be insisted on by the drawee? against the payee, by the payee against his endorsee, and by the acceptor against the drawer. Thus, for example, it is a good defence or bar to an action between these parties, that the bill is a mere accommodation bill, that the drawer is a mere accommodation drawer, the payee an accommodation endorser, and the acceptor an accommodation acceptor : Story on Bills, sect. 187. It being admitted that Haldeman and Grubb, the drawers, had received no consideration from the payees, the plaintiffs below, they had no title to recover on the bill.

When the bill was discounted by the Bank of Middletown it was for the use of the payees and endorsers Haldeman, Cottrell & Eagle, and though the money was received by Peter Haldeman alone it was for that firm, of which he was a member. To the bank — being boná fide holders — all the previous parties were responsible: yet any of those previous parties having been compelled to pay, could have had recourse to Haldeman, Cottrell & Eagle as the parties for whose accommodation they had respectively drawn and accepted the bill, and who were the only parties who had derived any benefit from it, they having negotiated and received the value of it. The bank, however,' proceeded against the endorsers for whom they had discounted the paper, and obliged them by due course of legal proceedings to repay what they had received. By this payment they were simply reinvested with their original title. It cannot be pretended that they succeeded to the superior position and privileges of the bank as bonfi fide holders for value without notice. Nor is the case varied so far as the title to sue on the bill is concerned, by the fact that Peter Haldeman, a member of the firm of Haldeman, Cottrell & Eagle, and also of the firm of Haldeman & Grubb, misappropriated the proceeds of the discount received by him as a member of the formér firm. The Act of April 14th 1838, Pamph. L. 457, has removed all legal difficulties in maintaining the suit, and we are bound as far as the legal title is concerned to consider the case “ as though the parties plaintiffs and defendants'were separate and distinct persons.”

But had the firm of Haldeman, Cottrell & Eagle any equity to call upon the firm of Haldeman & Grubb for the whole or any part of the amount repaid by them to the bank on the bill ? Had Edward B. Grubb been a party to the fraud or misappropriation a very different question would have been presented. But the case stated not only does not find this, but finds on the contrary that the bill was originally drawn by Peter Haldeman without his knowledge. It is not stated that any part of the proceeds of the discount of the bill was applied to the use or for the benefit of the firm of Haldeman & Grubb. On what principle then can the estate of Edward B. Grubb be made liable for any part of this money ? He was not legally responsible to the plaintifs below as one of the drawers. He never received himself, nor did the firm of which he was a member receive, any benefit or advantage from it. The- money when obtained from the bank by Peter Haldeman was in his hands, the money of the firm of Haldeman, Cottrell & Eagle, to which Edward B. Grubb was an entire stranger. Soeii mei soeius, mens soeius non est: says the Digest, L. 17, 47. The fraud committed by Peter Haldeman in the misappropriation of the money was a fraud upon the firm of Haldeman, Cottrell & Eagle. There was no privity between Edward B. Grubb and that firm — no joint liability voluntarily incurred by him with them, upon which any promise of indemnity or contribution could be implied. It is not a principle .of equity that, when a fraud is contrived and intended against several persons, which is successful only against one, that one can recover contribution from the others, intended to be defrauded. On the contrary it is well settled that if a loss must fall upon one of two innocent persons, both parties being free from blame, and justice being thus in equilibrio, the maxim melior est conditio defendentis rules the case: Broom’s Legal Maxims 639.

Judgment reversed, and now judgment on the case stated for the defendants. -