Russ v. Sadler , 197 Pa. 51 ( 1900 )

Opinion by

Mb. Justice Mestrezat,

By his promissory note of January 24, 1898, W. F. Sadler promised to pay in thirty days thereafter to the order of himself and the other defendants in this action $5,000 at the Commonwealth Guarantee, Trust & Safe Deposit Company of Harrisburg, Pa. The note was indorsed by the payees and by Patrick Russ, the plaintiff, and discounted by the Farmers’ Bank of Carlisle, Pa. It was not paid at maturity and was duly protested and notice thereof given to the drawer and indorsers. On April 24, 1899, Patrick Russ paid the Farmers’ Bank of Carlisle, the holder of the note, $5,353.81, the debt, interest and protest fees due thereon, and the note was delivered to him. He then instituted this suit against the defendants, as prior indorsers, to recover the amount he was obliged to pay on the note.

The affidavit of defense denies the right of the plaintiff to recover, and avers as a defense that (1) the money secured on the note was for the use, and is an indebtedness of, the Greens-burg, Jeannette and Pittsburg Street Railway Company, and was applied to the construction and equipment of said railwajr, and plaintiff knew the fact When he became an indorser; (2) the plaintiff was a director and officer of said railway company when the note was made, and was a member of a syndicate to promote and build said railway, and is indebted to said railway company in a sum much larger than the amount of the note; and (3) the money for which the note was given was borrowed for the purpose of promoting the interests of said railway company and paying its obligations, which was well known to the plaintiff, “ who joined with the defendants in this case in raising the money for that purpose.”

The plaintiff took a rule on the defendants to show cause why judgment should not be entered against them for want of a sufficient affidavit of defense, and, the rule having been made absolute, the defendants took this appeal.

The plaintiff, in his statement, avers that he was an accommodation indorser, that the note was duly protested and that, on demand, he paid the amount of the note to the holder. Neither of these averments is distinctly and specifically denied in the affidavit of defense, and, hence, the plaintiff is entitled to recover what he paid the holder of the note unless the allegations in the affidavit are sufficient to prevent it.

This is an action by an indorsee against prior indorsers. The plaintiff’s right to recover, therefore, on the note is clear unless there is something dehors the note that will avail the defendants. The defendants allege that the proceeds of the note were applied, with the plaintiff’s knowledge, to -the construction and equipment of the Greensburg, Jeannette & Pittsburg Street Railway in which the plaintiff was interested. The use to which the money was applied, however, is of itself wholly immaterial as affecting the liability of defendants to the plaintiff on the note in suit and is no defense to this action: Youngs v. Ball, 9 Watts, 139. It is not averred in the affidavit of defense that the plaintiff agreed, or intended by his indorsement, to become equally responsible with the defendants for the payment of the note to the holder. Without an allegation to that effect the presumption is, that he indorsed the note on the credit of the maker and prior indorsers, which would render them liable to him in the event he was compelled to pay the note. “ In the case of an accommodation note,” says Mr. Justice Kennedy in Youngs v. Ball, supra, “the payee, who is the first indorser, is considered as having lent his name to the maker on the credit of the latter alone'; the second indorser as having lent his name upon the credit of the maker and the prior indorser; and so every subsequent indorser, as having lent his name upon the credit of those who had become parties to the note before him. Consequently, after the maker has passed the note away and raised the money upon it, a subsequent indorser, who pays it to the holder at maturity, when called on for that purpose, after it has been presented to the maker, and payment thereof demanded of him, without obtaining it, becomes entitled to maintain an action thereon against all the parties to it, who have been duly notified by him of the presentment to, and nonpayment by the maker, whose names are to it, and who became parties thereto previously to himself.”

The contention of the learned counsel for the defendants is that the plaintiff and defendants were sureties for the repayment of the money secured on the note, and that their liability was not that of an indorser. They further contend that the money “ was a loan made by them (the indoi’sers) to be used by the street railway company in the welfare of which they were all interested, and all were equally bound to contribute to pay the note, if the indebtedness creatéd thereby was not discharged by the corporation.” If these allegations are facts, they should have been set up in the affidavit of defense. As they are not averred in the affidavit we, of course, cannot presume their existence or consider them, and it is idle to base an argument on them to support the sufficiency of the affidavit filed by the defendants. Slaymaker v. Gundacker’s Exrs., 10 S. & 11. 75, relied on by defendants, does not sustain their contention. In that case, the statement averred that the maker and indorsers of the note had mutually agreed to borrow the money and that each would pay his equal proportion of the note if the company failed to discharge the indebtedness. Here we have no such averment in the affidavit of defense and hence we cannot assume that the parties to this action entered into such an agreement, or contemplated an equal liability among themselves.

The allegation in the affidavit that the plaintiff “joined with the defendants in raising the money for the purpose ” of promoting the interests of the street railway company and paying its obligations is not sufficient to impose on plaintiff a primary liability for the repayment of the whole or a part of the note sued on. Concede it to be true as averred in the affidavit that he did join the defendants in securing the money for the purpose stated, it does not necessarily follow that he thereby consented to assume a primary responsibility for the money obtained on the note. His contract, as shown by his indorsement, is secondary, and without a distinct and positive averment in the affidavit to the contrary, we cannot infer that he intended to assume any other or different responsibility.

The contention that the defendants have the right to interpose as a defense in this action an indebtedness due the street railway company from the plaintiff has no merit whatever. The street railway company is not the defendant here and hence its claim against the plaintiff cannot be appropriated by the defendants and used as a set-off in this action. If the Street Railway Company should sue Patrick Russ for its claim it would be no defense for Russ to allege and prove that it had been used as a set-off in this action. But even if the alleged indebtedness were a proper subject of set-off here, the averment in the affidavit is insufficient in not alleging that the indebtedness was due at the time this suit was brought: Roig v. Tim, 103 Pa. 115.

The indorsement was joint and not separate and hence the action was properly brought against the defendants jointly: Foster v. Collner, 107 Pa. 305.

The affidavit of defense is clearly insufficient and the learned court below was right in entering judgment against the defendants.

The judgment is affirmed.

Mitchell, J., dissents.