DocketNumber: No 1165
Citation Numbers: 17 Ohio Law. Abs. 273
Judges: Barnes, Hornbeck, Kunkle
Filed Date: 2/7/1934
Status: Precedential
Modified Date: 7/20/2022
The controverted Question can be best understood by a rather full narrative. in chronological order of the pertinent facts. On July 16, 1928, Dr. Urich purchased from the plaintiff an automobile for the consideration of $1405; a used car was traded in at an accepted value of $505 and the balance of the consideration amounting to $900 taken care of by a note payable in 90 days. The order contained the following memorandum “with renewal privileges.” At the .end of the 90 days Dr. Urich was not able to pay the note although he did pay the accrued interest. At the suggestion of the Motor Car Company a new arrangement was entered into through which Dr. Urich took up the old note and executed a chattel mortgage on the car and a new note for the sum of $1044. Under the terms of the note it was payable $87 per month for a period of. 12 months. It was understood that the Motor Company was intending to negotiate the note to the Colonial Finance Company and the charges would amount to the sum - of $144. The Motor Company agreed to pay the finance charges and they did so pay. The only amount to be paid by Dr. Urich was the $900 plus interest. During the year he only paid $15, which was credited upon interest. The note and mortgage was duly assigned to the Colonial Finance .Company immediately after its execution. As the monthly payments came due Dr. Urich was unable to pay them and so the Motor Company made the monthly payments. Dr. Urich claims. that this was in accordance with their oral agreement and that as he would receive the monthly statements from the Colonial Finance Company he would turn them over to the Motor Company for payment. Mr. Charles .Moorman of the Motor Car Company and the individual who had the negotiations with Dr. Urich testifies somewhat differently as to the circumstances under which his company-made the payments. He testifies that after the expiration of the first month they took care of that payment as an accommodation to Dr. Urich and thereafter continued to pay from month - to month when it would develop that the doctor was not in position to make payment. This procedure, continued until they had made 10.payments or a total .of $870. Sometime-in September 1930 Mr. Moorman of the Mlotop Car Company asked Dr-. Urich to give them a new note with personal security. This the doctor agreed to do and. the note was drawn up dated September 28, 1930 and handed to the doctor for execution by himself and his proposed security. The doctor says .that he held this note for something, like, two weeks more .or-less,before he procured the signa
“An antecedent or pre-existing debt constitutes value; and is deemed such whether .the instrument is payable on demand or at a future time.”
Analyzing the instant case we can come to no other conclusion than that there was a pre-existing debt and this was the $870 paid by the Motor Car Company to the Colonial Finance Company in 10 monthly installments. In addition to this was the agreement to pay the remaining two installments which was done and the chattel mortgage cancelled by the Colonial Finance Company. Thereby the phattel mortgage obligation was extinguished and the note involved in this case took the place of that obligation.
At the time this question was first presented to Dr. Urich only 10 payments or $870 of the amount had been paid on the chattel mortgage obligation. So far as the Colonial Finance Company was concerne'd
So when the 10 monthly installments had been paid the Motor Company held nothing as evidéncing the obligation of Dr. Urich to them. They did hold the unquestioned right of subrogation equal to the amount they had paid. The Colonial Finance Company’s lien had been reduced to the two unpaid notes of $87 each. The Motor Car Company never asserted their claim to subrogation. Neither did the title to the chattel mortgage note ever return to them either in whole or in part after they discounted to the Colonial Finance Company.
There can be no- dispute that the Motor Car Company after making the monthly payments held a claim against Dr. Urich for the respective amounts as paid. Under this situation Dr. Urich’s obligation to the Colonial Finance Company was being reduced month by month and his obligation to the Motor Company was being increased month by month. When Dr. Urich gave the note secured by Mr. Rookstool it took up the pre-existing debt represented by the monthly payments paid by the Motor Company to the Colonial Finance Company by virtue of their secondary obligation as indorser.
The question may be raised that the 10 monthly payments did not equal the balance due on the automobile and that therefore there would be a partial failure of want of consideration.
The answer is that there was the obligation to pay the remaining two installments by the Motor Company and under the undisputed evidence they did so pay and caused the chattel mortgage to be cancelled on December 16, 1930. Thereby the chattel mortgage indebtedness was extinguished.
The question as to whether or not the chattel mortgage note was actually returned to Dr. Urich becomes immaterial. The note as in all instances was only the evidence of the indebtedness. The uncontradicted evidence shows the chattel mortgage obligation to be extinguished. In this particular the instant case is to be distinguished from State Savings and Trust Company v Grady, 20 Oh Ap, 385 (1 Abs 503). In the cited' case and in the opinion, the court does refer to the fact that the creditor kept physical possession of the chattel mortgage, but this is only part of the sentence; the opinion further says that the bank peremptorily refused to give it up after the new obligation was given and thereafter made collections thereon. The mere retaining of physical possession alone would not be sufficient. It was the act of the bank in retaining it as an existing obligation that defeated their right to hold the second note. In any event, the cited case would not apply in the instant case for the reason that the plaintiff Motor Company did not possess or own the chattel mortgage obligation at the time of the execution of the new note.
The defendant Rookstool is shown to be an accommodation party in the execution of the note sued upon. This can in nowise alter the position as is stated in 88134 GC.
“LIABILITY OF ACCOMMODATION PARTY. An accommodation party is one who signed the instrument as maker, drawer, acceptor or indorser without receiving value therefor and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding the holder at the time of taking it knew him to be only an accommodation party.”
On the question of consideration reference is also made to §8129 GC.
“PRESUMPTION OF CONSIDERATION. Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration; and every person whose signature appears thereon to have become a party thereto for value.”
Also §8131 GC.
“WHAT CONSTITUTES HOLDER FOR VALUE. When value at any time has been given for the instrument, the holder is deemed a holder for value in respect to all parties who became such prior to that time.”
We find in the briefs of counsel much discussion on the burden of proof. We
The cases cited by counsel for defendant In error are all readily distinguishable from the instant case. In several of the cases there is evidence of fraud known to the creditor and we have no such a situation in the instant case. In other cases the note in question was purely voluntary and not in payment of an antecedent or pre-existing debt. It is unquestionably true that where the pre-existing obligation is retained as such a new note attempting to cover the same obligation would be without consideration.
It is our conclusion that the judgment below should have been for the plaintiff and against the defendant Rookstool. The plaintiff should be restored to his position before the suspension of judgment and permission to defendant Rookstool to file answer and defend.
Counsel for defendant in error urges anew a question passed upon by this court during its April term. In the error proceedings in this court Dr. Urich was not made a party. Counsel for Mr. Rookstool interposed a motion that the proceedings in error be dismissed for defect of parties. That motion was argued orally and thereafter this court overruled the motion holding that the judgment still remained in effect as against Dr. Urich, and that he was an unnecessary party to this proceeding. At the present time counsel cites an additional authority being Werk v Christy, 9 C.C., 439. We have very carefully examined this case and in our conclusion it is to be distinguished from the instant case in that the proceedings in error were instituted by the principal on the note and the surety was not made a party. Under such a situation it is impossible to conceive of a liability against the surety without it also existing against the principal. As stated in the cited case the surety would be interested in having his liability follow the principal, if the principal was relieved the surety should be relieved also.
The case of Neuberger et v Finney, Admr., 17 C.C., 215 first syllabus, we think is somewhat in point. At page 218 of opinion the court says:
“The judgment against the other parties did not affect him and it was not necessary that he be a party tp the proceedings in error brought to reverse the judgment against them.”
In the case of Graphaphone Company v Slawson, 109 Oh St, 473 it was held that joint obligors, were necessary parties in proceedings in error but a reading of pages 476 and 477 of the opinion will disclose that this holding was due to the peculiar facts of that case. On page 476 the court says:
“The two obligors not here parties were peculiarly interested in holding the defendant in error as contributor to any judgment which might be obtained and collected against them.”
This is not the situation in the instant case.
We also refer to the case of Lindeman v Euryrach, Sr., 21 Oh Ap, 314 (4 Abs 645), second syllabus:
“Liability in tort is not joint liability but is joint and several.”
The cited case is to be distinguished from the instant case in that it was a tort action but we desire particularly to call attention to the third syllabus and also that part of the opinion wherein it states that if there is not a right to contribution, motion to dismiss proceedings in error will not bo sustained because all parties were not brought in. This principle applies to the instant' case. The defendant, Dr. Urich can in nowise be financially interested whether or not Carl Rookstool would be held or released.
In the instant case it is the surety who was relieved from the judgment in the court below. The principal interposed no defense. It frequently happens that a surety is not liable where the principal is. While it is true that the liability is joint and several in the instant case they are not so connected as to make one dependent upon the other.
We think that counsel for defendant Rookstool is unduly concerned as to the' form of the entry in the court below wherein he thinks the action was dismissed not only as to the defendant Rookstool but also as to the defendant Dr. Urich. Regardles:: of the language of the entry it could not be given a wider import than the nature of the case would warrant. It would be giving a construction as not affecting the judgment against Dr. Urich since he had filed no answer and was making no complaint.