Housum v. Rogers

The opinion of the court was delivered,

by Woodward, J.

:The plaintiff in error, defendant below, was an accommodation endorser of a promissory note discounted by the Bank of Pennsylvania, at its office of discount and deposit at Reading. Had he a right to pay the note in the depreciated paper of the Bank of Pennsylvania to an assignee who had paid full value for it to the bank ? The court below said no, and we think they answered correctly.

The analogies furnished by the cases cited in the argument are sufficient to justify the ruling of the court, but a reason which is decisive against the plaintiff in error may be drawn from the nature of the instrument he subscribed. It was a negotiable note. By his endorsement, the plaintiff in error meant to give it credit, into whose hands soever it should lawfully come for value. When he finds it in the hands of the trustees of other banks, who came forward in a vain endeavour to sustain the sinking fortunes of the Bank of Pennsylvania, and paid more money than the notes were worth which the Bank of Pennsylvania transferred to them, how can he refuse to perform his contract ? What equity has he to ask such trustees to receive the almost worthless notes of the broken bank in discharge of his liability ? He made a transferable instrument. He knew it might be transferred for value, and he was shown on the trial that it had been transferred bond fide and for full value. Then let him meet it as he meets other pecuniary obligations.

But whilst the transfer for value is not denied, it is insisted that it was out of the usual course of business. Doubtless the arrangement made through Mr. Welsh was unusual and extraordinary, but it was an honest transaction. It seemed to' be demanded by the exigencies of the occasion. It was designed to benefit the public, to protect the stockholders of the'Bank of Pennsylvania, and to maintain a sound paper currency. Of what moment, then, that the transfer of this note, influenced by such laudable motives, and paid for in solid cash, was not in the usual course of business ? It gave the transferees a legal and equitable title to the note, and they have a right to demand its redemption in the constitutional currency, or its equivalent.

It is argued that the Bank of Pennsylvania had no power under her charter to transfer the note. The plaintiff in error is not in position to raise that question. His contract was not enlarged or impaired by the transfer. He gave his note a transferable quality, and seeing that it was transferred with the consent of the holder, and for value before it fell due — and seeing, especially, that he joined the' drawers in renewing it after the transfer, and after the failure of the Bank of Pennsylvania was known to him, we do not consider him at liberty to raise the question of charter powers, which is suggested in the argument. As nobody interested in the assets of the bank is here to question the transfer, a debtor of the bank is not the proper party to do it.

The judgment is affirmed.