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11. Holder has a right of action against any of the prior parties. Whether the measure of recovery will be the amount of the bill or note, where the action is against an endorser who has received from the plaintiff less than the amount, or is by an endorser who has been subjected to costs.
The holder has his remedy against all the parties on a bill; he may sue the acceptor, or the drawer, or any endorser, till the debt is satisfied. Notwithstanding the acceptor or one endorser be charged in execution, an action may be maintained against another endorser. Haylings v. Mullhall, 2 W. Bl. 1236; Macdonald v. Bovington, 4 T. R. 825. The acceptor may have been discharged under what in England is termed the lords act; and yet if the bill be recovered from the drawer, he may, notwithstanding the acceptor has been thus discharged for the very debt, still sue him and charge him in execution. It is considered that by the drawer's payment a new cause of action arose, which may be enforced without regard to what passed in the former action. S. C.
In Pennsylvania, and perhaps most of the other states, it is common to sue the respective parties to a bill in different actions, though there can be but one satisfaction. A suit and a judgment against a person as one of the acceptors of a bill, will not prevent a suit against the drawers, though the drawers be a firm, of which the defendant in the former suit is a member. Allen v. Union Bank, 5 Whart. 424; Wise &c. v. Prowze, 9 Price 393.
If the holder sue the endorsers, it will be of no avail for them to shew that they served a written notice on the holder, requiring suit to be brought against the maker, and that he is in good circumstances and able to pay the money. If they wish recourse to be had to the maker or acceptor, they can take up the paper and sue for themselves. Beebe v. West Branch Bank, 7 W. & S. 375; Day v. Ridgway &c. 5 Harris 309; Skinn. 343.
The whole money due upon a bill may be paid by an endorser, without satisfying the bill as it regards acceptor or drawer. It is every day's practice for a dishonoured bill to be thrown back upon the first endorser: each endorser taking back from his immediate endorser what he has paid on account of the bill, and at the same time delivering up the bill to him; and the latter again throwing it back on his immediate endorser, till it at last arrives at the first endorser. 1 Bos. & Pul. 657, 8.
Generally an endorser should not delay taking up the paper until he is prosecuted to judgment and execution, and thereby subjected to costs. The courts of Pennsylvania have sometimes, on the ground of an implied promise, allowed an endorser to recover legal costs in addition to the money paid and interest. 5 Rawle 109. But in New York and Massachusetts it is considered that such costs accrued by his own default; that there is no implied promise on the part of the maker to save him harmless therefrom; and that he cannot resort to the maker for indemnity against them, unless there be a special promise to save him harmless. Simpson v. Griffin, 9 Johns. 131; Copp v. McDugall, 9 Mass. 6. In general, the holder of an endorsed note will be entitled to recover the whole amount on the face of the note, because the presumption of fact, in the absence of counter-proof, is that he gave the full value for it, or that he took it from some other holder for value, to collect the amount, receive a certain part to his own use, and account to the party from whom he took it for the surplus. Shaw, C. J., in Stoddard &c. v. Kimball, 6 Cush. 471.
But where the counter-proof shews that the bill is an accommodation one, and that known to the endorsee, and he pays but part of the amount, he can only recover the sum he has actually paid. Wisson v. Roberts, 1 Esp. 262; Brown v. Mott, 7 Johns. 361. In an action against the endorser of a note for $343 25, he was allowed to prove that it was purchased for $90 under the face of it. Braman v. Hess, 13 Johns. 52.
If the endorsee has taken the paper to secure a pre-existing debt of less amount, then he is a holder for value in his own right only to the amount of the debt due him, and will have judgment against the endorser only for that amount. Stoddard &c. v. Kimball, 4 Cush. 604; S. C. 6 Id. 470.
12. How far endorsee's right of action is affected by partpayment.
An endorsee's receiving part from an endorser, will not prevent his recovering the whole bill against the drawer. Johnson v. Kennion, 2 Wils. 262. He has no reason to complain, since he only pays what he owes. Walwyn v. St. Quintin, 1 Bos. & Pul. 658. And though the endorser may have a demand for what he paid, yet he could not sue for that part on the bill or note; for there cannot be two actions on one note. The plaintiff who recovers the whole will be a trustee for the endorser as to that part. Reid v. Furnival, 1 C. & M. 538.
But an endorsee has been prevented from recovering from the acceptor, where the drawer had paid part and the acceptor paid the residue to the plaintiff. Though he desired to be a trustee for the drawer, he was not allowed to recover again from the acceptor that which the drawer had paid. Bacon v. Searles, 1 H. Bl. 88.
It was indeed formerly laid down that if the endorsee accept but two pence from the acceptor, he can never after resort to the drawer, Tassell &c. v. Lewis, 1 Ld. Raym. 744; and that where the endorsee of a note received part of the maker, that it was a taking upon himself to give the whole credit to the drawer, and absolutely discharged the endorser. Kellock v. Robinson, 2 Str. 745. There ought certainly to be a deduction of so much as is received from the acceptor. Pierson v. Dunlop, Cowp. 574, 5. That much being satisfied, only the residue should be recovered. 1 Bos. & Pul. 658. But there must be a right of action to recover that residue from a drawer or endorser to whom due notice has been given of dishonour, unless something else has been done to discharge him besides the mere receipt of part of the money. James v. Badger &c. 1 Johns. Cas. 131; Gould &c. v. Robson &c. 8 East 576.
13. How right of action against an endorser or other surety may be defeated by discharging, or giving time to, prinWho is or is not regarded as principal; who as
The acceptor of a bill or the maker of a note being considered as principal debtor, and the other parties as sureties only, if the holder should discharge the acceptor or maker, without the consent of the endorser or his assignees, he will thereby discharge the endorser's estate. Ex parte Smith, 3 Brown's C. R. 1; Ex parte Wilson, 11 Ves. 410; Lynch v. Reynolds, 16 Johns. 41; Chambre, J. 3 Bos. & Pul. 366.
The holder has it not in his power to give time to a party on the bill first liable and afterwards proceed against another. The holder may give time to his immediate endorser; he may discharge him and proceed against a prior endorser to him or against the drawer or acceptor. Bayley, J. in Claridge v. Dalton, 4 M. & S. 233. But he cannot give time to or discharge the drawer or acceptor and afterwards proceed against that endorser; for if that endorser has to pay the money, he ought to have a right to resort immediately to those before him. English v. Darley, 3 Esp. 49, 2 Bos. & Pul. 61. When, however, the giving time to the party first liable is
with the assent of the party liable after him, the latter is precluded from afterwards objecting to it. Clark &c. v. Devlin, 3 Bos. & Pul. 363.
And the suing, or taking a security from, one of the parties liable shall not discharge another who is liable prior to him in point of order. The endorsee's discharging the drawer, cannot discharge the acceptor who is liable prior to him. This is so, notwithstanding the bill may have been accepted without any consideration. Smith v. Knox, 3 Esp. 46.
There is one case-a case at nisi prius-in which Lord Ellenborough seems to have thought that the bill being an accommodation bill within the knoweledge of all the parties, the acceptor could only be considered a surety for the drawer. Laxton v. Peat, 2 Camp. 185. On this ground he held that the drawer was not discharged by time given to the acceptor. Collott &c. v. Haigh, 3 Camp. 281. Very soon grave doubts were expressed whether Laxton v. Peat could be law. Except in this case, said Mansfield, C. J., it never was known that any thing passing between the other parties could discharge an acceptor. Raggett v. Armore, 4 Taunt. 730. He repeats that the case of Laxton v. Peat certainly is the first in which it was ever supposed that the acceptor of a bill was not the first person, and the last person, compellable to pay that bill to the holder of it, and that anything could discharge the acceptor except payment or a release. Fentum v. Pocock &c. 5 Taunt. 192, 1 Eng. Com. Law Rep. 72. In this case the court of common pleas differed from Lord Ellenborough. They could not consider the acceptor of an accommodation bill in the light of a surety for the payment by the drawer, and would not say that he was discharged by indulgence shewn to the drawer. Mansfield, C. J. adverted to the circumstance that here the person taking this bill did not, at the time when he took it, know that it was an accommodation bill, and if he did not then know it, it did not signify what came to his knowledge afterwards if he took the bill for a valuable consideration; but he then added: "It is better not to rest this case upon that foundation, for, as it appears to me, if the holder had known, in the clearest manner, at the time of his taking the bill, that it was merely an accommodation bill, it would make no manner of difference; for he who accepts a bill, whether for value or to serve a friend, makes himself in all events liable as acceptor, and nothing can discharge him but payment or release." The rule of Fentum v. Pocock, has been followed. Harrison v. Courtauld, 3 Barn. & Adol. 20, 23 Eng. Com. Law Rep. 25.
In the United States Larton v. Peat, is disapproved. The court of appeals of Maryland has pronounced it not law. Clopper's adm'r v. Union Bank, 7 Har. & J. 101. The supreme court of Pennsylvania has repeatedly approved Fentum v. Pocock, and applied the rule alike to an accommodation maker of a note and an accommodation acceptor of a bill. White v. Hopkins, 3 W. & S. 101.
The maker of a promissory note, like the acceptor of a bill, stands in the light of a principal; the endorsers of a surety. Mallet v. Thompson, 5 Esp. 178; Carstairs &c. v. Rolleston
c. 5 Taunt. 551, 1 Eng. Com. Law Rep. 184; Price v. Edmunds, 10 Barn. & Cress. 578, 21 Eng. Com. Law Rep. 135; Nichols &c. v. Norris, 3 Barn. & Adol. 41, 23 Eng. Com. Law Rep. 28; Perfect &c. v. Musgrave, 6 Price 111; Smith v. James, 2 El. & Black. 50, note, 75 Eng. Com. Law Rep. Time given the endorser will not discharge the maker. Bank of Montgomery Co. v. Walker, 9 S. & R. 239.
In Pennsylvania and Virginia, it matters not that the holders, when they discounted the note, knew it was for the accommodation of the endorser. The man who draws a note, for the purpose of negotiation, must stand to it. Having placed himself in the situation of principal, he shall not afterwards escape by alleging that he was but a surety. S. C., 12 S. & R. 382; Lewis v. Hanchman, 2 Barr 416; Hansbrough v. Gray, 3 Grat. 355.
In England a similar doctrine prevails. "The bona fide holder of a bill or note," says Lord Campbell, "cannot be prejudiced in the rights which he prima facie has, according to the terms of the instrument, by knowledge subsequently communicated to him after he has become the holder of it, or even by knowledge which he has at the time when he takes it, if there is no evidence of a special agreement at the time. when he takes it, to affect the rights and liabilities of the parties. Manley v. Boycot, 2 El. & Black. 56, 75 Eng. Com. Law Rep. 56, 18 Eng. Law & Eq. 51.
14. Effect of want of consideration as between the immediate parties. Rule generally as to the holder. Under what circumstances he may be affected.
From what was said on a former page (p. 141, 2), it will be understood that in an action by the payee against the maker of a promissory note, he may shew that it was given upon a consideration which has failed. Jefferies v. Austin, 1 Str. 674; 8 Man. Gr. & Scott 870. As between the immediate parties to a bill or negotiable note, and an immediate VOL. II.-16