Harris v. King

The plaintiffs had judgment against the defendants in the court below, from which judgment the defendants appeal upon the judgment-roll alone.

The record shows that on or about July 1, 1926, the appellants and respondents executed and delivered their promissory note for $900 to the Bank of America, at its office in Grass Valley, California. On or about the seventeenth day of January, 1930, the respondents herein paid to said bank the sum of $939.69, being the balance of principal and -interest then due and unpaid on said note. The bank, upon ■receiving payment, indorsed upon the note the words “without recourse”, and delivered the note thus indorsed to the respondents. Thereafter, the respondents brought this action, and judgment was entered in their favor as above stated.

The contention of the appellants is that this action, based upon the promissory note referred to, cannot be maintained.

“Plaintiffs complain of defendants and for cause of action allege:

“I.

“That on the 1st day of July, 1926, plaintiffs and defendants made and delivered to Bank of America of California, a corporation, their promissory note, of which the following is a copy:

“ ‘$900.00 Grass Valley, California,

“ ‘July 1st, 1926.

“ ‘In U. S. Gold Coin.

“ ‘Six months after date (without grace), for value received in United States Gold Coin, we or either of us promise to pay to the order of the Bank of America of California, successor to Nevada County Bank, at its office in Grass Valley, California, the sum of Nine Hundred Dollars ■- with interest thereon at the rate of seven (7) per centum, per annum from date until paid, principal and interest payable in United States Gold Coin only; said interest payable quarterly, and if not paid as it becomes due, to be added to the principal and become a part thereof, and to bear interest at the same rate. And in cáse said interest, or any part thereof, is not paid within ten days after same shall become due, the whole of said principal sum shall forthwith become due and payable at the election of the holder of this note.

“ ‘ (Signed) Boy J. King,

“ ‘Bessie L. H. King,

“ ‘T. M. Harris,

“ ‘D. E. Matteson.

“ ‘No. 7208 Due -.

“‘U. C.’

“II.

“That plaintiffs received no compensation therefor, but the same was an accommodation note on the part of said plaintiffs, given to said defendants at their special instance and request, and upon their promise that they would pay it at maturity.

“III.

“That as plaintiffs are informed and believe, defendants thereupon, and before its maturity, negotiated said not for value, and transferred and delivered the same to the payee therein named.

“IV.

“That said defendants did not pay said note at maturity; and that said plaintiffs were therefore compelled to, and did, on the 17th day of January, 1930, pay the sum of $939.69 to the payee named in said note, as the balance of principal and interest then owing and unpaid on said note-; and received from said payee its endorsement and assignment of said note. That said payee then and there endorsed the said promissory note—‘without recourse’, and delivered the same to plaintiffs.

“V.

“That plaintiffs are the present owners and holders of said promissory note.

“VI.

“That no part of the principal and interest upon said promissory note has been paid except $100.00 on the principal thereof, and interest on said note up to the 2nd day of August, 1927; and that the sum of $939.69, with interest thereon from the 17th day of January, 1930, at the rate of 7% per annum, remains wholly owing and unpaid thereon.

“"Wherefore, plaintiffs pray judgment against said defendants for the said sum of $939.69, in lawful money of the United States, with interest thereon at the rate of 7% per annum from the 17th day of January, 1930; and for such other and further relief as is meet in the premises.

•“Nilón, Hennessy & Kelly,

“Attorneys for Plaintiffs,

■ “Grass Valley, California.”

The findings and conclusions of the court include twenty-two paragraphs, but may be summarized aS follows: That the plaintiffs and defendants made and delivered to the bank the promissory note set out in the complaint; that plaintiffs received no compensation therefor, but the same was an accommodation note on the part of said plaintiffs; that the defendants negotiated the note before maturity; that the defendants did not pay said note at maturity, and plaintiffs were compelled to, and did, on the seventeenth day

The defense to the action was that the promissory note referred to in plaintiffs’ complaint was executed and delivered for the accommodation of a certain mining corporation known as the “Grass Valley Gold Mines Company”, of which corporation the plaintiffs and the defendant Roy J. King were alleged to be stockholders.

Under the terms of the promissory note set out in the plaintiffs’ complaint all of the defendants whose names appeared thereon were primarily liable to the payee therein ■named. Section 3266a of the Civil Code reads: “The person primarily liable on an instrument is the person who, by the terms of an instrument, is absolutely required to pay the same.” By the provisions of sections 2847 and 2848 of ■the Civil Code a surety satisfying the principal obligation is entitled to enforce every remedy which the creditor then ■had against the principal, to the extent of reimbursing what the surety has been compelled to expend. In the case at .bar, however, the plaintiffs occupy the position of comakers of the promissory note, and were equally liable to the bank for payment thereof, and immediately upon making payment, the promissory note was discharged and is no longer ■a living obligation on the part of the makers thereof. Whatever right of action there may exist between the parties themselves, either as to reimbursement or contribution, no such action can be had upon the promissory note. Section 1473 of the Civil Code is definite as to the extinguishment of the primary obligation. It reads: “Full performance of an obligation by the party whose duty it is to perform it, or by any other person on his behalf and with .his assent, if accepted by the creditor, extinguishes it.” Section 1474 of the Civil Code reads: “Performance of an obligation by one of several persons who are jointly liable under it, extinguishes the liability of all.” This question received full consideration in the case of Yule v. Bishop, 133 Cal. 574 [ 62 Pac. 68 , 65 Pac. 1094 ]. We quote from the opinion in that case as follows: ‘ ‘ That there might be no room for controversy, with the enactment of the code the question was laid at rest in this state by the declaration that the full performance of the obligation by any person on

In Waldron v. Lyon, 92 Cal. App. 400 , 268 Pac. 457 [ 269 Pac. 450 ], the questions presented upon this appeal were likewise considered. In that case the action was in the nature of assumpsit for money paid for the uses and purposes of the defendant, and was therefore sustainable. The court said: “Appellant urges three points: First, that no action can be maintained on the first two promissory notes under the theory of the stockholders’ liability, for the reason that the principal obligation was satisfied by the payment of the notes and only an action in assumpsit would lie against the corporation, for reimbursement or for a contribution between indorsers, and cites us to sections 2847 and 2848 of the Civil Code; that no action was filed against the corporation to seek reimbursement in assumpsit, nor was the corporation made a party to the suit. In answer to this objection it may be said that plaintiff’s action is not on the notes, but on a new and original obligation which arose

Again, in Lavers v. Jones, 96 Cal. App. 248 [ 274 Pac. 78 ], the distinction is pointed out as to what actions can be maintained and what actions cannot be maintained. The court there said: “As to the first cause of action, appellant’s contention that as the note was paid by Brown, the obligation was discharged and consequently that no recovery on the note could be had by Brown or his assignee as against the comaker of the note, finds support in the cases of Yule v. Bishop, 133 Cal. 574 [ 62 Pac. 68 , 65 Pac. 1094 ], and McDonough v. Nowlin, 17 Cal. App. 45 [ 118 Pac. 463 ], However, in each of those authorities a pleading such as is stated by plaintiff in the second cause of action is directly authorized and recognized as proper in a case of the nature of that here under consideration.”

There are no allegations in the complaint that any money has been paid by the plaintiffs for the uses and purposes of the defendants, nor are there any findings to the effect that any money has been paid by the plaintiffs for the uses and purposes of the defendants, or of either of them. The pleading does not show that any recovery is sought by reason of having paid any money for the uses, purposes or

It follows, necessarily, from what we have said, and the authorities cited, that the complaint does not state a cause of action. Under such circumstances it cannot be held that section 4% of article VI of the Constitution applies. . That section is not intended to create a cause of action upon an instrument where none exists; that section only can be resorted to, to support a judgment, where a cause of action that exists has been erroneously pleaded.

The judgment is reversed.

Thompson (R. L.), J., concurred.

A petition for a rehearing of this cause was denied by the District Court of Appeal on May 9, 1931, and a petition by respondents to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on June 8, 1931.