Peck v. Burwell

Headnote

Action by the payee against the maker of a note — if the note was given for the accommodation of the payee the maker may pi’ove a total want of consideration as a defense.

Appeal from a judgment entered upon the verdict of a jury at the Warren County Circuit.

This action was instituted by the plaintiffs, as the payees, against the defendant, as the maker of a promissory note, of which the following is a copy:

“ $375. ■ “ Schroon Lake, February 11, 1887.

- “ Four months after date I promise to pay to the order of D. Peek & Co., three hundred and seventy-five dollars, at the First National Bank Grlens Falls. Yalue received.

“C. W. BURWELL,

The defense interposed at the trial was, in substance, that the note was executed by the defendant under an agreement between the parties, maker and payees, that the maker should sign the note as

agent fox1 tbe accommodation of tbe payees, but tbat tbe maker should not become personally liable thereupon. It appeared, on tbe trial, tbat when tbe note was given tbe plaintiffs, represented by Walter 1VI. Peck, who was one of tbe partners of tbe firm of D. Peck & Co., bad applied to tbe defendant to obtain payment of a promissory note which they held against tbe estate of' John D. Harwell, deceased, who died intestate, and as to whose estate no letters of administration bad been granted. Such note was not, however, surrendered. Tbe defendant is tbe son of tbe intestate. Two witnesses only were examined upon tbe trial and each gave bis version of the transaction.

Tbe coui’t, after stating tbe testimony given by tnese witnesses, said: “ Tbe evidence was so far contradictory as to present a fair question for tbe corisideration of tbe jury, and the court committed no error in thus submitting tbe same, provided tbe defendant’s tkeoiy in regard to tbe legal effect of such agreement, if established, can be regarded sound. This action being between tbe maker and payees of tbe note, tbe consideration became a legitimate subject of inquiry. Tbe note, according to tbe defendant’s theory, which be claims to have supported by tbe evidence and confirmed by tbe verdict of tbe jury, was given purely for tbe accommodation of tlie plaintiffs. Assuming such to be tbe case, we are convinced tbat tbe defense was available to tbe defendant, because, if true, as between tbe immediate pai’ties to tbe note, there was no consideration therefor. Tbe parties could make such an agreement, and, if they did so, certainly there would be no justice in bolding tbe defendant liable for tbe debt. Tbe evidence discloses tbat the note, which was given by tbe father of tbe defendant, has not been surrendered, but continues a claim against bis estate, to be collected therefrom provided there shall be sufficient for that purpose. It does not appear tbat tbe plaintiffs pai’ted with anything of value which could constitute a consideration for tbe defendant’s signature to tbe note in qxxestion. It is not shown that tbe defendant has received or is likely to receive any amount from tbe estate of bis father. Keeping in mind the facts tbat the agreement relied upon by tbe defendant was entered into at tbe time tbe xxote was executed, and between tbe defendant as maker and tbe plaintiffs as payees, and for tbe accommodation of tbe latter, and tbat the rights of no third party who has advanced

money upon the strength of the defendant’s signature is involved in this controversy, and that the word agent was appended to the defendant’s signature, we conclude that the defense insisted upon at the trial by the defendant was admissible and available to him for the purpose of showing that there was no consideration for the note in question as between the parties to this action. {Murphy v. Keyes, 39 Sup. Ct. R. [8 J. & S.], 18.) Story on Bills of Exchange (§ 187) the author says: ‘The general rule is that the total or partial want, or failure of consideration, or the illegality of consideration, may be insisted upon as a defense or a bar between any of the immediate parties to a contract. Thus, for example, it is a good defense or bar to an action between those parties that the bill is a mere accommodation bill.’ (Story on Promissory Notes, § 190; Chitty on Bills, pp. 68, 69 ; Bowe v. Schutt, 2 Den., 621 .) The court remarks: ‘ An accommodation note is invalid in the hands of a person for whose benefit it was made.’ ( Wheeler v. Billings, 38 N. Y., 263 ; Glerm v. Burrows, 37 Hun, 602 , 607.) ■ If this action were between the defendant and ■a third party, who had parted with value for the note, the case would be widely different. {First National Bcmlc of Whitehall v. Tisdale, 18 Hun, 151 .) Justice Learned remarks: ‘ The meaning of the words “ accommodation paper ” is well known. Where ■such paper is made and lent, the maker can defend against the borrower on the ground of want of consideration.’ In that case, however, the note had been transferred, and the action was brought by a holder who had parted with value upon the faith of the signature, and it was held that, as between such parties, the defense of want of consideration was not available. {Hcvrger v. Worrall, 69 N. Y., 370 ; The Mechanics and Traders' N B. v. Grow, 60 id., 85; Grcmt v. Fllicott, 7 Wend., 227 .) The cases referred to recognize the distinction before stated. The purpose for which the evidence was offered by the defendant, and received by the court, was to show the circumstances under which the note was executed by the defendant and accepted by the plaintiffs, with the view to ' establish as a fact that, as between these parties, there was no consideration for the note, for the reason that the defendant executed the same, at the request of the plaintiffs, and for their accommoda

tion simply. In a controversy between tbe original parties to a note it is competent to show for what purpose the same was executed, and to inquire into the consideration and to show the relation which a party bore to the contract, whether as principal or surety. (Mitten v. McKenzie, 95 N. Y., 575 ; Hubba/rd v. Gurney, 64 id., 458.) The judge, in. his charge, submitted to the jury the real question involved, and clearly and fairly presented the same for their consideration as a question of fact for them to determine. The evidence given at the trial was such that the verdict should be sustained. {Cheney v. N. Y. C. cmd H. R. R. R. Co., 16' Hun, 415.)

We have examined the exceptions to the charge of the judge,, and to his refusals to charge, as requested by the plaintiffs, and. discover no material error which calls for a reversal of the judgment,, and the same must be affirmed, with costs.”