Majority
p. 440FIRST NATIONAL BANK OF PORTLAND, MAINE, Plaintiff and Respondent, v. GARRET L. SCHUYLER, et al., Defendants and Appellants. Before Monell, Ch. J., Freedman and Sedgwick, JJ„ Decided June 7, 1875.
Headnote
I. BILL OF EXCHANGE.1. Acceptance, accommodation after discount of.
1. Liability of acceptor.
a. The acceptor is liable to the party who, in good faith and for value, discounted the bill before its acceptance.
1. Knowledge. This, although such party knew it was t* be accepted for the accommodation of the drawer.
3. Evidence fob plaintiff in an action on such acceptance.
1. Previous transactions.—Credit.
Evidence of previous similar transactions between the parties, that plaintiff in discounting the bill relied chiefly on its being accepted by the drawee, and that the plaintiff at the time of discount had no knowledge that it was not drawn in the usual course of business, is proper, if not necessary, as tending to show plaintiff to be a bona fide holder for value.
H. EVIDENCE.
1. Questions.
a. What not objectionable, as calling for a conclusion of law, or for evidence beyond the Jmowledge of witness.
- Appeal from a judgment.
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The action was to recover against the defendants as the acceptors of a bill of exchange.
The defendants alleged that their acceptance was without consideration and for the accommodation of the drawer; and that the plaintiffs received it with knowledge that it was an accommodation acceptance, and entirely upon the credit of the drawers ; and that the plaintiffs paid no consideration therefor, and are not the lawful or bona fide owners.
The bill of exchange was drawn at Portland, by R. Holyoke, upon the defendants in Mew YorJc. Before acceptance it was discounted for Holyoke by the plaintiffs, and by them sent to New York for acceptance, and was there accepted by the defendants. There had been many previous similar transactions between Holyoke and the bank, in which they discounted the drafts before acceptance; all of which had been accepted and paid by the defendants.
The plaintiff’s president was examined upon a commission, and the defendants objected severally to the following interrogatories:
“ State whether the plaintiff, by any or either of its officers or agents, or either of them, before discounting said draft, had any knowledge or information that the same was not drawn in the regular course, or that the same was accepted by the defendants without consideration, or for the accommodation of the drawer thereof; state what, if any, knowledge or information the plaintiff’s officers or agents had in respect thereto.”
“State whether the plaintiff had previously discounted the drafts of R. Holyoke, accepted or endorsed by these defendants; if yea, when, to what amount, and whether the same was paid by the defendants at maturity.”
“Upon what credit did the plaintiff chiefly rely in discounting the drafts in suit, and why ? ”
The first interrogatory was objected to on the
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grounds: 1st, that it is leading; 2d, that it calls for a conclusion of law ; 3d, that it calls for evidence necessarily beyond the knowledge of the witness.
The seventh interrogatory was objected to as calling for immaterial evidence.
The eight interrogatory was objected to on the grounds: 1st, that it calls for a conclusion of law ; 2d, that it calls for something beyond the knowledge of the witness.
The objections were overruled, and the defendants excepted.
In answer to the interrogatories the witness stated, that the plaintiffs had no knowledge or information, that the bill was not drawn in the usual or regular course ; or that the acceptance was without consideration or for the accommodation of the drawer. That the bank had previously discounted drafts drawn in the same manner, which were subsequently accepted and paid by the defendants; and that in discounting the bill, the plaintiffs relied chiefly upon the defendants, as acceptors, for the reason that all the previous bills had been paid by them.
One of the defendants was examined as a witness. Evidence of the time of acceptance, and that it was after the discount, that the acceptance was without consideration and for the accommodation of the drawers, was objected to by the plaintiffs, and excluded by the court
The defendants excepted.
The court directed a verdict for the plaintiffs. The defendants excepted and appealed from the judgment.
F. G. Smedley, attorney and of counsel for appellants, on the points noticed by the court in its opinion, urged:
I. The interrogatories objected to were objectionable on each of the grounds urged by defend
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ants, and should have been disallowed. The last one was especially objectionable. The question as to what credit is relied on in a transaction is always incompetent (See Merritt v. Briggs, 11 Alb. Law J., 273 , in commission of appeals). In the case at bar it is a conclusion of law that plaintiff relied on credit of B. Holyoke (Farmers’ & Mechanics’ Bank v. Empire Stone Dressing Co., 5 Bosw. 275 , on page 290).
II. The court below erred in excluding the evidence offered by defendants as to want of consideration for the acceptance. The plaintiff was not, as against the defendants, a bona fide holder for value of the bill in suit. The plaintiff was the party with whom the contract of acceptance was made, and it being made without consideration, the plaintiff can not recover from defendants (Farmers’ & Mechanics’ Bank v. E. Stone Dressing Co., supra). The evidence offered, if uncontradicted, would have entitled defendants to a dismissal of the complaint under the authority last cited.
Chase, Bestow & Holt, attorneys, and Philo Chase, of counsel for respondent, urged on the points noticed by the court in the opinion:
I. The court properly excluded the testimony offered by the defendants. It was entirely immaterial whether the draft was accepted before or after being discounted by the plaintiff, or what consideration there was for the acceptance, or whether the draft was accepted for accommodation, and without consideration. The defendants, in their answer, admit their acceptance of the draft. The defendants proved by Grould, the cashier of the bank, that Holyoke, the drawer, applied to the bank to discount the draft; that the application was referred to the board: of directors ; that the bank then discounted the draft, and paid Holyoke the full amount thereof, less the bank discount, and placed the amouht paid to his credit in his account with the bank, and which he subse
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quently drew out. Here was proof given by the defendants themselves that the plaintiff discounted the draft in the regular course of business, and paid full consideration therefor. The plaintiff took the draft upon the assurance of Holyoke that he had drawn the draft against lumber shipped by him to the defendants. The plaintiff discounted the draft in anticipation of its acceptance by the defendants. They had accepted a,nd paid all the previous drafts drawn against them by Holyoke, discounted by the plaintiff, under similar circumstances. They accepted the draft in question. The plaintiff had every reason to believe they would pay this as they had paid the others.
II. It was no defense to this action that the defendants were accommodation acceptors (Grant v. Ellicott, 7 Wend. 227 ; Grandin v. Le Roy, 2 Paige, 509; Redfield & Bigelow on Notes and Bills, 216; Edwards on Bills, 430; Chitty on Bills, 81). It is an elementary principle that an accommodation acceptor is liable to a bona fide holder for value, though the latter have notice of the accommodation (Story on Bills, §§ 191-253; Ch itty on Bills, 305). The evidence offered was immaterial, and properly excluded by the court.
III. It was no defense to this action if the defendants did accept the draft after it was discounted by the plaintiff (Commercial Bank of Lake Erie v. Norton, 1 Hill, 507 ; Mechanics’ Bank v. Livingston, 33 Barb. 458 ; The Bank of Louisville v. Ellery, 34 Barb. 633 ; Williams v. Winans, 2 Green's Rep. [N. J.], 339).
IY. The mere matter of time, when the note is signed or bill is accepted, in such case, is immaterial. The act of signing or accepting relates back to the delivery of the note or bill (Mechanics’ Bank v. Livingston, supra; Story on Bills. § 201; Chitty on Bills, 8th. Am. Ed. 263).
Y. There was sufficient consideration for the acceptance of the bill by the defendants. The accep
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tance itself implied consideration (Mechanics’ Bank v. Livingston; The Bank of Louisville v. Ellery, supra, and cases cited). There was sufficient consideration in the forbearance of the plaintiff to resort to the drawer, as it would have done in case of non-acceptance by the defendants.
The evidence was uncontradicted that the plaintiffs discounted the bill of exchange for the drawer in the regular and usual way, that it was subsequently accepted by the defendants without qualification, and that it had not been paid.
This left no question for the jury; and if upon the undisputed facts the plaintiff can recover, then the verdict must be upheld.
The plaintiffs were undoubtedly the bona fide owners of the bill. An accommodation acceptor of such a bill becomes liable to the holder, even though the holder knew the acceptance was without consideration (Story on Bills, §§ 191, 253).
The time of the acceptance is not material, and may as well be after as before it passes to the holder (Mechanics’ Bank v. Livingston, 33 Barb. 459 , 465, which was a case in all respect like the one before us. And see Bank of Louisville v. Ellery, 34 Barb. 630 , and Commercial Bank v. Norton, 1 Hill, 501 , 508).
The circumstance that the bill had not been accepted when it was discounted by the plaintiffs, rendered it proper, if nob actually necessary, for them to show that they had paid value for it; and having shown that, it constituted them bona fide holders, and shut out any defense of want of consideration between the drawer and acceptors. Hence the evidence to prove the manner of the plaintiffs becoming the holders of the bill, objected to by the defendant, was properly allowed to be given. Until acceptance, the legal reli
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anee of the plaintiffs was upon the drawer. But hav- „ ing paid value for the bill, the subsequent acceptance by the drawees, whether voluntary and for the accommodation of the drawer, or otherwise, enured.to the plaintiffs, and constituted it a legal liability of the defendants.
For these reasons the evidence offered by the defendants was wholly immaterial, and was properly excluded. That the acceptance was without consideration, and for the accommodation of the drawer of the bill, constituted no defense to an action by these plaintiffs, even though it had been shown that they had discounted the bill with knowledge of those facts. They had become bona fide holders, and that was enough to exclude the defense.
The direction to the jury was correct, and the judgment entered upon their verdict should be affirmed.
Freedman, and Sedgwick, JJ., concurred.
Cases cited
- Farmers' & Mechanics' Bank v. Empire Stone Dressing Co. 5 Bosw. 275 p. 443
- Grant v. Ellicott 7 Wend. 227 p. 444
- Mechanics' Bank v. Livingston 33 Barb. 458 p. 444
- Bank of Louisville v. Ellery 34 Barb. 630 p. 445