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Douglass v. Wilkinson

17 Wend. 431 Court N.Y. Sup. Ct. English

Delivered by Bronson, J.

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p. 243
Douglass and Dunn vs. Wilkinson.[1]

Headnote

Where an accommodation note is drawn for $2500, and the payee declines to endorse for the whole amount, but agrees to do so for a less sum, and writes a direction to the cashier of the bank where the note is made payable, to pay upon it §750, such note is, in legal effect, a note for §750, and may accordingly be declared upon as a note for that sum.
This was an action of assumpsit, tried at the Albany circuit in March, 1834, before the Hon. James Vandebpoel, one of the circuit judges.
The declaration contained a count by the plaintiffs, as endorsees, against the defendant, as endorser of a promissory note, bearing date 13th December, 1828, made by Heman Norton as drawer, for $750, payable to the order of the defendant, at the Mechanics’ & Farmers’ Bank, ninety days after date. The declaration also contained the common money counts. On the trial of
p. 244
the cause, the plaintiffs produced in evidence a note in these words: “ $2500. Albany, 13th December. 1828. Ninety days after date, for value received, I promise to pay to the order of Samuel Wilkinson, at the Mechanics’ & Farmers’ Bank, twenty-five hundred dollars. (Signed), Heman Norton.” On which was an endorsement in these words: “ Mr. Olcott. Pay on within seven hundred and fifty dollars. (Signed), S. Wilkinson.” And the mercantile name of the plaintiffs, viz., “ Douglass & Dunn,” also appeared and endorsed on the back of the note. Heman Norton, the maker of the note, testified that he made the note as a member of the firm of Norton, Goodman •& Go., which firm transacted business together as partners; that the note was handed to the defendant to endorse, as an accommodation endorser, for the whole amount of the note; that the defendant declined to endorse for the whole amount but made the endorsement appearing on the note; that the plaintiffs then endorsed the note also as accommodation endorsers, when it was taken to the Mechanics’ & Farmers’ Bank, and there discounted for $750, for the benefit of the firm of Norton, Goodman & Co. who received [432] the money advanced upon the note, and when the note fell due it w'as paid and taken up by the plaintiffs. Protest and notice to defendant were duly proved. By the permission of the judge, the plaintiffs were allowed at the trial, to write over the name of the defendant on the back of the note, the words “ Pay to Douglass & Dunn.” The plaintiffs also produced in evidence, two certified copies of rules of this court, one granted 28th February, 1832, striking out the special counts in-the plaintiff’s original declaration (see 6 Wendell, 637), and giving leave to the plaintiffs to proceed to trial upon a declaration containing a new special count, and the common money counts, and that on the trial they be confined to" the cause of action set forth in the special count; and the other, granted 29th November, 1833, modifying the former rule so that the plaintiffs should be confined, on the trial, to the cause of action.set forth in the special count, to wit, a promissory note for $750; being such either in terms or legal effect. On this evidence the plaintiffs rested. The counsel for the defendant having objected to the introduction in evidence of the note, which was produced on the trial, as variant from that described in the declaration; to the filling up of the endorsement, to the parol proof varying the contract as it appeared in writing; and generally to the whole course of the proceedings on the trial, now moved for a nonsuit, which'was denied by the judge. Whereupon the jury, under the charge of the judge, to which the defendant’s counsel also excepted, found a verdict for the plaintiffs for the $750, with the interest thereof. The defendant now asks for a new trial.
A. Taber, for the defendant.
M. T. Reynolds, for the plaintiff.

By the Court,

Since these parties were before the court on a former occasion ( 6 Wend. 637 ), the declaration has been amended, by striking out the two special counts which it then contained, and inserting a count on the note, describing it as having been made for the sum of [433] $750. On the former trial, the special facts in relation to the making and endorsing of the paper did not appear. It was then regarded as a valid note against the maker for $2500, and as the payee had only transferred a part of the note, without showing that the residue had been satisfied, it w'as held that the legal relation of endorser and endorsees had not been created between the parties. It was said that it would be absurd to give the plaintiffs an action, as endorsees, against the defendant, when they could not maintain an action against Norton, the maker. It was agreed, however, that if only $750 was due on the note at the time of the transfer, the diffi-' culty in the way of a recovery by the plaintiffs would bo removed. That difficulty has now been removed.

p. 245
This was never a valid note for any thing more than $750. Although drawn for a larger amount, the defendant refused to endorse it for any thing beyond that sum. It was accommodation paper, and of no value whatever until it was negotiated at the bank. It was not an available security to anyone; indeed it had never been out of the hands of the maker until it was passed to the bank, and the maker or his firm, for whose benefit it was endorsed, received the avails. In legal effect, this was, I think, a note for $750, and no more; andas such, it was a valid security to the bank, one which could be enforced against the maker and all the other parties, in the same manner as though it had been originally drawn for that sum. If this be a just view of the question there can then be no doubt that the plaintiffs are entitled to maintain this action against the first endorser. It is not unusual, I believe, to discount accommodation paper for a less sum than the nominal amount; and I am not aware that the right of the holder to treat it as a valid security against all the parties, for the amount at which it was discounted,, has ever been questioned. I do not speak of a usurious discount, but of a transaction like the present one, where the note was received by the bank in the same manner as though it had been drawn for $750, and nothing more than the legal discount was charged upon that sum.

The view which has been taken of the principal question disposes of the objection on the ground of variance. The declaration sets out [434] the contract according to its legal effect.

The plaintiffs have not attempted to recover on any cause of action different from that set forth in the special count, and the objection that the plaintiffs -have departed from the order made by the court, is not well taken.

New trial denied.

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