Comstock v. Buckley

• Decision Date: 11 January 1910
• Citation: 141 Wis. 228,124 N.W. 414
• Parties: COMSTOCK v. BUCKLEY ET AL.
• Court: Wisconsin Supreme Court

141 Wis. 228

124 N.W. 414

COMSTOCK

v.BUCKLEY ET AL.

Supreme Court of Wisconsin.

Jan. 11, 1910.

Appeal from Circuit Court, Milwaukee County; Lawrence W. Halsey, Judge.

Action by E. G. Comstock against James O. Buckley and others. Judgment for plaintiff, and defendants appeal. Reversed and remanded.

Action upon a promissory note, $2,500, dated April 21, 1900, signed by J. O. & W. S. Buckley, a copartnership, payable to the order of Thomas F. Somers, at six months date, with 6 per cent. interest and indorsed by Thomas F. Somers, Charles Buehner, John Graf, Peter J. Somers, John Zilg, C. S. Otjen, H. F. Bosworth, and W. E. Haskin in the order aforesaid. It appeared that said note, so indorsed without any consideration to the indorsers, but for the accommodation of a mining company in which they were all concerned and for which the two Buckleys were financial agents, was delivered to Henry Herman, as a note broker, to negotiate and pay over the proceeds to said agents; that said Herman during the life of said note did dispose of the same fraudulently, as claimed, to one Wight, an innocent holder, who paid value to Herman, and concededly obtained good title to the note. Herman, it is claimed, applied the proceeds to his own use without informing defendants that he had disposed of the note. At maturity the note was protested for nonpayment, and shortly thereafter, October 25, 1900, was paid by Henry Herman and returned to his possession. Thereafter, November 27, 1900, Herman sold said note for value approximating its face to the plaintiff, who had notice of its dishonor, the certificate of protest being attached, and who at the same time entered into an agreement with Herman for a definite date of extension of the time of payment. At the close of the trial, upon these facts, the court directed a verdict for the plaintiff for the full amount. From judgment on such verdict the defendants appeal.Kronshage, McGovern, Goff, Fritz & Hannan, for appellants.

Roemer & Aarons (Henry J. Killilea, of counsel), for respondent.

DODGE, J. (after stating the facts as above).

The direction of a verdict for the plaintiff is sought to be supported, first, on the authority of Marling v. Jones, 138 Wis. 82, 119 N. W. 931, for that, as asserted, the accommodated party, and Herman, as its agent, had actual authority, by force of the note itself, to negotiate it, which authority was not limited by the maturity of the note. That rule of law was unambiguously adopted by this court upon weight of authority after carefully reviewing a conflict of decision elsewhere. The right of the creditor was not predicated upon an innocent holder's immunity from equities as between the parties, but upon the view that no equities existed to defeat such a note; that the accommodation makers had by proper construction of their instrument agreed to pay any one who should lend the amount of the note to the accommodatee either before or after maturity. This case presents a very marked difference in facts, for here, conceding that Herman acted within his authority, the accommodated party had once been accommodated when Wight lent money upon the note, which afterwards had been paid in full and returned to the original custody, all of which appeared upon the face of the paper, and doubtless was fully notified to any subsequent purchaser by the fact of maturity alone. The question on this branch of the present case is therefore whether the true contract between the accommodation parties to negotiable paper and the accommodatee is that the latter may repeatedly incur indebtedness upon their credit. The rule in the Marling Case that the true construction of the contract authorized the accommodatee to borrow once on the accommodator's credit even after the maturity of the note was recognized as highly burdensome to the latter and fraught with much peril of inconvenience to commerce from its naturally deterrent effect on the granting of such accommodations. The weight of authority in favor of the rule, however, was found to be so overwhelming as to overcome the countervailing considerations. No authority, however, has been cited or found in support of the idea that the ordinary meaning of the parties in making accommodation paper extends to repeated use of the accommodator's credit, and the reasons against such a purpose are even more numerous and cogent than those which have caused many courts to pause short of the conclusion reached in Marling v. Jones. The accommodated party is, of course, the primary debtor. It is expected when others by signing accommodation paper become substantially sureties for him, at least as between them and him, that he will pay the debt and protect the sureties from liability. When he does so, and the note returns to his possession, it is hard to conceive any reason why the whole purpose of the transaction is not accomplished, and why the note, at least as to the accommodation makers, does not become discharged and cease to have any legal existence. It is a general rule of law that when an instrument upon which several are liable, some primarily and some secondarily, is satisfied by him who is...