Continental Mut. Sav. Bank v. Elliott, 23014.

CourtUnited States State Supreme Court of Washington
Citation6 P.2d 638,166 Wash. 283
Docket Number23014.
Decision Date11 January 1932

6 P.2d 638

166 Wash. 283


No. 23014.

Supreme Court of Washington, En Banc.

January 11, 1932

Appeal from Superior Court, King County; Homer Kirby, Judge.

Action by the Continental Mutual Savings Bank and another against Jessie M. Elliott and others. From judgment rendered, plaintiffs appeal.

Reversed and remanded, with directions. [6 P.2d 639]

Tanner & Garvin, of Seattle, for appellants.

Byers & Byers and Alfred J. Westberg, all of Seattle, for respondent.


This action was brought to foreclose a real estate mortgage, and for a deficiency judgment upon the promissory note secured by the mortgage. After the action was instituted, the Washington Mutual Savings Bank was joined as a party plaintiff. The defendants, other than Jessie M. Elliott, were defaulted, and are no longer involved in this controversy. The trial was to the court without a jury, and resulted in a decree directing the foreclosure of the mortgage, but declining to provide for a deficiency judgment in the event that the property did not sell for enough to satisfy the entire obligation. From this decree, the plaintiffs appeal.

The facts are these: March 16, 1925, the respondent Jessie M. Elliott made and delivered to Continental Mutual Savings Bank a note in the sum of $1,500, and, to secure the payment of the same, executed a mortgage covering certain real property then owned by her. June 9, 1927, respondent deeded the mortgaged property to one R. J. Chamberlain, who assumed and agreed to pay the mortgage debt, and later entered into a contract for the sale of the same to one William R. Pugsley. [166 Wash. 285] The note became due March 16, 1928. April 2d of that year Continental Mutual Savings Bank (the payee of the note), Chamberlain, and Pugsley entered into a tri-party agreement, extending the time of the payment until March 16, 1929. The respondent was not a party to this agreement, and testified that she did not know of it until she was served with summons and complaint in this action. The note was not paid when due, and this action was brought upon the debt and to foreclose the mortgage.

The controversy here is over whether the appellants were entitled to a decree which provided for a deficiency judgment. Appellants say that they had a right to such a provision in the decree; respondent contends to the contrary.

The first question is whether the respondent was primarily or secondarily liable upon the note.

Section 3451, Rem. Comp. Stat., which is one of the sections of the Negotiable Instruments Act, provides: 'The maker of a negotiable instrument by making it engages that he will pay it according to its tenor, and admits the existence of the payee and his then capacity to indorse.'

Section 3582 provides: 'The person 'primarily' liable on an instrument is the person who by the terms of the instrument is absolutely required to pay same. All other parties are 'secondarily' liable.'

It will be observed that, by the section last quoted, the person primarily liable on an instrument is one who by the terms of the 'instrument is absolutely required to pay same,' and all other parties are secondarily liable. By the terms of the promissory note in this case, the respondent is unequivocally required to pay the same, and she therein expressly consented that, in any action brought for the foreclosure of the [166 Wash. 286] mortgage, 'a deficiency judgment may be taken for any balance of debt remaining after the application of the proceeds of the mortgaged property.' From this it follows that the respondent's liability on the note was primary and not secondary.

The next question is, how one primarily liable upon a negotiable instrument may be discharged. Section 119 of the Negotiable Instrument Act (Rem. Comp. Stat. § 3509) provides:

'A negotiable instrument is discharged----
'1. By payment in due course by or on behalf of the principal debtor;
'2. By payment in due course by the party accommodated, where the instrument is made or accepted for accommodation;
'3. By the intentional cancellation thereof by the holder;
'4. By any other act which will discharge a simple contract for the payment of money;
'5. When the principal debtor becomes the holder of the instrument at or after maturity in his own right.'

Section 120 (Rem. Comp. Stat. § 3510) provides:

'A person secondarily liable on the instrument is discharged----

'1. By any act which discharges the instrument;

'2. By the intentional cancellation of his signature by the holder;

'3. By the discharge of a prior party;

'4. By a valid tender of payment made by a prior party:

'5. By a release of the principal debtor, unless the holder's right of recourse against the party secondarily liable is expressly reserved;

'6. By any agreement binding upon the holder to extend the time of payment, or to postpone the holder's right to enforce the instrument, unless made with the assent of

[6 P.2d 640] the party secondarily liable, or unless the right of recourse against such party is expressly reserved.'

[166 Wash. 287] It will be observed that by subdivision 6 of section 120 an agreement binding upon the holder to extend the time of payment, or to postpone the holder's right to enforce the instrument, unless made with the assent of the party secondarily liable, or unless the right of recourse against said party is expressly reserved, discharges the instrument. There is no such provision in section 119, and it would necessarily seem to follow that under that section the instrument is not discharged by the extension of time. An instrument upon which one is primarily liable can only be discharged under section 119.

Section 29 of the act (Rem. Comp. Stat. § 3420) provided: 'An accomodation party is one who has signed the instrument as maker, drawer, acceptor or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party.'

The courts have uniformly held that an accommodation party is primarily liable and can only be discharged in the manner provided in section 119. The respondent, being the maker of the note and primarily liable thereon, cannot be in any more favorable position with reference to the discharge of the instrument than would an accommodation maker. In Union Trust Co. v. McGinty, 212 Mass. 205, 98 N.E. 679, 680, Ann. Cas. 1913C, 525, the court had Before it the question of whether an accommodation maker of a promissory note was discharged, if the holder, knowing that the note was made for the accommodation of the payee and indorser, by agreement with the indorser upon a valuable consideration, without the maker's [166 Wash. 288] consent, extended the time of payment; and it was there said:

'Before the enactment of the Negotiable Instruments Act (St. 1898, c. 533; R. L. c. 73, §§ 18-212) one who made a promissory note for the accommodation of another was as between the parties a surety. The holder, who had knowledge of the true relation of the parties, was bound to act toward such accommodation maker as toward a surety in order to preserve his rights against him. Under such circumstances an extension of time to the person ultimately liable, without the consent of the surety, that is the accommodation maker, released the latter. Guild v. Butler, 127 Mass. 386, and cases cited at page 389; Jennings v. Moore, 189 Mass. 197, 75 N.E. 214. The precise point is whether this rule of law has been changed by the Negotiable Instruments Act.

'It is matter of common knowledge that the Negotiable Instruments Act was drafted for the purpose of codifying the law upon the subject of negotiable instruments and making it uniform throughout the country through adoption by the Legislatures of the several states and by the Congress of the United States. The design was to obliterate state lines as to the law governing instrumentalities so vital to the conduct of interstate commerce as promissory notes and bills of exchange, to remove the confusion or uncertainty which might arise from conflict of statutes or judicial decisions amongst the several states, and to make plain, certainand general the controlling rules of law. Diversity was to be moulded into uniformity. This act is substance has been adopted by many states. While it does not cover the whole field of negotiable instrument law, it is decisive as to all matters comprehended within its terms. It ought to be interpreted in such a way as to give effect to the beneficent design of the Legislature in passing an act for the promotion of harmony upon an important branch of the law. Simplicity and clearness are ends especially to be sought. The language of the act is to be construed with reference to the object to be attained. Its words are to be given their natural and common meaning, and the prevailing principles of statutory interpretation are to be employed. [166 Wash. 289] Care should be taken to adhere as closely as possible to the obvious meaning of the act, without resort to that which had theretofore been the law of this commonwealth, unless necessary to dissolve obscurity or doubt, especially in instances where there was a difference in the law in the different states.

'Approaching the act from this point of view, it is apparent that no relation of principal and surety is established or contemplated by any of its sections. It determines the liability of the various parties to the negotiable instrument on the basis of that which is written on the paper. The boligation of all makers, whether for accommodation or otherwise is to pay to the holder for value according to the terms of the bill or note. Their obligation is primary and absolute. Sections...

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21 cases
  • Hederman v. Cox, 33838
    • United States
    • United States State Supreme Court of Mississippi
    • 15 janvier 1940
    ...of a negotiable law on suretyship. Gilliam v. McLemore, 141 Miss. 253, 106 So. 99, 43 A. L. R. 79; Cont. Mut. Sav. Bank v. Elliott, 166 Wash. 283, 6 P.2d 638; Pue v. Wheeler, 78 Mont. 516, 255 P. 1043; Moinet v. Burnham, Stoepel & Co., 143 Mich. 489, 106 N.W. 1126; People ex rel. Crabb v. D......
  • In re Pers. Restraint Petition Stockwell, 86001–7.
    • United States
    • United States State Supreme Court of Washington
    • 23 janvier 2014
    ...does not appear to have been suggested to the court by which the opinion was rendered.” Continental Mut. Sav. Bank v. Elliot [ Elliott ], 166 Wash. 283, 300, 6 P.2d 638, 81 A.L.R. 1005 (1932).(Footnote omitted.) ¶ 23 Stockwell also argues that older cases, Kitchen, Boone, Richardson, and Gu......
  • Piel v. City of Fed. Way, 83882–8.
    • United States
    • United States State Supreme Court of Washington
    • 27 juin 2013
    ...what does not appear to have been suggested to the court by which the opinion was rendered.” Continental Mutual Savings Bank v. Elliot, 166 Wash. 283, 300, 6 P.2d 638 (1932).Accord Cazzanigi v. Gen. Elec. Credit Corp., 132 Wash.2d 433, 442–43, 938 P.2d 819 (1997) (despite a prior case appea......
  • Schatz v. State, 42332–4–II.
    • United States
    • Court of Appeals of Washington
    • 19 novembre 2013
    ...those presented here, and we do not find [a prior case said to be binding precedent] controlling.”); Cont'l Mut. Sav. Bank v. Elliott, 166 Wash. 283, 300, 6 P.2d 638 (1932) (“An opinion is not authority for what is not mentioned therein and what does not appear to have been suggested to the......
  • Request a trial to view additional results

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