Elsey v. Peoples Bank of Bardwell

• Decision Date: 24 February 1916
• Citation: 168 Ky. 701
• Parties: Elsey v. Peoples Bank of Bardwell.
• Court: Kentucky Court of Appeals

168 Ky. 701

Elsey v. Peoples Bank of Bardwell.

Court of Appeals of Kentucky.

Decided February 24, 1916.

Appeal from Carlisle Circuit Court.

JOHN E. KANE for appellant.

ROBBINS & ROBBINS and T. M. COLLINS for appellee.

RESPONSE BY CHIEF JUSTICE MILLER TO PETITION FOR REHEARING — Granting rehearing and affirming.

The facts of this case may be found in 166 Ky., 380.

The case was prepared and tried in the circuit court, and argued and decided upon the appeal to this court, upon the theory that the note was not a negotiable instrument, or was not affected by the negotiable instruments law of this State. Neither party mentioned that act in his brief; and in their petition for a rehearing, counsel for appellee concede that the case was correctly decided in this court under the law of this State which antedated the negotiable instruments law.

For the first time, however, it is suggested in the petition for a rehearing that under the negotiable instruments law, J. L. Elsey, although he was a surety, is primarily liable upon the note sued on, and has not been discharged from that liability in any one of the five ways provided in section 119 of the act.

The case is controlled by the negotiable instruments act, which is found in chapter 90b of the Kentucky Statutes.

Section 60 of that act reads as follows:

"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 endorse."

In the case at bar, J. L. Elsey signed the note without anything appearing on the face of the note to indicate that he signed it as surety, or as other than maker.

Section 29 of the act further provides, as follows:

"An accommodation party is one who has signed the instrument as maker, drawer, acceptor or endorser, 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."

And, section 191 thereof, further provides:

"The person `primarily' liable on an instrument is the person who, by the terms of the instrument, is absolutely required to pay the same. All other parties are `secondarily' liable."

Finally, section 119 also 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."

In First State Bank of Nortonville v. Williams, 164 Ky., 143, it was held that an accommodation maker, or surety, on a promissory note, was primarily liable, although the fact of suretyship was known to the payee.

The authorities sustaining the doctrine are cited in that case, where it was said that the act having covered the entire subject of discharge and release, it controls; and its meaning should be ascertained by interpreting the language used, and not by assuming that the former law on the subject...