McCune v. Belt

• Court: Missouri Supreme Court
• Writing for the Court: BLISS
• Citation: McCune v. Belt, 45 Mo. 174 (Mo. 1869)
• Decision Date: 31 October 1869
• Parties: JOHN S. MCCUNE, Respondent, v. HENRY B. BELT et al., Appellants.

45 Mo. 174

JOHN S. MCCUNE, Respondent,

v.HENRY B. BELT et al., Appellants.

Supreme Court of Missouri.

October Term, 1869.

Appeal from St. Louis Circuit Court.

The material facts in the case are sufficiently stated in the opinion of the court. See also same case, 38 Mo. 281.

Whittelsey, and Gantt, for appellants.

I. Plaintiff and defendants hold to each other the relation of co-sureties for John J. Anderson & Co., and, therefore, the plaintiff was only entitled to recover of defendants one-half of the amount paid by plaintiff upon the bill sued on. (Dering v. Earl of Winchelsea, 1 White & T. Lead. Cas. Eq. 60; 1 Cox, 318; Lead. Cas. Eq. 60, Am. ed. 1852, pp. 100, 115, note; Craythorne v. Swinburne, 14 Ves. 169; Mayhew v. Crickett, 2 Swanst. 192; Ramsey v. Lewis, 30 Barb. 403; Norton v. Coons, 3 Denio, 130; Stout v. Vauce, 1 Rob. 169.) “Where successive accommodation indorsers all indorse for the accommodation of the maker, though at different times, and without communication or mutual understanding, they are, in equity, co-sureties, subject to common contribution.” (Daniel v. McRae, 2 Hawks, 590, 598, 604; 1 White & T. Lead. Cas. Eq., Am. ed. 1852, p. 115, notes; Bell v. Jasper, 2 Ired. Eq. 597, 601.)

II. The defendants, as sureties, were entitled to have the benefit of the securities deposited by John J. Anderson & Co. with the plaintiff. (Dering v. Earl of Winchelsea, 1 White & T. Lead. Cas. 100, 102, Am. ed. 1852, pp. 68, 106, note; Miller v. Woodward, 8 Mo. 169; Hayes v. Ward, 4 Johns. Ch. 123; 1 White & T. Lead. Cas. Eq. 119; Ramsey v. Lewis, 30 Barb. 403; Truescott v. King, 6 N. Y. 147; Brown v. Ray, 18 N. H. 102.). Where a surety, before he paid the debt, took securities to indemnify himself, his co-sureties are entitled to share the benefit of the security. If there are several demands with different co-sureties, and the security be taken generally as an indemnity, it is to be applied pro rata among all the demands. (Brown v. Ray, supra;Copperthwaite v. Sheffield, 1 Sandf. 416, 452; Moore v. Moore, 4 Hawks, 358, 360.) As between co-sureties, an indemnity taken by one is to be held for the mutual benefit of all. (1 White & T. Lead. Cas. Eq., Am. notes 119, and cases cited; United States v. Amory, 5 Mas. 455; United States v. Linn, 2 McLean, 501; United States v. Wardwell, 5 Mas. 82.)

III. The payments made by John J. Anderson & Co., December 27, 1860, should have been applied to the bill then due, as the deposit account was afterward extended in full for nine and twelve months, and deed of trust taken as security. An item credited to general account must be considered as an application of it by the plaintiff to the oldest items of the account. (Allen et al. v. Culver, 3 Denio, 284.) The items of payment credited as on general account on March, 1861, in the account rendered Anderson in 1864, must, as to plaintiff, be considered as applying to the oldest items of the account, and the plaintiff can not, therefore, as against a surety, repudiate this order of credit. (Truescott v. King, 2 Seld. 147; United States v. Kirkpatrick et al., 9 Wheat. 720; 1 Am. Leg. Cas. Eq. 135; P. M. Gen. v. Furber, 4 Mas. 333.) The payment made December 27, 1860, should have been applied to the bill then due (Cloney et al. v. Richardson, 34 Mo. 370), because it was a debt then payable, the deposit account having been extended in March, 1861, thus showing that it was not applicable to that account. (1 Am. Leg. Cas. Eq. 142; Ramsey v. Lewis, 30 Barb. 403.) Admitting that plaintiff was a creditor taking securities from his debtor, still he was bound to consult the interest of the sureties, and, having stated an account with the principal debtor, he can not afterwards repudiate the credits, when controversy has arisen, and attempt to make a different statement and apply the credits in a different manner. (United States v. Kirkpatrick, 9 Wheat. 720.)

Ewing & Holliday, and Glover & Shepley, for respondent.

The plaintiff and defendants were not co-sureties on this bill. “If they become sureties by successive indorsements on mercantile paper--as that is a form of contract which, in general, binds the first to indemnify the second-- the law presumes that they mean to stand as they have placed themselves. (McNeilly v. Patchin, 23 Mo. 43; McDonald v. Magruder, 3 Pet. 474.) It is not pretended that there was any agreement between the plaintiff and defendants at the time of their placing their names upon the paper. The defendants stand in no relation to the plaintiff to demand any application of payment of the amount the plaintiff may have collected from the securities, so long as it is shown that there remains unpaid more than the amount of the bill sued on. Until the amounts received from these collaterals have made McCune whole up to within the amount of this bill, no amount received by McCune can benefit the defendants. There can be no application of payment as between these parties, because they do not stand in the position of co-sureties. McCune has the right, for his indemnification, to resort to all the securities he has. The taking by McCune, after he received these securities, of notes of Anderson & Co., at a future time, instead of allowing the debt to remain as an open account, cuts no figure here for two reasons: first, because the security was given to secure the debt, and the debt was not changed by putting it into the form of a promissory note; and second, because, rejecting these notes, McCune has not received enough on these collaterals to reimburse him for the other two drafts paid by him, and interest.

BLISS, Judge, delivered the opinion of the court.

This cause has once been before this court and is reported in 38 Mo. 281. A new trial has been had and the case is again here upon exceptions to the ruling of the court. The questions not heretofore decided are but few, and in order to understand them it is not necessary to recite the numerous instructions given and refused upon the last trial. The defendants drew a bill of exchange upon Anderson & Co. for $5,000 at sixty days, in favor of the plaintiff, which bill was indorsed by him, accepted by the drawee, and discounted at the bank. The drawers and indorser had no interest in the paper, but became parties to it for the accommodation of Anderson & Co., the acceptors. It was protested at maturity, the indorser paid it, and now brings suit against the drawer. Several questions were raised upon the second trial, which it is claimed were not decided when the case was here before.

The defendants claim that, although they are the drawers of the bill, yet as both they and the indorser are but accommodation parties, they ought to be held as co-sureties merely, and that the drawers should not be held to the ordinary liability to which they would be subject upon paper in which they were interested. Counsel have cited a number of authorites in support of their claim, but I find but one of them that even gives color to it. It is held in Daniel v. McRae, 2 Hawks, 590, that indorsers of an accommodation promissory note for the benefit of a third person, and when neither is benefitted, are to be considered as co-sureties. If this were the law, it would be reasonable to apply the rule to accommodation drawers and indorsers of bills, for their relation to each other is similar to that of successive indorsers of promissory notes. But in commercial law, in the absence of a contract, the accommodation indorsers of a promissory note are not co-sureties, but are held in the order of their indorsement. (2 Pars. on Notes and Bills, ch. 1, § 6; McNeilly v. Patchin, 23 Mo. 40; Wilson v. Stanton, 6 Black, 507.)

As to the liabilities of parties to bills of exchange, there is but one rule known to the law: the drawee, if the bill is accepted, is bound to all other parties. Upon his default the drawer becomes obligated to the indorser, and the indorsers, if there are more than one, are bound in the order of their indorsement. (Story on Bills, § 107.) This obligation may be varied by special contract. (Dunn v. Wade, 23 Mo. 207; Kelley v. Few, 18 Ohio, 441.) And the accommodation parties to the bill should not be held to those for whose benefit it is drawn. But all accommodation parties, as between themselves, are bound by the obligations which they assumed under the law merchant by becoming such parties. Co-securities can surely be held to contribution, and if the parties to this action held that relation, the judgment for the full amount of the bill would have been clearly erroneous. But, in the absence of any special agreement, their relation is to be determined by the instrument to which they are parties. If they intended to be co-securities, they should have so agreed, or should have been drawers merely; or if the payee and indorser so intended, they should have been also drawers. In Ohio an early decision made accommodation indorsers of a promissory note co-securities in acknowledged contravention of the general law, but in Williams v. Blossom, 11 Ohio, 62, the Supreme Court of that State refused to go further, and applied the rules of the commercial law to accommodation parties to bills of exchange.

The defendants also claim that the securities turned out to the plaintiff by the acceptors who had assumed obligations on their behalf, and was their creditor in the sum of $25,000, besides this bill, should be applied pro rata upon the obligation now in suit. This claim is without foundation.

The assignment was made for the security of the plaintiff alone, and the defendants can have no interest in it, unless it inures to their benefit by virtue of their relation to the plaintiff upon the paper. If the plaintiff and defendants were co-sureties, the property turned out to one should inure to the benefit of all, for “it is a settled principle of equity that if one of several co-sureties subsequently takes a security from the principal for his own indemnity, it inures to the benefit of all the...