Murphy v. Panter

• Decision Date: 16 July 1912
• Citation: 62 Or. 522,125 P. 292
• Parties: MURPHY v. PANTER et al.
• Court: Oregon Supreme Court

125 P. 292

62 Or. 522

MURPHY v. PANTER et al.

Supreme Court of Oregon

July 16, 1912

Appeal from Circuit Court, Coos County; John S. Coke, Judge.

Action by W.H. Murphy against William R. Panter and others. From a judgment for the defendant named, the plaintiff appeals. Reversed.

The complaint alleges, in substance, that on May 1, 1908, at Bandon, Or., the three defendants, for a valuable consideration, made, executed, and delivered to Tillman &amp Bendel of San Francisco, Cal., their promissory note for the sum of $3,079.49, with interest at 8 per cent. per annum payable in 10 equal installments, the first installment to be paid on or before May 30, 1908, and the remaining installments on each and every month until the whole should be paid. Should default be made in the payment of any one of the installments, the balance should immediately become due. The note was indorsed to plaintiff by Tillman & Bendel. A payment of $923.80 was made in June, 1908.

The defendant William R. Panter answered, admitting the execution of the note. He denied that it was executed for a valuable consideration, that anything remained due thereon, or that he had any knowledge of the assignment of the note. For a further and separate answer, he alleged that the same was signed by him, without consideration, as an accommodation maker, with the understanding and upon the express condition with Tillman & Bendel that they would advise him of the nonpayment of any installment; that he was not so informed that the time for the payment of the note was extended by Tillman & Bendel without his knowledge or consent. For a second separate defense, this defendant alleged that about the 24th day of September, 1908, defendants Thomas W. Panter and William A. Panter, as Panter Bros., made an assignment of all their stock of merchandise, fixtures, books of account and cash on hand to E.H. Fahrbach, trustee, representing the San Francisco Board of Trade, in full discharge of all debts and liabilities of the firm, and for the benefit of Tillman & Bendel; that the latter firm has received payment and settlement in full for all debts against Panter Bros., including the note sued on; that the plaintiff was not a bona fide holder of the note, for value, in the usual course of business. This defendant alleged a third and separate defense as to the nonnegotiability of the note. Counsel for plaintiff first moved to strike out, as irrelevant, the substance of the separate defenses. The court denied the motion to strike, as to the first and second separate defenses, and allowed the same as to the third. Thereupon plaintiff filed a reply, putting in issue the remaining new matter of the answer. The cause was tried before a jury, and considerable testimony admitted as to the defendant William R. Panter being an accommodation maker of the note, as alleged in the first separate defense. Afterwards the court instructed the jury, in substance, that such alleged facts did not constitute a defense to the note by this defendant.

Geo. P. Topping, of Bandon, and A.J. Sherwood and L.A. Liljeqvist, both of Coquille, for appellant.

C.R. Wade and F.J. Feeney, both of Bandon, for respondent.

BEAN J. (after stating the facts as above).

At the time of the execution of the note, Panter Bros., had been doing business at Bandon, Or., for about three years. Their account with Tillman & Bendel had become somewhat large and overdue. William R. Panter signed the note in question as a joint maker, for the purpose of obtaining an extension of time and credit for his sons.

The negotiable instruments law defines what constitutes an accommodation maker, and specifies how negotiable instruments may be discharged. Section 5862, L.O.L., is as follows: "An accommodation 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."

It is settled that, under the negotiable instruments law, the accommodation maker is primarily liable as a principal debtor, notwithstanding an indulgence given to the indorser or drawer for whose benefit he became a party to the instrument. Sections 5952, 5953, 6023,. L.O.L.; Lumbermen's Nat. Bank of Portland v. Campbell, 121 P. 427; Cellers v. Meachem, 49 Or. 186, 89 P. 426, 10 L.R.A. (N.S.) 133, 13 Ann.Cas. 997, and cases there cited.

The first separate defense could well have been stricken out, and may therefore be disregarded in the consideration of this case. The defendants requested several instructions to the jury, which were refused by the court.

The tenth assignment of error is the giving of the following instruction, over the objection of counsel for plaintiff: "The burden of proof is upon the party having the affirmative of the issue to make out the better case. As to the making of the note and the transfer of the same to the plaintiff here, and as to the payments thereon, if any payments were made, except as alleged in the complaint, the burden would rest upon the plaintiff; and, as to these affirmative allegations of the answer which I have stated to you, the burden would rest upon the defendant Wm. R. Panter to establish these by a preponderance of the evidence."

Counsel for plaintiff saved an exception to this instruction, and requested the court to instruct the jury to the effect that the note itself makes a prima facie case, and entitles the plaintiff to recover the amount due thereon; that to overcome this, or to make out a defense, the burden of proof is upon the defendant. This the court refused. The giving of the instruction, and the refusal of the court to instruct as requested, are assigned as errors. We think that the instruction as to the burden of proof upon the matter of payment was erroneous; and that the substance of the requested instruction should have been...