Pender v. Cook

• Decision Date: 27 May 1930
• Docket Number: 4
• Citation: 300 Pa. 468,150 A. 892
• Parties: Pender v. Cook (et al., Appellant)
• Court: Pennsylvania Supreme Court

150 A. 892

Pender v. Cook (et al., Appellant)

300 Pa. 468

No. 4

Supreme Court of Pennsylvania

May 27, 1930

Argued March 24, 1930

Appeal, No. 4, March T., 1930, by John H. Stephens, from judgment of C.P. Cambria Co., March T., 1927, No. 346, on verdict for plaintiff, in case of John C. Pender v. H. C Cook et al. Affirmed.

Issue to try validity of judgment. Before McCANN, J.

From the record it appeared that the judgment was entered on a promissory note for $10,000.

The testimony in support of the defense was that, through a mistake of fact, the note (which was drawn by defendant) was made for $10,000, instead of $5,000, the amount he intended to obligate himself for. The following memorandum, drawn up when the note in suit was signed, was also introduced "Whereas John C. Pender and John H. Stephens heretofore executed and delivered their note to the First National Bank of Seward for $10,000 to be applied to the credit of H. C. Cook's various coal companies; and whereas the said note has this day become due and left at the U.S. National Bank of Johnstown for collection; and whereas the said note is this day lifted and paid by John C. Pender executing and delivering his own note for like amount payable in four months, to said U.S. Bank, and at the same time to save and keep harmless the said John C. Pender the said H. C. Cook and John H. Stephens have executed and delivered to John C. Pender their note for like amount and bearing even date. With the distinct understanding as the note of John C. Pender to the said bank is reduced or paid by H. C. Cook that like reductions shall be marked on the note of Cook and Stephens to John C. Pender and when the note of Pender to the U.S. Bank is fully paid by H. C. Cook and surrendered, the note of Cook and Stephens to John C. Pender shall be likewise surrendered."

Verdict and judgment for plaintiff for $5,819.17. John H. Stephens appealed.

Error assigned, inter alia, was refusal of judgment for defendant n.o.v., quoting record.

Judgment affirmed.

J. J. Kintner, with him Robert C. Hoerle, for appellant. -- The parties to this action being accommodation parties, there was a failure of consideration and appellee is not entitled to recover: Piper v. Queeney, 282 Pa. 135; Peale v. Addicks, 174 Pa. 543; Murray v. Flesher, 88 Pa.Super. 592; Miners State Bank v. Auksztokalnis, 283 Pa. 28.

Appellant, being an accommodation maker of the original note and appellee the accommodation endorser, and the relation of the parties not having changed, then on failure of the accommodated party to pay, each should contribute his proportionate share: Steckel v. Steckel, 28 Pa. 233; First Nat. Bank of Bellefonte v. Rodgers, 198 Pa. 627; Shaeffer v. Clendenin, 100 Pa. 565.

The court was wrong in holding that the two witnesses rule, or one witness and corroborating circumstances, applied: Cridge's Est., 289 Pa. 331; Lackawanna Traction Co. v. Carlucci, 264 Pa. 226; Scranton Savings Bank v. Focht, 19 Pa. Dist. R. 687; Smith v. Muse, 25 Pa. C.C.R. 584; First Nat. Bank v. Baer, 277 Pa. 184.

Frank P. Barnhart, for appellee. -- The evidence offered by defendant was insufficient to reform the writing: Thompson v. Schoch, 254 Pa. 585; Phillips v. Meily, 106 Pa. 536; Faux v. Fitler, 232 Pa. 33; Kline v. Fitzgerald Bros., 267 Pa. 468, 473; Dixon v. Minogue, 276 Pa. 562, 565; Brenard Mfg. Co. v. Kroker, 91 Pa.Super. 254, 258; Odgen v. Traction Co., 202 Pa. 480; Hicks v. Harbison Walker Co., 212 Pa. 437, 441; Ahlborn v. Wolff, 118 Pa. 242.

The trial judge correctly charged as to the measure and burden of proof: Michael v. Stuber, 73 Pa.Super. 390; Ott v. Oyer, 106 Pa. 6; Thompson v. Schoch, 254 Pa. 585, 590; Miller's Est., 279 Pa. 30, 38; Pittsburgh-Texas Gas Co. v. Adams, 79 Pa.Super. 511, 517.

Before MOSCHZISKER, C.J., FRAZER, WALLING, SIMPSON, KEPHART, SADLER and SCHAFFER, JJ.

OPINION

MR. JUSTICE KEPHART:

Stephens made a note of $10,000 payable to Pender; it was endorsed and the proceeds used for Cook's benefit. Both Stephens and Pender were admittedly accommodation parties for Cook. The note was not paid at maturity by Cook, and a new note was given directly to the bank by Pender, as maker; at the same time, Stephens, the maker of the first note, and Cook jointly gave to Pender a note in like amount. Pender was required to pay the second note because of Cook's bankruptcy, and sued Stephens and Cook on the third note. Stephens interposed the defense that there was a "failure of consideration" in the third note so far as his liability was concerned, and that as he and Pender were the accommodation parties on the first note they were cosureties or guarantors, each liable for one-half the amount thereof. The questions which arise in this case are: What is the order of liability on commercial paper, and may that order be changed or the ordinary legal status modified? If so, what must be shown to effect the change? And, finally, was there a change in this case?

In the case of ordinary commercial paper, parties in the regular course of business are liable to each other in succession as their names appear on the instrument, the maker being the principal debtor and the endorsers being severally liable in the order in which their names are written: Negotiable Instruments Act of May 16, 1901, P.L. 194, sections 60, 68; 8 C.J. 288; Allison v. Purdy, 6 Pa. 501; Youngs v. Ball, 9 Watts 139; Chambers v. McLean, 24 Pa.Super. 567; Umstad v. McNamara, 59 Pa.Super. 598; Delaware County Trust Co. v. Haser, 199 Pa. 17, 25. And it is a general rule, followed by an overwhelming weight of authority, that the relationship between accommodation parties to a note is the same as that existing between parties to ordinary business paper. Thus, an accommodation maker is liable to an accommodation endorser, when both sign a note for the accommodation of a third person, unless a cosuretyship was expressly agreed upon: 8 C.J. 289. Their liability is that expressed by the paper itself, unless there is an express agreement to the contrary, and is successive and not joint; consequently they are not cosureties, and the doctrine of contribution does not obtain: Allison v. Purdy, supra; Wolf v. Hostetter, 182 Pa. 292; Russ v. Sadler, 197 Pa. 51. Of course where accommodating parties stand in the same degree or position on the note they are equally liable. Thus, in Steckel v. Steckel, 28 Pa. 233, where two payees endorsed for the accommodation of the maker, and one paid the note to the holder on maturity, the latter was entitled to recover one-half the money so paid from the other payee.

The natural relation between the parties, as evidenced by their position on the first note,...