Washington Bank v. Krum. While the defendant may make the defense of a want of consideration against a remote party, when he could have made it against a nearer (the remote party taking the note, with knowledge that it was open to such defense); an exception to this general rule prevails in the case of paper made for the accommodation of another party. (Upon this and analogous questions, see Grant v. Ellicott, 7 Wend., 227; Brown v. Mott, 7 John., 361; Smith v. Knox, 3 Esp., 46.). In Saxton v. Peat, 2 Camp., it was held by Lord ELLENBOROUGH, that an acceptor for the accommodation of the drawer was only a surety for the drawer. The correctness of this rule, however, was denied in Tenturn v. Pocock, 5 Taunt., 192. And see Church v. Barlow, 9 Pick., 547; Murray v. Judah, 6 Cow., 484; Clopper v. Union Bank, 7 Har. & J., 92; Bank v. Rathbone, 26 Vt., 19; Lambert v. Sandford, 2 Blackf., 137; Price v. Edmonds, 10 B. & C., 578; Cornise v. Kellogg, 20 Ill., 11; Diversy v. More, 22 Id., 330; Bank of Montgomery County v. Walker, 9 S. & R., 229. Tenturn v. Pocock is followed by the current of authorities, and especially in this country. (And see 1 Parsons on Bills and Notes, 229, Note p., 326, note w.) In Yallop v. Ebers, 1 B. & A., 698, it is said by Lord TENTERDEN that Saxton v. Peat has been long overruled. (Contra, see Parks v. Ingram, 2 Foster, 283.) To every person who shall take such a note for value, the parties hold themselves out by their signatures to be absolutely bound, to the same extent as if that value were personally advanced to them, or on their account. Story on Prom. Notes, 231. When the accommodation is given for a particular purpose, and this is known to the indorsee, a misappropriation of the paper will release the party giving the accommodation from all responsibility. If, however, the person indorsing the same has the power to pass the title, a holder Washington Bank v. Krum. for value, and ignorant of such misappropriation, will, of course, be entitled to recover. Evans v. Kymer, 1 B. & Ad., 528; Small v. Smith, 1 Denio, 583; Sweetser v. French, 2 Cush., 309. The giving of time to the principal debtor, who indorses the accommodation paper, as collateral, does not discharge the maker, though the creditor knew that the paper was made for the indorser's accommodation. Lambert v. Sandford, 2 Blackf., 137; Collett v. Hoigh, 3 Campb., 281; Agawam Bank v. Strever, 18 N. Y., 502. And see Bailey on Bills, 166; Story on Prom. Notes, 552; Chitty on Bills, 85; 12 S. & R., 382. The drawer or maker would be liable to an action at any time after his note matured; and neither he nor the indorser could derive any benefit upon this paper, and under this contract, from the agreement to give time upon the principal debt. Thus if Krum had been compelled to pay this note before the maturity of either of the notes given by Cook & Sargent to the plaintiff, his remedy against them would not have been in the least retarded by that arrangement. It seems to us clear that they are separate and independent contracts, and not parts of the same. 18 N. Y., supra; and 2 Blackf., 137, and cases there cited. Says SELDEN, J., in the New York case: "If a mere accommodation note, given for the purpose of being used as collateral security for a loan, and made payable to the party for whose accommodation it is given, be assigned to one who advances money upon the faith of it, the holder may bring a suit and recover upon such note, whenever by its terms it is due, whether the money loaned has become payable or not." The same principle obtains where time is given upon a pre-existing debt, in consideration of the deposit of such collateral security. And this conclusion follows, logically, from the view above recognized, that by signing the note, Krum, as to third persons, assumed the position of principal. And Washington Bank v. Krum. see Yates v. Donaldson, 5 Maryland, 389; 33 Eng. L. and Eq., 282. When such paper is delivered to the payee, and the party receiving has no knowledge of the actual arrangement, the payee is authorized to make any use of the same for his own benefit, of which it is capable. Seneca County Bunk v. Neass, 3 Comst., 442. Applying these general views, we entertain no doubt but that Cook & Sargent had a right to pledge this note a second time, and that appellant would be bound, though before its maturity it had been so pledged for every week or month, and as often redeemed or lifted. Whether the note was made to enable the payees to raise money by hypothecation, or by a direct sale or discount, or for what, the bank did not know. So far as the bank was concerned, therefore, the payees had a right to use it for any purpose beneficial to themselves. As to the third party, the payees may be treated as indorsers, lifting the paper, which, however, did not discharge or satisfy it, as to the maker. He lent his name for the accommodation of the payees, and there was no presumption that the paper was to be withdrawn, or not be again used as a security, so soon as the payees arranged the debt. He could have canceled his obligation, by calling in his paper, and thus prevented its passing into the hands of an innocent holder. The views heretofore expressed, which treat the collateral and principal notes as separate and independent contracts, to say nothing of the proposition, that the accommodation maker is not treated in the light of a surety merely, sufficiently indicate the distinction between this case and that of Kelly v. Gillespie, 12 Iowa, 55. Judgment affirmed. Phillips v. Bush. PHILLIPS V. BUSH. 1. FRAUDULENT REPRESENTATIONS: PARTIES. When A sold certain lands to B, making false and fraudulent representations as to the locality of the lands sold, and at the request of B, conveyed the same to C as security for the payment of an indebtedness from B to him, it was held, that in an action for damages for such fraudulent representation A was liable, and that B being the real party in interest, was the proper party plaintiff. Appeal from Marshall District Court. THURSDAY, JUNE 12. THE plaintiff in his petition claims that defendant sold to him eighty acres of land, that he pointed out the same to plaintiff, and represented that the land he thus pointed out, was the same he was about to convey, and that he would insure it to be such. The deed for the land thus sold, was, at the request of plaintiff made to one E. E. Phillips, as plaintiff, wished to convey the land to said E. E. Phillips in security for a debt owing by him. It is now claimed by the plaintiff that thirty acres of the land sold was not a part of the land pointed out and insured by the defendant, that the thirty acre tract named in the deed is less in value than that intended to be conveyed. It is claimed that these representations were made in a false and fraudulent manner, and for the purpose of deceiving the plaintiff. The plaintiff claims the difference in the value of the land sold, and that which it was intended he should convey. To this petition defendant filed a demurrer which being sustained, plaintiff appeals. Henderson & Boardman for the appellant. Brown & Mercer for the appellee. BALDWIN, Ch. J.-It is insisted upon by appellee that E. E. Phillips is the proper party plaintiff in this action; that Elder v. Littler. as the deed was made to him, he alone is the party to the contract, and is the only person that could complain. If it is true, as stated by the petitioner, that the title was taken in the name of E. E. Phillips, as security for a debt, then the plaintiff was the party to the contract. He is the one injured by the fraudulent representations of the vendor, as the land would revert to him after the debt secured thereby was paid. Again if the land is valueless the security is unavailing to the debtor. The defendant by his demurrer admits the allegations of the petition. If it is conceded that the land was deeded to E. E. Phillips at the request of plaintiff and only for a special purpose, and it is admitted that the sale was to plaintiff, we are unable to see why he is not the proper party to the suit. The plaintiff alleges, however, that it was not a mistake by defendant, but that it was an intentional fraud on his part. If such was the case, he is, without doubt, liable. The demurrer should have been overruled. Reversed. ELDER V. LITTLER, Administrator. 1. QUESTIONS NOT RAISED BELOW. The Supreme Court will not consider questions which were not presented to and passed upon by the Court below. 2. ADMINISTRATOR DE SON TORT. An administrator de son tort is liable in an action by any creditor of the decedent to the extent of the value of the property of the decedent which has come into his hands. Section 2464, Rev. of 1860. Appeal from Monroe District Court. FRIDAY, JUNE 12. ACTION for damages against defendant as administrator de son tort of the estate of William Littler, deceased, for the VOL. XV.-9 |