and inevitable results be denied. The rule there announced was in conflict with previous decisions in New York, and the decision is strongly criticised by the Court of Errors and Appeals of New Jersey in Wood v. Sheldon, 42 N. J. Law, 421, 425, 36 Am. Rep. 523. It follows that the judgment of the Circuit Court must be reversed, and the case be remanded with directions to enter judgment for plaintiffs for $8,383.75, with interest from judicial demand and costs. * Under the Negotiable Instruments Law, the liability of the qualified indorser and the transferor by delivery is as follows: N. I. L. Section 65. Every person negotiating an instrument by delivery or by qualified indorsement, warrants-(1) that the instrument is genuine and in all respects what it purports to be; (2) that he has a good title to it; (3) that all prior parties had capacity to contract. The provisions of subdivision three of this section do not apply to persons negotiating public or corporations securities, other than bills and notes; (4) that he has no knowledge of any fact which would impair the validity of the instrument or render it valueless. But when the negotiation is by delivery only, the warranty extends in favor of no holder other than the immediate transferee. There would seem to be no substantial reason why the unconditional liability on warranties of the transferor by delivery and that of the qualified indorser should differ from that of the unqualified indorser. Both are vendors of negotiable instruments. The liability arising from the warranties spoken of in sections 65 and 66 is imposed upon the parties because they are vendors. Nevertheless the vendor who has indorsed without qualification under section 66 is under a broader liability than is a vendor by delivery only or by qualified indorsement. It must be noticed that the warranty of genuineness of the instrument, that the vendor has title and that all prior parties had capacity to contract are the same in both cases. But as regards the remaining warranty there is a marked difference. The unqualified indorser, by section 66, subsection 2, warrants "that the instrument is at the time of his indorsement valid and subsisting." The qualified indorser, and the transferor by delivery, by section 65, subsection 4, warrants "that he has no knowledge of any fact which would impair the validity of the instrument or render it valueless." The unqualified indorser, therefore, warrants that there are no real or personal defenses which may be successfully interposed against the claim of the holder even though he may have no knowledge that such defenses exist. With the exception of the warranty of genuineness of title and that all prior parties had capacity to contract, the qualified indorser and transferor by delivery warrants merely, he has no knowledge of existing defenses possessed by primary parties. The Negotiable Instruments Law has therefore codified the principle of Littauer v. Goldman. There is one difference between the liability of a transferor by delivery and that of the qualified indorser. The warranty of the transferor by delivery extends only to his immediate transferee, while that of the qualified indorser, by implication, extends to all subsequent holders in due course. As a general rule, warranties which accompany sales of tangible personal property do not run to sub-vendees. It is, therefore, somewhat difficult to explain the theory on which such warranties run to subsequent holders in due course; perhaps this result follows from the notion that each successive holder under the qualified indorsement, by his transfer of the instrument, assigns his right on the warranties to his indorsee and that indorsee in turn assigns to his indorsee and so In the law of real property there is an analogy for the view that warranties should run to subsequent holders. Some of the covenants which a grantor of land in a warranty deed enters into with his grantee, will pass to the subsequent purchasers of the law. Such covenants are called covenants running with the land. Where a holder of a negotiable instrument, in such form that it may be negotiated by delivery, does in fact indorse unqualifiedly, it would follow that his liability would be that of the unqualified indorser and not that of the transferor by delivery. This result is recognized in the following section: N. I. L. Section 67. Where a person places his indorsement on an instrument negotiable by delivery, he incurs all the liabilities of an indorser. Where the transferor by delivery is an agent for the owner on principles of the law of agency, he will incur a personal liability unless he discloses his principal. N. I. L. Section 69. Where a broker or other agent negotiates an instrument without indorsement, he incurs all the liabilities prescribed by section sixty-five of this act, unless he discloses the name of his principal, and the fact that he is acting only as agent. SECTION 4.-RIGHTS OF THE HOLDER AGAINST THE ACCOMMODATION INDORSER We have already discussed some features of the liability of an accommodation party. Section 29 defines an accommodation party as 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. The liability of an accommodation party is then declared to be 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. An accommodation party is a surety for some principal debtor. Either party may occupy any position on the instrument. The present section deals with certain special aspects of the liability of one kind of an accommodation party-i, e., an accommo dation indorser. Such an indorser is sometimes called an irregular indorser or an anomalous indorser. The indorsement is said to be irregular or anomalous because the indorser was never in the chain of title. He was never the owner of the instrument. The same indorsement is spoken of as an accommodation indorsement because the indorser is accommodating a debtor by loaning his credit to the debtor. The sections following, in the main, deal with two features of the liability of an accommodation indorser: (1) The nature of the liability; (2) the parties to, whom the liability runs. The nature of the rights and liabilities of the contract of the accommodation indorser, in their broadest aspect, constitute the subject matter of that branch of the law known as the law of suretyship. To some of the more important principles there applied some reference was made in Chapter XI of Contracts. Those principles, of course, apply to accommodation indorsers the same as to all other sureties. In determining the rights and liabilities of sureties on negotiable paper several sections of the Negotiable Instruments Law must be taken into consideration. In the chapter on Discharge other sections will be referred to. Here we are interested in the four sections following: N. I. L. Section 63. A person placing his signature upon an instrument otherwise than as maker, drawer or acceptor, is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity. N. I. L. Section 64. Where a person, not otherwise a party to an instrument, places thereon his signature in blank before delivery, he is liable as indorser, in accordance with the following rules: (1) If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties. (2) If the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer. (3) If he signs for the accommodation of the payee he is liable to all parties subsequent to the payee. N. I. L. Section 68. As respects one another, indorsers are liable prima facie in the order in which they indorse; but evidence is admissible to show that as between or among themselves they have agreed otherwise. Joint payees or joint indorsees who indorse are deemed to indorse jointly and severally. N. I. L. Section 66. Every indorser who indorses without qualification warrants to all subsequent holders in due course * * and engages that on due presentment, it shall be accepted or paid. * * * In its broadest outline the problem involved in the interpretation of the above sections is: For what purposes may parol testimony be admitted in a suit against a person whose signature appears on the instrument otherwise than as maker, drawer, or acceptor. From a bare inspection of the instrument it may be determined whether the name appears on the instrument as maker, This is drawer, or acceptor. No parol testimony is necessary. simply a question of interpretation of the words on the instrument. Section 63 then asserts that the party whose name appears on the instrument otherwise than as maker, drawer, or acceptor is deemed to be an indorser. This section is, therefore, a sweeping declaration, apparently, of the total legal effect of such signature such party is given the rights of an indorser and is made subject to the liabilities of an indorser. In the absence of this section it is not conclusive that such party is an indorser. A signature on an instrument, wherever placed, may have been placed there by one who intended to sign as maker, acceptor, or drawer, although he did not place his name in the position where the names of such parties usually appear. Such party may have intended to assume the position of a guarantor of payment or of collectibility. Before the Negotiable Instruments Law, there was considerable conflict of authority as to the nature of the liability of one who had never had title to the instrument and signed other than as maker, drawer, or acceptor. Many courts held that such a signer was an indorser and this view was adopted by section 63. This section therefore, would seem to render inadmissible any evidence tending to change the nature of the liability of the accommodation indorser from that of an unqualified indorser to that of a joint maker, a guarantor, or other party. The last clause of the section, permitting the accommodation indorser to vary the nature of his liability if he "clearly indicates by appropriate words his intention to be bound in some other capacity," should be interpreted as though it read "clearly indicates by appropriate words on the instrument his intention to be bound in some other capacity." Several courts have held, however, that parol evidence is admissible to change the liability of the accommodation indorser. The conflict which the section was intended to silence still continues. Section 64 specifies in detail the parties to whom the liability, whatever the nature, of the accommodation indorser runs. The principle behind these detailed rules is that the accommodation indorser is liable to the creditor and is not liable to the debtor, the party accommodated. The section is phrased in language which seems to exhaust all the possibilities. There is one situation not provided for-where the indorser signed for the accommodation of the acceptor on a bill payable to the order of the drawer. Since the drawer payee is the creditor the accommodation indorser should be liable to him, but the section does not provide for this. liability, for subsection 2 provides that he shall be liable only to parties subsequent to the drawer. The desire to bring about a just result has led the New York Court of Appeals, in Haddock, Blanchard & Co. v. Haddock, a case following, to allow parol testimony to be introduced to render the accommodation indorser liable to the drawer. Here again we have the difficulty which it was thought was eliminated by the act. If parol testimony may freely be admitted to establish the liability of the accommodation in dorser, uniformity of decision as regards the nature of his liability is improbable, and this result is not desirable. Section 64 should permit the introduction of parol testimony for the one purpose only: That the person whose signature appears on the instrument did in fact sign the same in blank before delivery. Section 68 applies to a case where there are two or more accommodation indorsers for the same debtor, and expressly permits parol testimony to be introduced to show an agreement between them as to the proportion in which they should bear their common liability. Being co-sureties, they would share the loss equally. In the absence of this section it would be possible that the surety whose name appeared last could recover from his co-surety the full amount of the debt, a result which, obviously, should be avoided. Section 66, dealing with the liability of indorsers, in express terms, applies to "every indorser, who indorses without qualification." This includes the accommodation indorser. The accom modation indorser therefore enters into the same special engagement to pay upon due presentment and due notice of dishonor that is imposed by the unqualified indorsement. In many states, before the act, the accommodation indorser, not being regarded as an indorser, was not entitled to due presentment and due notice of dishonor. Section 66, also, it would seem, imposes upon the accommodation indorser the liability of a warrantor. Since the accommodation indorser is not a vendor, it is difficult to see upon what theory he should be made liable as a warrantor. The following cases illustrate some features of the general problem involved in the application of the above sections: For what purposes may parol testimony be admitted in actions against accommodation indorsers? ROCKFIELD et al. v. FIRST NAT. BANK OF SPRINGFIELD. SPEAR, J. Whether or not the answer avers a defense to the cause of action set up in the petition is the question here. The theory of the defendants' pleading is that Rockfield and Snyder, by writing their names across the back of the note, became indorsers in the commercial sense, and therefore entitled to notice of demand at maturity of the maker and of nonpayment, and, failing that, no liability attached. The theory of the petition is that these defendants, having signed the note before delivery, must be held to have signed with the purpose of giving it credit and of aiding negotiability, and therefore stand as maker, and although their names appear on the back of the instrument, and they are in law sureties, yet they are not indorsers in the commercial sense, and therefore not entitled to notice of demand and nonpayment. This view is the one adopted by the trial court, which incorporated in the judgment entry a finding that the defendants are in |