Opinion
June Term, 1821.
If two individuals endorse a note in virtue of a mutual understanding with each other to lend their names for the accommodation of the maker, evidence may be left to a jury of such mutual understanding or agreement.
THIS was an action from ANSON, brought to recover the amount of a promissory note made by Edward G. Williams, negotiable and payable at the Bank of Cape Fear, in Fayetteville. The note was made payable to and endorsed by the defendant and afterwards by the plaintiff; both these endorsements were made for the accommodation of the maker, who procured the note to be discounted at bank and applied the proceeds to his own use. When the note arrived at maturity it was regularly demanded at the bank, protested and due notice given to the defendant and plaintiff. The plaintiff being sued by the bank paid the amount of the note, and brought this action against the defendant as first endorser. On the trial below the defendant contended that both the plaintiff and himself were to be viewed as joint securities of Williams, having both endorsed for his accommodation, and that the plaintiff was therefore only entitled to recover one-half of the note. The court instructed the jury that there appearing no evidence of any special agreement between the parties this case was to be regulated by the law merchant; and that the defendant, being the first endorser, was liable to any subsequent endorser who was a bona fide holder (314) of it or who had been compelled to pay the note to a bona fide holder, whereupon the jury returned a verdict for the full amount of the note. A new trial was moved for on the ground of misdirection of the court, which was refused, and from the judgment rendered pursuant to the verdict defendant appealed.
Gaston for plaintiff.
It does not distinctly appear whether the plaintiff endorsed the note in virtue of a mutual understanding with the defendants to become bound or lend their names for the accommodation of Williams, or whether after the note was made by Williams and endorsed by the defendant for William's accommodation the plaintiff, without any previous agreement with the defendant to that effect to give the note additional credit for the accommodation of Williams, also endorsed it. In the case first put I think the evidence was to be left to a jury of a mutual agreement to stand as joint securities, and there is certainly nothing in the form of the writing which forbids the defendant from showing the special agreement and on what consideration (315) the parties respectively signed their names or agreed to become bound. I therefore think the presiding judge was wrong in requiring a special agreement of mutual liability to be proven in words. The jury should have been instructed that in law a mutual liability arose from a mutual agreement to become bound for accommodation, unexplained or uncontradicted by other circumstances. If the case be as put in the latter part of the foregoing statement authorities may be found to show that a joint liability does not arise, which is as far as the cases relied on by the plaintiff's counsel go (Chitty on Bills, 155, 357, 160; 7 Johns. R., 361; 5 Cranch, 49, 142), from which I am strongly inclined to believe that the foregoing opinion is supported by authority — at least is not contradicted. We were without the aid of an argument for the defendant, and although strongly inclined for the plaintiff, if the case be as last stated, do not wish to express an opinion on it. But as from the statement it is doubtful how the facts are, and if as first stated we think the law has not been administered, the judgment of the Court is that there must be a new trial.
Cited: Hill v. Robinson, 48 N.C. 503; Mendenhall v. Davis, 72 N.C. 154; Smith v. Haynes, 82 N.C. 450.