Lacy v. Lofton

26 Ind. 324

• Court: Indiana Supreme Court
• Decided: May 15, 1866
• Status: Published

Opinions

Erazer, J.

The questions presented in this case can be . stated without incumbering tlie opinion with a recital of the contents of the record.

1. Is the drawer of a bill of exchange made for the accommodation of the payee, the surety of the latter, within the meaning of the statute which provides for a trial of the question of suretyship between the defendants to a suit upon the instrument, brought by the holder thereof?

The object of the statute, (2 G. &. H., § 674-5, p. 308,) was to provide a convenient remedy whereby the surety might protect himself in the first instance, without injurious embarrassment to the plaintiff in the collection of the debt, by obtaining an order of court directing the sheriff' to exhaust the property of the principal before levying execution upon the property of the surety.

It is well settled, and we do not understand it to be controverted, that as between the parties liable upon the instrument, the form of it is not conclusive as to their relations with each other, but the actual relations may be shown to be other than they appear upon the face of the contract, and as between themselves, their rights will depend upon the actual facts. Marsh v. Consolidation Bank, 48 Penn. St., 510; Kelly v. Gillespie, 12 Iowa 55; Clapp v. Rice, 13 ; Weston v. Chamberlin, 7 Cush., 404; Dickerson v. Commissioners, &c., 6 Ind., 128. Authorities as to the rule of evidence might be multiplied, but as that is not controverted it is needless to fortify the proposition further. There is, in view of authority, no question that one who draws a bill of exchange for the accommodation of the payee may defeat an action against him thereon by the payee, or that after payment he may recover the amount from the payee, and this solely upon the ground that ho is merely a surety. And yet the instrument imports that he is the principal debtor. The case may be said to be a well established exception to the rule of evidence which forbids written instruments to be changed or contradicted by oral testimony. The convenience of commerce has rendered the mode of lending credit to another by the use of a bill of exchange drawn payable to that other, so that it may be negotiated by him at will, a common transaction; and considerations of justice and commercial necessity require that the implications arising from the form of the instrument shall, as between the parties, yield to the facts as they can be shown by oral evidence actually to exist. The proceeding authorized by the statute already cited is a litigation exclusively between the parties alleged to sustain towards each other the relation of principal and surety. The plaintiff in the suit cannot be a party to this controversy, for it cannot injuriously affect him nor delay his suit. Why then shall not the statute apply to the case ? It is argued that the Statute contemplates only a surety who appears to bo such upon the face of the written contract. But in Dickerson v. Commissioners, &c., supra, which was a joint and several bond, silent as to who was surety, it was held that the sureties might, even as against the payee of the bond, show their true relation, for the purpose of avoiding liability, in consequence of a valid contract with the principal for extending the time of payment without their consent or knowledge. Thus the presumption arising from the face of the bond was allowed to be overcome by oral proof of the actual fact, even against the obligee. To give the statute force only when the fact of suretyship appears upon the face of the instrument, would be adopting a narrower construction than its terms import, and one not required by any principle of justice or policy. . If the maker of the bill would be held only in equity to be the surety of the payee, and on,that ground entitled to equitable relief, how can we say that he shall not be deemed a surety within the purview of this statute? "Wiry shall we, in searching for the sense of the legislature, adopt the most narrow and technical sense of the term “ surety,” as used in this remedial enactment, and thus deny relief in a case as much within the mischief of the old law as if the fact of suretyship had been disclosed by the written contract ? Such statutes are, according to all authority, to be liberally construed, so as to avoid the mischief and advance the remedy.

The considerations mentioned are with a majority of the court so palpable and controlling, that but for the dissent of our brother Gi-egory, and the decision of this court in Gordon v. The Southern Bank of Kentucky, 19 Ind. 192, it would probably not have been deemed useful to refer to them go fully. The opinion in the case alluded to is not very satisfactory. No reason is intimated for the conclusion reached, and as it cannot find a basis upon other than the most narrow and technical construction of a remedial statute, we feel compelled to overrule it.

2. On the trial evidence offered by the appellant, tending to prove that he and one McGollem, the drawee of the bill, did not do business with the public as partners in the purchase of hogs, was rejected, and this is claimed to have been an error. We do not think so. The appellee offered the admissions of the appellant, made to the appellee when the bill was signed, and to others, to the effect that there was some sort of a joint arrangement for the purchase of hogs, but did not attempt to establish a partnership by proof that they held themselves out to the general public as partners. The evidence rejected was not an answer to this, and would not tend to disprove it orto illustrate the issue joined, •which was not as to how those parties dealt with the public, but whether Lofton signed the bill for Lacy’s accommodation.