Bills and Notes, Accommodation indorser. Contract, Agreement in writing. Evidence, Presumptions and burden of proof, Competency, Admissions and confessions. Practice, Civil, Exceptions, Judge's charge. Witness, Impeachment. Estoppel.
If, at the request of a lender of money and wholly for his convenience and accommodation, a person consents to have the title to certain promissory notes and mortgages securing them pass through him as a conduit with the understanding and agreement that he shall incur no personal liability, and if in pursuance of this agreement the notes and mortgages are made to him and he indorses the notes to the lender and transfers the mortgages to him, the lender cannot recover in an action against him as indorser, because in such an action brought by the party accommodated the indorser is free to show the facts in defence.
In such an action, where the facts are in dispute, the burden is on the plaintiff to prove that the defendant received a consideration for his indorsement of the notes.
It is settled that no exception to a portion of the charge of a presiding judge will be sustained where the charge as a whole sufficiently states the law applicable to the issues tried between the parties and where, as in the present case, the failure of the jury to adopt the view of the excepting party cannot be attributed to any fault of the judge and is not an error of law.
In an action on certain promissory notes against an indorser, whose defence is that he indorsed the notes without consideration at the request and for the accommodation of the plaintiff, where the defendant, testifying as a witness, has admitted on his cross-examination that before he brought a certain action against the plaintiff on an independent demand he had claimed the right to set off that demand against his liability on the notes on which he now is sued, not then setting up his present defence on the notes, the record of a judgment against the witness in the action referred to is not admissible to impeach his credibility, because that judgment settled only the controversy then on trial, and does not affect the present issue either by estoppel or as an admission.
BRALEY, J.
The makers and indorser of the notes having been joined as defendants, it is conceded that as to the makers, who have been defaulted, the plaintiff is a holder for value; and it would not avail the indorser who alone defends, that with the plaintiff's knowledge he became bound for their accommodation. R.L.c. 73, § 46. Neal v. Wilson, 213 Mass. 336, 337, and cases cited.
While it was unquestioned that, with the accompanying mortgages, the notes were taken by the plaintiff in payment for the transfer of certain personal property to the makers and mortgagors, the evidence as to their business relations and dealings with the indorser, hereinafter referred to as the defendant, both before and after the transactions, is irreconcilable. The testimony of the plaintiff's president and of its counsel, who prepared the papers and at whose office they were executed, tended to show that the defendant had in some form a pecuniary interest in the property or that the property had been transferred to the makers at the defendant's request and he had indorsed to secure the transfer.
The jury, if they believed this evidence, would have been warranted in finding a valuable consideration, sufficient to support the defendant's promise. Hubbard v. Coolidge, 1 Met. 84. Warren v. Durfee, 126 Mass. 338.
But the defendant testified that at the solicitation of the plaintiff's president, and wholly for its convenience and accommodation, he consented to the use of his name as a mere conduit to pass title to the plaintiff of the notes as well as to the property named in the mortgages, with the distinct understanding and agreement that he should incur no personal liability.
"As to third parties, the rights and liabilities of an accommodation party are, in general, the same as those of a party receiving valuable consideration for his signature; but between the accommodation party and the person accommodated there is no such liability, and one who draws or indorses commercial paper for the accommodation of another is not liable on it to him, whatever their apparent relation upon the paper may be." 3 R.C.L. § 336, and cases cited. Bird v. Daggett, 97 Mass. 494.
The credibility of the witnesses was for the jury. If they believed the defendant's evidence, or if they found the evidence evenly balanced, there was no consideration shown for his promise and he was entitled to a verdict. Lockwood v. Twitchell, 146 Mass. 623. Warren v. Durfee, 126 Mass. 338, 341. Corliss v. Howe, 11 Gray, 125.
The plaintiff's first, third and fourth requests could not have been given as formulated. The jury were to determine the actual transaction and a verdict for the plaintiff could not have been ordered. The validity of the notes as enforceable contracts against the defendant depended upon proof of a valuable consideration, the absence of which could be shown by parol evidence, with the burden of proof upon the plaintiff to satisfy the jury that the defendant could be held. Hill v. Whidden, 158 Mass. 267. Delano v. Bartlett, 6 Cush. 364. The first clause of the fifth request, that the notes, mortgages and assignments were part of the same transaction, is sufficiently covered by the instructions; and the remainder of the request, that a consideration moving either to the makers or to the indorser would support the obligation of each, rests upon the plaintiff's theory that the defendant was liable because at his request the plaintiff had transferred title to the horses and wagons, as the parties understood, to the makers and the defendant, even if the defendant's name did not appear in the bill of sale, or that he had indorsed for their benefit. It could not have been given without directing the attention of the jury to this qualification, and the judge carefully and accurately pointed out the distinction.
The exception taken at the close to so much of the charge as failed to make clear to the jury that a valid consideration may have existed, which would bind the indorser without the transfer of any property or of any beneficial interest in property to him, "because it makes no difference whether Gray got any property or . . . any beneficial interest, if the transaction was done at his request," was not well taken. The charge repeatedly directed the attention of the jury to the respective claims of the parties. They were told plainly that, if the defendant indorsed at the makers' request, he was liable as well as if the plaintiff transferred the property to the makers at his request, or he had a beneficial interest in the property, and what the plaintiff must prove to hold the defendant on his indorsement was defined with sufficient accuracy. See Arlington National Bank v. Bennett, 214 Mass. 352, 357; Doe v. Boston Worcester Street Railway, 195 Mass. 168, 172.
The next exception is to certain statements of the judge that the makers never promised to pay the defendant anything, and that the papers themselves threw no light on the questions the jury were to pass upon, or stated the real transaction. It was unquestioned that on the face of the notes the defendant had no defence. But the case was tried, from beginning to end, upon a question of fact, dependent upon extrinsic evidence, whether the contract between the defendant, the makers and the plaintiff was as the plaintiff contended, or whether the defendant acted only at the request and for the benefit of the plaintiff. The nature of the transactions, to which the judge referred and which he directed the jury to consider, as shown by the context, were the questions raised by their respective contentions.
The further request, apparently proffered after the foregoing exceptions had been alleged, rests upon the assumption that there was a mutual agreement and understanding between the makers and the defendant that the makers should take title to the property for the benefit of themselves and of the defendant. Although accurate as a statement of the plaintiff's contention, which already had been given, it ignored the defence and the adverse conclusion which the jury might find on all the evidence. The language used by the judge, after reading the request and saying that he gave it, did no more than again to recall to the jury the real question which they must decide, and he repeated that the burden rested upon the plaintiff to satisfy them that its contention as to the consideration was true, but if the indorsement was merely for the plaintiff's accommodation, they must find for the defendant. Morrison v. Holder, 214 Mass. 366.
It is settled that portions of a charge cannot be separated and excepted to, where the charge as a whole, as in the present case, sufficiently states the law applicable to the issues which the parties actually tried. Sayles v. Quinn, 196 Mass. 492, 496. The failure of the jury to adopt the plaintiff's view cannot be attributed to any fault of the judge and is not an error of law.
A single exception remains to the exclusion of evidence. To impeach the credibility of the defendant as a witness the plaintiff properly was allowed to introduce in evidence the contradictory statements made by him in the bill in equity, to which he had affixed his signature and made oath. DeMontague v. Bacharach, 187 Mass. 128. But the record of the judgment in the action at law was inadmissible. The defendant's liability on the notes was not in issue in that case. It was an action to recover a debt alleged to be due from the plaintiff, and in reply to questions of counsel in cross-examination the defendant admitted he had claimed before the action was brought that the debt should be set off against the notes. The plaintiff had the full benefit of this and could ask the jury to draw the inference that the claim of set-off was an admission that he was liable on the notes. The judgment in favor of the defendant which followed the verdict only settled the question there tried. It could not affect the issue in the case at bar, either by estoppel or as an admission. Maguire v. Pan-American Amusement Co. 211 Mass. 22, 25, 26.
The plaintiff having failed to show affirmatively any reversible error, the exceptions, in the opinion of a majority of the court, must be overruled.
So ordered.