« ForrigeFortsett »
“In the case of Hollier v. Eyre 32 Lord Cottenham, in delivering his opinion in the House of Lords, laid down the rule of law relied upon by counsel for the plaintiff in the argument before us, that 'the question whether the plaintiff as between himself and the grantees was a principal in the grant of the annuity, or only a surety for the payment of it by another, must be ascertained by the terms of the instruments themselves: no extraneous evidence,' said he, ‘is admissible for that purpose.' In this doctrine we entirely concur; and we think that, if the discharge of the surety could only be effected by establishing that there was a different contract as between the creditor and the alleged surety from that apparent on the written contract, as for instance that the latter would be liable, not primarily but collaterally only, on the default of the principal debtor, we should be satisfied that the defence was not made out. It remains, however, to consider whether, assuming the contract, as between the creditor and the parties contracting with him, to be, as apparent on the face of the written document, a primary and not a collateral liability, an equity does not arise from the relationship of the principal and surety inter se known to the creditor. . . From those passages it seems to us that the rule, as laid down by Lord Cottenham in the House of Lords, may be inferred to be that equities such as that which we are discussing may arise, dehors the written agreement, from the relation of the principal and surety inter se if known to the creditor, and that such knowledge may be proved either from what appears on the face of the written instrument or from evidence aliunde.” 33
Mr. Chief Justice Shaw puts the same proposition as follows:
“The presumption, that two or more promisors of a note are equally responsible for its ultimate payment, so that if one pays the whole he shall have contribution, may be rebutted by showing that one signed for the accommodation and as surety for the other. ... So, where one of two promisors annexes the word 'principal' to his signature, and the other 'surety,' these descriptions do not affect the terms or legal effect of the contract, they are equally bound to the promisee or indorsee as if such words of description had not been annexed. They indicate the relation in which the parties stand to each other, and notice of such relation to the holder. But the fact of such relation, and notice of it to the holder, may, we think, be proved by extrinsic evidence. It is not to affect the terms of the contract, but to prove a collateral fact and rebut a presumption. It goes to show, that the defendant was in fact a surety; and the rights of contribution result accordingly.” 34
9 Cl. & Fin. 1, 45 (1840).
So also Mr. Chief Justice Gray:
“The fact that one debtor is a surety for the other is no part of the contract with the creditor, but is a collateral fact showing the relation between the debtors, and, if it does not appear on the face of the instrument, this fact and notice of it to the creditor may be proved by extrinsic evidence. ... As the right of the surety does not depend upon the contract, but upon the equities arising out of the circumstances of the case, the creditor is affected by knowledge of the true relation of the debtors, acquired at any time before he does the act which alters the position of the surety; and one who makes a promissory note for the accommodation of another is a surety, within the rule. . . . In this commonwealth, the surety may avail himself of this equity in defence of an action at law against him." 35
In other words, the discharge of the accommodation party by reason of the holder's disregard of the equities of the credit-lender's suretyship has nothing to do with “secondary” liability in the “law merchant" sense. Viewing the matter from this angle, it is evident that, even if the purpose of the Uniform Act is to secure uniformity in commercial transactions by making the instrument itself express the obligation of each party to it, that purpose has no effect upon the collateral contract of suretyship, or upon the equities arising from the holder's knowledge and disregard of such contract. As far as concerns the discharge of the accommodation maker by extension of time, the Act itself, including such extension among the causes for discharge of a party “secondarily” liable, and omitting it from the corresponding list for the instrument itself, may perhaps reasonably be held by its terms to furnish warrant for the abrogation of that defense 36 — though even that language of the Act may be a result of the aforementioned confusion between the two senses in which the terms “primary” and “second
36 Guild o. Butler, 127 Mass. 386, 389 (1879).
86 But see BRANNAN, NEG. Inst. Law, 2 ed., 117, contending that the Act should not be construed as abrogating even this defense. “The discharge of a party who, though primarily liable, is known to the holder to be a surety, by giving time to the principal debtor, seems to be covered by section 119–4. But if this is not so, then, since the discharge of a surety-maker or surety-acceptor by an extension of time granted to the principal by a holder with knowledge of the relation, is neither a discharge of the instrument nor a discharge of a party secondarily liable, this must be regarded as an omitted case, and therefore to be governed by the law merchant under section 196."
ary” are used. But upon this revelation of implied legislative intention, and not upon the Act's failure to mention suretyship, the courts ought to base the accommodation maker's increased liability. It is enough to deprive him of the equity of which the Act itself may be construed as suggesting that legislatures in enacting it intend to deprive him.37 The other equities of his peculiarly disadvantageous commercial and legal situation ought to remain in the “law merchant,” codified or uncodified. The same is true of proof aliunde that such equities exist.38 Farther than this the rule expressio unius est exclusio alterius 39 ought not
In the application of this rule to the Uniform Act, moreover, we encounter another misconception, as far-reaching as that regarding "primary” and “secondary” liability. We have noted that the limitation of the defense of extension of time to parties “secondarily” liable may find some warrant in its inclusion in Section 120 alone, indicating that the drafters of the Act had it in mind and would have included it elsewhere had they intended it to apply to any other party's liability. But is there anything to indicate that
37 See Fullerton Lumber Co. o. Snouffer, 139 Ia. 176, 117 N. W. 50 (1908), where the court evaded what it considered the harshness of the majority rule by a strict construction of the Act, limiting “holder” as used in the Act to holders for value, and discharging an accommodation maker because of time given the real maker by an original payee. Following this decision, as authority, one branch of the intermediate court of Missouri, in Long v. Shafer, 185 Mo. App. 641, 650, 171 S. W. 690 (1914), held the accommodation maker discharged by release of security by an original payee. On account of conflict with a prior decision of another branch of the court (Lane v. Hyder, 163 Mo. App. 688, 147 S. W. 514 (1912)), the case was certified to the Supreme Court of the state, where it is still pending. In a dissenting opinion Sturgis, J., said (185 Mo. App. 658, 171 S. W. 695): "Most, if not all, of the cases cited deal with the question of the release of the accommodation maker because of the holder making an agreement for the extension of time; and the majority opinion has not discussed, nor will I do so, whether or not a discharge by reason of the holder releasing securities held should be placed on a different basis as being a subject not treated of by the negotiable instruments act, and the further question of defendants' equitable rights against the holder, conceding that all parties to this note are makers and primarily and absolutely bound to its payment, because of his surrendering or appropriating to the payment of another note the security held by him from one of the makers of this note. See on this point Woods v. Finley, 153 N. C. 497,69 S. E. 502."
38 See the opinion of Chase, J., in Haddock v. Haddock, 192 N. Y. 499, 85 N. E. 682 (1908).
39 Richards v. Bank, 81 Ohio St. 348, 90 N. E. 1000, 26 L. R. A. (N. s.) 99 (1910); Vanderford v. Bank, 105 Md. 164, 66 Atl. 47 (1907); Cellers o. Meachem, 49 Ore. 186, 89 Pac. 426 (1907); Cleveland Nat. Bank v. Bickel, 159 Pac. 302, 303 (Okla.) (1916).
they had in mind the accommodation party's other equitable defenses, or any of his equitable rights as against the holder, or that these, any more than his rights and remedies as against the accommodated party, of which there is no pretense that the Act deprived him, are impliedly excluded by the failure to include them? Such interpretation we can justify only by assuming that the Uniform Act is an attempted codification of the whole body of the "law merchant," by implication repealing whatever it omits.
It is true that some of the decisions quoted by the conference hint at such assumption.40 A more logical view, however, Section 196 of the Act itself suggests:
In any case not provided for in this act the rules of the law merchant shall govern.""
On its face this provision is compatible neither with the theory that the Act codifies the entire "law merchant," nor with the assumption that it necessarily sets aside or changes such rules of the "law merchant" as it fails specifically to mention. The commonsense view of it is not that it is an attempt to codify the entire law of commercial paper, or anything more than an effort in the direction of uniformity in commercial transactions, leaving matters not covered by it to the operation of the general "law merchant.” Properly speaking, the rule expressio unius cannot apply to it at all. Even Mr. Chief Justice Rugg's remark, in discussing the purpose of the Act, that "it does not cover the whole field of negotiable instruments law," 42 bears out this view.
40 Brophy v. Wilson, 45 Mont. 489, 124 Pac. 510 (1912); Wisner v. Bank, 220 Pa. 21, 68 Atl. 955 (1908); Walker v. Dunham, 135 Mo. App. 396, 115 S. W. 1086 (1908); Trustees v. McComb, 105 Va. 473, 54 S. E. 14 (1906); Wirt v. Stubblefield, 17 App. D. C. 283 (1900).
41 AMERICAN UNIFORM COMMERCIAL ACTS, p. 184.
42 Union Trust Co. v. McGinty, supra. This is also the view of the leading critics of the Act. See the quotation from Professor Brannan's work on the Act, supra; also his suggestions for amendments to it. 26 HARV. L. REV. 588-600. See also the discussions of the Act by Professor Street, 11 LAW NOTES 105; Professor McGehee, 12 LAW NOTES 122; Professor H. H. McMahon, 80 LAW REPORTER 25; Professor McKeehan, 41 Aм. L. REG. (N. S.) 437, 499, 561. The subject receives some attention, also, in the Ames-Brewster debate (14 HARV. L. REV. 241; 10 YALE L. J. 84; 14 HARV. L. REV. 442; 15 HARV. L. REV. 26; 16 HARV. L. REV. 255; BRANNAN, NEG. INST. LAW, 162 seq).
His earlier suggestion in the same opinion, as to the elimination of suretyship, therefore goes too far. So also does the conference report above quoted, for which his suggestion was a precedent. The Uniform Act does not codify suretyship out of the “law merchant,” any more than it codifies a "law merchant” in which suretyship never belonged. On the contrary, it leaves such rules of suretyship as the “law merchant” has by analogy adopted, still operative in those cases involving commercial paper, to which the analogy applies.43 As at least one court has suggested, the abrogation of the defense of extension of time may perhaps be justified not only by the terms of the Uniform Act, but also by the fact that such defense has always been at best a technical one, seldom based upon any real injury to the accommodation party.44 Not so of surrender of security or release of funds or other acts of the holder with knowledge constituting positive neglect or wrong. To abolish the equities of the accommodation party's suretyship, therefore, is to ignore both the fundamental nature of his contract and the purpose of the Uniform Act. Such abolition the rule expressio unius, applied to the Act, alone justifies. The same reasoning which regards extension of time as a merely technical defense must condemn that rule, so applied, as also too technical for consonance with the spirit of equity which permeated the “law merchant” and which the Uni
* Bean, J., in Hunter v. Harris, 63 Ore. 505, 513, 127 Pac. 786, 789 (1912), an action between accommodation parties. “In the examination of this question it is worthy of note that a surety on a negotiable instrument is not mentioned in the negotiable instruments law. This law provides that, in any case not provided for in the act, the rules of the law merchant shall govern.”
The late Dean Ames, discussing subsections 120–5 and 6 of the Uniform Act, said: “There seems to be no sufficient reason, on the one hand, for inserting these doctrines of suretyship in a negotiable instruments code, or, on the other hand, if they are to be inserted, for omitting other doctrines of suretyship of equal importance.” 14 HARV. L. REV. 241, 254; BRANNAN, NEG. INST. LAW, 175. He favored the dropping of these subsections, and the adding of a subsection providing for the release of the accommodation party if the holder with knowledge of the accommodation releases or gives time to the accommodated party.
Hon. Amasa D. Eaton, former president of the Conference of Commissioners on Uniform State Laws, addressing the conference in 1907, expressed agreement with the critics who contend with Professor Brannan, that the Act can be so construed as to harmonize with the established rules of suretyship. 31 REPORTS OF THE AMERICAN BAR ASSOCIATION, 1154, 1164. See also the discussion of the Act by Professor Crawford D. Hening, 59 U. of Pa. L. REV. 532, 542.
4 Mason, J., in First National Bank o. Livermore, 90 Kan. 395, 398, 133 Pac. 734, 47 L. R. A. (N. S.) 277 (1913).