Miller v. Pollock

1. Where negotiable notes are indorsed over ns collateral security for other notes then and there discounted by the indorsee for the indorser on the faith and credit of the notes indorsed as collateral, the indorsee of said notes is to be regarded as a purchaser for value. Hence no prior indorser can set up as against such indorsee the fact that he is an accommodation indorser only. 2. In a suit by such indorsee, against such prior indorser, no evidence is admissible on behalf of the defendant which does not prove or go to-prove actual payment of the notes to the indorsee. O. Where a suit is instituted by one person to the use of another, and subsequently on the trial it appears that the use plaintiff is both the legal and equitable owner of the security sued upon, it is competent for the court to allow the record to be amended so as to correspond to the facts of the case. •

Error to the Court of Common Pleas of Butler county: Of October and November Term, 1881, No. 304. • Assumpsit, by the Kittanning Insurance Company, for use of William Pollock and James Musgrave, administrators of James E. Brown, deceased, against Adam Miller, upon two promissory notes, drawn by Frederic Miller to the order of defendant, and by him indorsed. Subsequently, on the trial of tlio cause, it appearing that Pollock and Musgrave, administrators, were both the legal and equitable owners of the notes, the record was, by leave of court, and under objection of defendant, so amended as to insert their names as sole plaintiffs. (First and second assignments of error.) On the trial the following facts appeared: On March 7th 1877, Frederic Miller, having purchased of Samuel W. G. Brown the interest of said Brown in the firm of Brown & Ivory, gave him, in payment therefor, the notes in suit, indorsed by defendant. On March 19th 1877, before said notes had reached maturity, they were indorsed over by Samuel G. W. Brown to James E. Brown, as collateral security for certain other notes that day given by said Samuel G. W. Brown to said J ames E. Brown. These last-mentioned notes were, on maturity, taken up by and merged in notes for larger amounts, with which new collateral was given. These renewal notes were never paid. James E. Brown having afterwards died, the plaintiffs, his administrators, presented the notes in suit at maturity to the maker. Payment thereof being refused, the present suit was then instituted. Defendant offered to prove that he was a mere accommodation indorser; that Frederic Miller, the maker of the notes in suit, had, after the date thereof, sold out all his interest in the firm of Brown & Ivory to Ivory, the said Ivory agreeing to assume all debts of the said firm; that said Ivory afterwards sold all the property of said firm, and purchased with the proceeds thereof a certain leasehold estate in an oil well, and had given a mortgage on said leasehold to Samuel W. G. Brown in full payment and satisfaction of the notes in suit, which mortgage said Samuel W. G. Brown afterwards assigned to James E. Brown, plaintiff’s decedent, said James E. Brown being notified that the mortgage was given in payment of the notes. Offer objected to by plaintiffs as irrelevant. Objection sustained; evidence excluded. (Fifth assignment of error.) Defendant requested the court to charge as follows : “ 1. The plaintiffs having shown and admitted that the notes in suit were held as collateral security merely, and were not transferred as payment, the plaintiff is not a bona fide holder, and the notes are subject to the equities existing between the original parties. Answer. We refuse this, there being no evidence that the notes taken were held as collateral security for an antecedent debt, but for money advanced on the day that the collateral security was taken on another note. (Third assignment of error.) “ 2. It having been shown by the plaintiffs that the notes of Samuel G. W. Brown, for which the notes in suit were transferred as collateral security, were paid by the substitution of new notes, with other collaterals ; that it relieved Adam Miller, who was but an accommodation indorser or surety, and that the plaintiffs cannot recover without showing what has been done with the collaterals, and the burden of proof is on them to show what has been done with them.” Answer. We refuse this also. We have not seen any evidence in the case that would go to show that these notes in suit were paid by the substitution of new notes or other collaterals. The evidence, as we understand it, is, that when these notes matured they were merged or included in other and larger notes, and additional collateral security taken; that when tiie additional collateral was taken the notes had grown larger, and then the collateral grew larger. Now, if at any time it was shown that these notes were reduced below the original amount of $2,000, it was a payment by collaterals, and the defendant would bo entitled to credit for whatever amount it is shown they were reduced below $2,000. But, if we understand the proof, the indebtedness never was reduced, but it kept increasing all the time, and new collaterals were taken when the notes were increased. The notes were given for $2,000 originally. As they were not paid, the debt due James E. Brown never was reduced below $2,000, and there is no foundation for saying that the proof shows that he should have given credit on these particular notes for the amount that he received on other collateral securities. We understand Mr. Pollock to say that neither of these notes of Frederic Miller, indorsed by Adam Miller, nor the notes of Samuel G-. W. Brown, have been paid by the'payment of this collateral or otherwise. That is what, we understand, he swore to on the witness stand; that the note of S. G-. W. Brown remains unpaid, and the collaterals taken, as appear by the list, remain unpaid. According to that, then, S. G-. W. Brown owed the estate of James E. Brown largely in excess of the $2,000 taken as collateral or part collateral. We believe that is all that is necessary to say to the jury. If the testimony of Mr. Pollock is relied on we do not see how there can be anything in this case but a verdict for the plaintiffs for the amount of the notes and interest. (Fourth assignment of error.) The court instructed the jury to render a verdict for the plaintiffs. (Sixth assignment of error.) Yerdict and judgment accordingly. Defendant thereupon took this writ, assigning for error the action of the court, in permitting the amendment in the names of the plaintiffs, the rejection of defendant’s offers of testimony, the answers to defendant’s points, and the instruction to find for plaintiffs. The assignments of error with regard to the answers to defendant’s points were not sec. reg. in that they did not set out at length the points and answers. The amendment should not have been permitted. The Act of Assembly contemplates the correction only of a mistake in the name and not in the title of a party: Freeland v. Penn. Bailroad, 2 Pearson 73 ; Ward v. Stevenson, et ah, 3 Harris 21; Commonwealth ex rel. v. Dillon, et al., 32 P. F. Smith 45; Young v. Young, 7 Norris 422. The transfer of mercantile paper as collateral security does not constitute the transferee a holder for a valuable consideration : Petrie v. Clark, 11 8. & B. 377; Walker v. Gfeisse, 4 Wharton 258 ; Depean v. Waddington, 6 Wharton 220; Hartman v. Dowdel, 1 Bawle 279; Trotter v. Shippen, 2 Barr 358; Oakford v. Johnson, 2 Miles 203; Jackson v. Polack, 2 Miles 362 ; Lord v. Ocean Bank, 8 Harris 384; Sitgreaves v. Bank, 13 Wright 359 ; Lenheim v. Wilmarding, 5 P. F. Smith 73 ; Ash-ton’s Appeal, 23 P. F. Smith 153; Boyer v. The Keystone National Bank, 4 W. N. C. 86; Muirhead v. Kirkpatrick, 9 Harris 240. Defendant could therefore set up the fact that he was a mere accommodation indorser as against plaintiffs. The amendment was clearly proper: Bangler v. Ilummell, 1 Wright 132; Commonwealth ex rel. v. Dillon, et al., 32 P. F. Smith 44. The notes were indorsed to plaintiff’s decedent as collateral, not for an antecedent debt but for a new and distinct consideration. Plantiffs were therefore in the position of purchasers for value: Kirkpatrick v. Muirhead, 4 Harris 123.