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Robinson v. Kilbreth.

rie, and lived at Pittsburg. John B. Guthrie had intended to become a partner in the firm of J. V. Guthrie & Co., but subsequently abandoned such purpose. The firm of J. V. Guthrie & Co. lacked the necessary capital to carry on their business, and was obliged to resort to bank accommodations to enable them to do so. To effect their object, at the special request of John B. Guthrie and for his accommodation, the plaintiff, Robinson, a man of large means and undoubted credit,"living at Allegheny City, agreed to lend the use of his name to raise money for said firm. The usual course was for John B. Guthrie to draw on James V. Guthrie & Co., to the order of Robinson, who indorsed the bills; and, at maturity, they were taken up by the proceeds of his acceptances, which were usually discounted by banks at Cincinnati. Some time in the year 1851, the firm of J. V. Guthrie & Co. failed, and their credit was so far impaired that the Cincinnati banks refused further to discount their paper. To save them from protest, John B. Guthrie, through his brother, William Guthrie, requested the defendant Kilbreth to lend the use of his name in the place of J. V. Guthrie & Co. To this, Kilbreth assented, saying at the time to William Guthrie, . that it must be understood that he was to incur no liability thereby. This condition was made known to John B. Guthrie, but never to the plaintiff. Nor does it appear that the plaintiff requested Kilbreth to go on the paper, or had at the time any knowledge of the arrangement between him and John B. Guthrie.

At the time Kilbreth agreed to lend the use of his name, the bills of J. V. Guthrie & Co., outstanding and unpaid, amounted to $4,600. On all this paper, John B. Guthrie was the drawer and the plaintiff either indorser or acceptor. This sum was in bills of different amounts, and had been discounted at different banks. Pursuant to the arrangement with the defendant, as these bills matured they were paid by the proceeds of other bills drawn by John B. Guthrie, each bill having the name of plaintiff or defendant

Robinson v. Kilbreth.


either as acceptor or indorser. These bills were finally reduced to and consolidated in two bills. One for $2,500, dated August 27, 1852, drawn by the defendant, at four months, to the order of Kilbreth and De Camp, on the plaintiff Robinson, accepted by him, and indorsed by Kilbreth and De Camp. This bill was discounted at the Bank of Lawrenceburg, on the application of Kilbreth, and the proceeds were applied to take up paper at other banks on which Robinson was acceptor. . This is the foundation, as I understand the argument of the counsel of the defendant, on which he claims a set-off against the plaintiff for mony paid for his use.

The other bill set up in support of the set-off is a bill for $2,000, dated August 28, 1852, drawn by Kilbreth, at four months, to the order of Kilbreth & De Camp, accepted by the plaintiff, and indorsed by said firm. This bill is now in the possession of Kilbreth, and it is insisted by his counsel that it is a legal set-off to the claim of Robinson on the $1,000 bill sued on, and that he is entitled to a judgment after deducting the amount of said bill.

As to the $2,500 bill referred to, the facts seem to be that it was sent by the Lawrenceburg bank to the Bank of Pittsburg for collection; and at maturity was paid by John B. Guthrie at that bank by the proceeds of a bill for $1,500, drawn by him, indorsed by Robinson, and accepted by Kilbreth. This bill was discounted by Patrick & Fields, bankers at Pittsburg, and the proof is clear that it was paid some time after maturity by the drawee, John B. Guthrie. The other part of the $2,500 bill was paid by the proceeds of a bill for $1,000, drawn by Guthrie to the order of Robinson, indorsed by him, and accepted by Kilbreth. This is the bill on which this suit is brought. As already stated, it was discounted at the Lafayette bank of Cincinnati, protested for non-payment by the acceptor, paid by Robinson as indorser, and is now held by him. The $2,500 draft having thus been paid and extinguished by Guthrie and Robinson, I can not perceive any ground on

Robinson v. Kilbreth.

which the defendant's claim of set-off, based on this transaction, is sustainable. And so far as this suit is concerned, it may be left wholly out of view.

The only controversy in this case arises on the $2,000 bill of August 28, 1852. This bill, as before noticed, was accepted by Robinson at the request and for the accommodation of John B. Guthrie. He sent the bill to Kilbreth, who indorsed it and procured its discount at the Trust Company at Cincinnati, on the day of its date, and received the proceeds. It was sent by the Trust Company to the Exchange Bank at Pittsburg for collection, and paid by Guthrie at or soon after maturity. The evidence that it was thus paid is incontrovertible. Guthrie testifies that he so paid it, and took up the bill and exhibited it to Robinson to satisfy him that he was discharged from liability. The fact of payment also clearly appears by the entries in the books of the bank, which are in evidence.

The defendant, however, claims that Guthrie paid the $2,000 bill of the 28th of August by the proceeds of another bill for the same amount, dated December 1, 1852, drawn by Guthrie on Kilbreth to the order of Robinson, indorsed by him, and accepted by Kilbreth. This bill was negotiated at a bank in Cincinnati, and, as Kilbreth testifies, was paid by him at maturity. And it is insisted by his counsel, in a most elaborate written argument, that as the proceeds of the bill paid by Kilbreth were applied to take up the bill on which Robinson was liable as acceptor, such payment is a valid set-off to the plaintiff's claim in this suit, as so much money paid for the use of the plaintiff.

This presents in the view of the court, the only question involving any doubt in this case. After a careful consideration of the points made in the argument of the defendant's counsel, I am unable to concur in his conclusions. The solution of the questions involved depends upon the position which the parties occupied on the paper referred to, and the legal liabilities arising from it. Now, the rule of law is well settled by the authorities already cited, that

Robinson v. Kilbreth.

all the parties upon accommodation paper, except the party accommodated, are to be treated as parties to business paper, and subject to the strict principles of commercial law applying to such paper; and that where there is no express agreement to the contrary, the legal conclusion is that each party stands in the relation to the others as on business paper. The acceptor on such paper is always liable to the other parties. The cases in 11 and 18 Ohio Reports before referred to, as well as the elementary writers cited, clearly sustain this position.

The fallacy in the extended argument of the defendant's counsel arises, as I think, from his assumption, that as between these parties there was an understanding, express or implied, that they were to stand in the relation of sureties for each other, and in the event of any loss each was to be liable to contribution. But the evidence does not sustain this view. It is true the defendant Kilbreth stated, when he lent his name for the accommodation of J. V. Guthrie & Co., that it must be understood he was to indur no reponsibility thereby. It is not necessary to decide whether a party can limit his legal liability by such a declaration, for it is in evidence in this case that the plaintiff was never informed that the defendant had annexed such a condition in putting his name on the paper. The plaintiff can not be presumed, therefore, to bave been affected in his action by such condition. The inference fairly deducible from all the facts is, that both the plaintiff and defendant had entire confidence in the ability of John B. Guthrie to protect them from ultimate liability; and with this impresssion, became parties on the paper. The plaintiff, in the strictest sense, was on the paper as either an accommodation indorser or acceptor for John B. Guthrie. He had no interest in the transactions in which the paper originated; he was not indebted to either of the Guthries, nor did he receive any remuneration for the use of his name on their paper. There was no request from him to Kilbreth that his name should be used, or any correspondence or communication

Robinson v. Kilbreth.

between them on the subject. He might well have inferred, knowing the fact that Kilbreth was the brother-in-law of the Guthries, that his motive was to do them a favor, and in doing so was willing to incur the risk which he assumed by going on their paper. But without pursuing this view further, I am clear that there is nothing developed by the evidence, which, either expressly or by fair implication, justifies the conclusion that there was any agreement or understanding between these parties exempting them from the application of the settled principles of commercial law in determining their rights and liabilities.

There can be no question that the payment of the $2,000 bill of the 28th of August, as before stated, by John B. Guthrie, in behalf of Robinson, the acceptor, was to all intents and purposes an extinguishment of that bill. It became by such payment functum officii, and could not be enforced against any of the parties. 2 Parsons on Notes and Bills, 216, 219; Byles on Bills, 193, 323. And I do not see on what ground the defendant can assert any rights as the holder of the bill. It is clear he could not sue Robinson as acceptor, and equally clear he can not set it up as a set-off in this suit. It was delivered by the collecting bank to John B. Guthrie as a paid bill. Guthrie could not transfer it to Kilbreth, and he swears he did not either transfer or deliver it to him. After payment he put it among his papers, and does not know how or when it came into the possession of Kilbreth. Kilbreth says be obtained it from William Guthrie, since deceased, but under what circumstances does not appear. He is not, therefore, the bona fide holder of the bill, and can assert no rights under it.

That Guthrie paid the bill with the proceeds of another bill discounted on the credit of the parties, does not, as it seems to the court, affect in any way the question under consideration. That was a matter distinct from, and independent of, the prior bill paid by Guthrie. It was not paid by a renewal of the same bill at the same bank, but by the negotiation of a new bill at a different bank. The pro

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