
    Robertson and Company v. Williams and Smith.
    Decided Feb. 3d, 1816.
    J. Promissory Note — Accommodation Endorser — Rights of, — If a promissory note, negotiable at Bank, be made and endorsed, for the purpose only of obtaining accommodation for the maker, and being left by Mm with a second endorser, to lie lodged in the Bank for discount, be fraudulently-put into circulation by such second endorser, to raise money thereupon tor his own use; a third endorser, knowing nothing of such fraud, may ■cause the note, (if lodged in the Bank for collection, and not paid w-hen due.) to be protested as to the maker and prior endorsers, pay it himself, and thereupon maintain his action against the maker arid first endorser; notwithstanding no valuable consideration passed, or was contracted for, between him and the second endorser, but he made the endorsement merely from the motive ot enabling such second endorser to get the note discounted at the Bank.
    See Norvell v. Hudgins, 4th Munf. 496.
    This was an action of Debt, in behalf of the Appellants, on a promissory note negotiable at the Office of Discount and Deposit of the Farmer’s Bank of Virginia, at Petersburg, against Samuel G. Williams the maker, and Burwell Smith the payee and first endorser. The note was in the usual form, and duly stamped, dated August 9th, 1814, for fifteen hundred dollars, *“value received,” payable in sixty days, “without off-sett;” but the words, “credit the drawer,” were not subjoined. It was endorsed by “Burwell Smith,” “James F. Lochhead,” “William Robertson and Co.,” and “Peyton Mason, sr. by Arch’d Todd.” Issue being joined on the plea of “nil debent,” the plaintiffs, at the trial, proved the handwriting of the maker, and of the first and second endorsers. They also proved, that when the note became due, having been placed in the Office of Discount and Deposit of the Farmer’s Bank of Virginia, at Petersburg, for collection, it was duly protested, for non-payment, as to the said maker, and first and second endorsers; which protest was given in evidence, certified by a notary public, with his seal annexed. The plaintiffs proved that, after the said protest made, they, being the next endorsers, paid the whole amount of the note at the said Office of Discount and Deposit, without the same being protested as to them.
    The defendants then proved that the defendant Williams, having previously obtained an accommodation, at the Peters-burg Office of Discount and Deposit of the Bank of Virginia, to the amount of seven hundred and fifty dollars, through the agency of the said James E. Lochhead, (a resident of Petersburg, and the defendant Williams’s town endorser,) and being desirous to procure an accommodation for a greater amount, to wit, the amount of twelve hundred dollars, at the same office, through the same agency, wrote his name on the blank stamped paper, whereon the promissory note in question was afterwards written, and procured the other defendant Smith to endorse his name thereon, and sent the said stamped paper, so signed and endorsed, to the said James F. Lochhead, (being still in blank,) to be by him filed up with a promissory note, in the usual form, for the sum of twelve hundred dollars, for the particular purpose of procuring, if he could, from the said Office of the Bank of Virginia, an accommodation for the defendant Williams himself, to that amount, and for no other purpose whatever; and, accordingly, no consideration whatever passed from Smith, the payee of the said note (as it was afterwards filled up) to Williams the maker thereof, or from Lochhead the second endorser, to Smith the first endorser; that, after sending the said note, so signed and endorsed in blank, *the defendant Williams sent to Lochhead another piece of stamped paper, blank, except as to the signature, with his signature thereon, and the endorsement of the defendant Smith, to be by the said Lochhead filled up with a promissory note, in the usual form, for seven hundred and fifty dollars, in order to renew and continue his accommodation to that amount, if the accommodation to the amount of twelve hundred dollars should not have been obtained, and requested Lochhead to return the first mentioned stamped paper, if the same should not have answered the purpose, for which it was intended; but Lochhead did not return the same, alleging that, as both the maker and endorser lived at a distance, in the country, (as was the fact,) it was necessary that he should retain the said paper, so signed and endorsed in blank, to be resorted to in the event of any accidental omission of the said Williams, at any time, to supply him with promissory negotiable notes for the purpose of renewing, and continuing the accommodation, he had already obtained as aforesaid; the said Lochhead being his second and town endorser; in which reason the defendant Williams acquiesced, and left the said stamped paper with Lochhead, for that purpose, and no other: that Lochhead, having failed to obtain for the defendant Williams the additional accommodation, he desired, and retaining in his hands the said stamped paper, filled it up with the promissory note in question, and, adding his own endorsement next after that of the defendant Smith, placed it in the hands of a broker for the purpose of raising money thereon for his own use; and, the broker afterwards informing him that another town endorser was wanted to give full credit to the note, and particularly naming the plaintiffs as the endorsers, who were required, or would be satisfactory, he carried the same to the counting house of the plaintiffs, and asked their Clerk to put their endorsement upon it, telling him that it was wanted by him in order to put the note into Bank for discount; and the plaintiff’s Clerk did accordingly endorse their name and firm thereon, being ignorant at the time of all the circumstances above stated, and verily believing the whole transaction to be fair, and the said Lochhead’s purpose to be what he stated; and this endorsement of the plaintiffs, so made by their Clerk, was made without any valuable consideration, but merely as a friendly act, done at the request *and for the accommodation -of the said Lochhead, ánd to give additional credit to the note, without any privity between the plaintiffs and the defendants; the latter being personally unknown to the former, though the credit of the endorser Smith was known to the plaintiff’s Clerk; and the endorsement of the plaintiffs being so obtained, Lochhead again carried the note to the said broker, who disposed of the same at a discount of two and a half per cent, per month ; and so it came after-wards into the hands of Peyton Mason, the last endorser; but neither the plaintiffs, nor their Clerk, at the time of his endorsement for them, or at the time the said note was afterwards retired at Bank by them, had any manner of knowledge of the circumstances, above stated, of fraud on the part of Lochhead in improperly putting it into circulation, or any knowledge of the manner, in which he had disposed of it after their endorsement, though they knew it had not been discounted at Bank; and the defendants both remained entirely ignorant of the conduct of Lochhead in relation to the same, or of its having ever been put into circulation at all, until after it had been retired at the Bank by the plaintiffs, and payment thereof was demanded by them of the defendant Williams.
    It was farther proved, that the negotiable note above set forth, is not what, according to the course of business, is, in the Banks in the State of Virginia, called an accommodation note, but is what is there called a real note; notes of the former kind, discounted or offered to be discounted at the said Banks, having always a memorandum subjoined, that they are for the credit of the maker or drawer. It was also proved, that the endorsement by the plaintiffs of the said note, at the request and for the accommodation of Loch-head, without any other consideration, is according to the usual and common course of such business, where the note is intended to be offered at Bank for discount j and that* the payment of the contents of the said note by the plaintiffs, for the purpose of retiring the same at Bank, after it had been so as aforesaid protested as to the maker and the two first endorsers, without waiting ’till it was protested as to themselves, was, also, according to the usual and common course of business, in such cases, where the endorser is able to retire the note, and has no knowledge or suspicion of any fraud or unfairness in the inception of the note, and the putting it into circulation.
    *It was agreed between the parties, - that, if the several Acts of Assembly, concerning the Bank of Virginia and Parmer’s Bank of Virginia, are to be considered as private Acts of Assembly, they shall be taken and regarded, as set forth in the record in this case.
    And this being all the evidence in the cause, the defendants moved the Court to instruct the Jury, “that, if from that evidence, it should appear to them, that the defendant were defrauded by the said Loch-head, when he put the note aforesaid into circulation, without their knowledge, approbation or consent, and attempted to raise money upon it, as aforesaid, for his own particular benefit; and if it should farther appear to them that, when the plaintiffs endorsed the said note, they neither paid nor agreed to pay to the said Lochhead, any valuable consideration for the same, in money, bank notes or other property, nor received nor contracted to receive from him any such valuable consideration for so doing; then, in law, under all the circumstances of this case, the said defendants are not liable to pay the amount of the said note, or any part of it, to plaintiffs, who thus acquired the said note without valuable consideration.’’ The Court instructed the Jury accordingly; to which opinion the plaintiffs filed a bill of exceptions.
    Verdict and Judgment for the defendants. The plaintiffs appealed to this Court.
    Leigh and Wickham for the Appellants.
    Call for the Appellees.
    On the part of the Appellants, it was contended that the note in question stood on the footing of a Bill of Exchange, by virtue of the amendment of the Bank Charter. Smith’s endorsement upon it in blank, with the signature of Williams on its face, and a $1500 stamp impressed upon it, was a letter of credit from Smith to Williams to that amount; and Williams’s delivery of this blank to Bochhead, with this stamp, and his own signature and Smith’s endorsement upon it, was a letter of credit from Williams and Smith to Bochhead, to the same amount.
    *The proposition is bottomed on direct and conclusive authorities; Russell v. Bangstaffe, Doughl. 514; Collis and others v. Emett, 1 H. Blacks. 313.
    It is no objection to the claim of Boch-head’s endorsees, that the paper was put into his hand for a particular purpose; and that he, violating the trust reposed in him, put it into circulation for his own benefit; Robertson and Co. having no notice of Williams and Smith’s equity,  Nor is it any objection against Bochhead’s en-dorsees, that he committed a gross fraud on Williams and Smith in putting this paper into circulation ; since the endorsees had no notice of. the fraud, 
    
    It would not be easy to divine the ground of the Judgment of the Court below, if it were not stated in the record: it is, that, at the time when Robertson and Co. endorsed the note, they neither received nor paid any valuable consideration for it.
    We know it has been held that, where the holder of a promissory note has given no consideration for it, and afterwards puts it into circulation, the subsequent holder can only recover the actual amount by him paid for it.  These cases shew that, were a fraud has been committed on the drawer or acceptor of a bill, or maker of a note, and the endorsee has notice of it, or where the drawer or acceptor of a bill or maker of a note has received no consideration for it, and the endorsee has paid for it only part of the contents; in the ■first case, he shall not recover at all, and, in the second, he shall recover only what he paid for it; or, if he paid nothing for it, nothing.
    The first branch of the rule has no application whatever to this case. As to the second, it is inapplicable also; because, 1st, The risk which Robertson and Co. ran, by the endorsement, was a sufficient consideration to vest the property in them, by relation back to the time of the endorsement, if they afterwards were thereby made liable for the contents; and 2dly, Robertson and Co. did actually pay the full contents of the note, as a consideration for it, when they retired it from bank; and this consideration has relation to the time of their endorsement. It is material to consider that their conduct was innocent throughout, and according to the constant course of business. Bochhead’s fraud cannot affect them, as they were ignorant of it. Suppose the first endorser, Smith, had been the ^sufferer. Could not he have recovered of Williams? Yet he gave no consideration at the time. Suppose an ordinary accommodation note, protested, for non-payment, as to the maker, taken up by the endorser: cannot such endorser recover of the maker? Yet, in no case of that kind, does such endorser pay a consideration, for the note, at the time of endorsement. The principles on which the Court below proceeded, would annihilate almost the whole of the mercantile transactions at our Banks.
    Call, for the Appellees,
    observed that, if the note was to be considered as a foreign Bill of Exchange, the plaintiff did not use due diligence, and give reasonable notice to the defendants of the non-payment and protest. Eor, as Williams did not reside in town, when the note was signed by him, application should have been made to him in person, or at the place of his abode; and a protest, in town, without his knowledge, was not sufficient; because the note was made negotiable only, but not payable, at the Farmer’s Bank: so that, if Williams had even been apprised that it was in circulation, he would not have known at what place he was to pay it; and much less could he have done so, when he was entirely ignorant that it had ever been filled up. The plaintiffs therefore were guilty of laches even as to him; but cleariy so as to Smith, who was in the nature of a drawer, and consequently not liable, without timely application to the maker, and notice of the non-payment and protest. Of course, the Court did right in instructing the Jury, upon the joint issue, that, under all the circumstances, the defendants were not liable to pay the amount of the note to the plaintiffs.
    2. If the note is not to be considered as a foreign Bill of Exchange, then the plaintiff took it, subject to the original equity between Williams and Bochhead; which would render the instruction of the Court, necessarily, right.
    
      
       See monographic note on "Bills, Notes and Checks” appended to Archer v. Ward, 9 Gratt. 622.
    
    
      
       Collins v. Marlin and others, 1 Bos. and Pull. -618.
    
    
      
       Miller v. Race, 1 Burr. 453; Grant v. Vaughan, .8 Burr. 1516; Peacock v. Rhodes, Dougl 688.
    
    
      
       Wiffen v. Roberts, 1 Esp. N. P. cases, 261; Barber v. Backhouse and others, Peake’s N. P. cases, -81; Ledger v. Ewer, lb. 316; Smith v. Knox, 3 Esp. N. P. cases, 46; Lawson and others v. Weston and others, 4 Esp. N. P. cases, 56; Duncan v. Scott, 1 ■Campbell’s Rep. 100; Rees v. Marcpiis of Headiort. 2 Campbell’s Rep. 571.
    
   February 3d, 1817. JUDGE ROANE pronounced the Court’s opinion, that the Superior Court of Baw erred in giving the instruction mentioned in the Bill of Exceptions.

Judgment reversed; verdict set aside; and new trial awarded, “on which no such instruction is to be given.”  