
    Da Costa against Guieu.
    Case Stated.
    
      January.
    
    was°made for of amTommodation notes' indorsed for 3o aító^exoneratethemaKeps or indorsersofsaid thefr liability, ^bMdiwn1 on the assignaccommodation, in favour of and mdorsed by the aecepTed^nd neg°cmtedj)y L embracedS* se!iption.l8de" Where an assignment 2. counts signorsínd*3" the drawers of such paper ¡s to be taken into consideration, and the remainder after deducting such balance, to be paid to the holders.
    THIS cause came before the Court on a case stated. John P. Gareschc and Vital M. Gareschc, executed an assignment to the defendant, and a certain M. Arnous, deceased, of all their estate and effects, in trust for the payment of their debts, m the order and manner prescribed in the said assignment. After ordering the payment of certain preferred debts not material to the question before the 4 / 4 Court, the assignment provided for the payment of other debts in the following words. • “ In the next place, they (the asslSnees) shall pay and satisfy all just demands against the grantors, for money lent by other persons than those above named, and pay and discharge all accommodation notes sub-> SCribed or indorsed for them by other persons than those above ° , , ■ i _ , named, so as to exonerate the makers or indorsers oj the said notes, from their liability therefor.” The plaintiff was the holder of a writing, drawn by P. Bauduy upon the assignors, and by them accepted, in the words and figures following. Dollars 2000. Wilmington, March, 28, 1818. Four months after date, please to. pay to my order, without defalcation, hundred dollars, P. Bauduy. Messrs. J. P. V.M. Gareschc, Merchants, Philadelphia. On the face of the instrument, was written “ accepted.” J. P. fc? V. M. Ga~ resché. This instrument was drawn and indorsed by P. BaupUy for accommodation of the assignors. J °
    
      
      Binney, for the plaintiff.
    The spirit of the assignment is to prefer all who had made themselves liable for the. accommodation of the assignors, and this would include the paper in question;' The term note is’used to signify a promissory note or a bill of exchange : and this is the case as well in'legal language as in common parlance. In Tassel v. Lewis, 1 Ld. Raym. 743, a goldsmith’s note is, spoken of, which is in form a bill of exchange. In Grant v.1 Vaughan, 3 Burr. 15.16, a bill directed, “ pay to Ship Fortune or bearer,” is spoken of as a note repeatedly, in the statément of the case, the arguments, and opinions of Lord Mansfield and the other Judges. In Pearson v. Garret, Skinn. 398, the words bill and note, • are used convertibly in speaking of the same instrument which was strictly a note ; and indeed as note may mean a promissory note or bilf of exchange, bill may have, the same meaning. In Bull's N. P; 269, it is said, “ merchants’ notes are in nature of letters of'credit passing between one correspondent and ano- . ther in this form. Pray pay to J. S. or order such a sum, witness my hand. Now if the correspondent accept this note, he becomes chargeable in a special action on the custom.” Besides, this instrument is not strictly speaking a bill of exchange, which is an- instrument by which one orders another to pay money to a. third.; and to which there áre three parties. This assignment was drawn for the accommodation of the assignors, and had no force till it was ac-' cepted. It thus became in effect a promissory note, drawn by the -assignors in favour.of Bauduy or order. The term without defalcation, is never introduced into a bill of exchange. It is a term peculiar to promissory notes, under the laws of Pennsylvania. The paper in question might have .been declared on as a promissory note. .A bill, says Chitty, (on Bills, 85,) may be drawn payable to the drawer himself: though in that case it is more 'in the nature of a ^promissory note. So-it is held in Shuttlexvo'rth v. Stevens, 1 Gampb. .407, that an instrument in form of a bill may be declared on' as a bill or note.- In Butler v. Crisp’s, I Salk. 130. Lord Holt says, if A; has money to lodge in B.’s hands, and . would have a negotiable note for it, it is only saying thus; Mr. B. pay me or my order so much money value to yourself and signing this, and B. accepting it. Or he mayinake the common note, and say thus, for value to yourself pay me so much. But the great question is, did the parties mean to restrict the preference to a promissory .note, formally such, or was it meant to embrace generally accommodation paper. . .
    
      Keating and Duponceau, contra.
    This is a mere question of construction of the assignment, and preferences in assignments are to be construed strictly. Terms used in instruments are to be understood in their common popular sense, unless they have acquired a technical meaning. 2 Com. Cont. 531. 1 Pow. Cont. 376. 407. 1 Doug. 277. The instrument here is strictly a bill of exchange, and its nature is not changed by being made payable to the drawer. Accommodation note is a well known expression, and never used in reference, to a bill of exchange. The words “ makers or indorsers of said notes,” in the assignment are material to shew that promissory notes were meant, as the word maker applies to them only : in speaking of bills of exchange we use the term drawer. In the case before the Court there were promissory notes on which the preference might operate. It is true, that in bookkeeping bills payable and bills receivable, comprehend notes : but this is for convenience. In law and in proper speech, bills .and notes are different, and the contracts are different. England did not receive the commercial law till long after it had been used in Europe, and that has occasioned some confusion in the elder books. But of late, the language of Courts and merchants has been more accurate. The word note is used in our Courts for promissory note. 1 Binn. 430, 432, 433. Chitty 24, uses bill to mean bill of exchange : and note for promissory note. Note formerly meant a memorandum, and was used extensively : but now it has a received signification, and is applied simply and exclusively to a promissory note, when employed in reference to negotiable paper.
    
      Binney, in reply.
    The main intent of the preference in this instrument was to secure those persons to whom the assignors were under honorary engagements : those who became responsible from friendship only. The words 'makers or indorsers are relied on. This is a very critical remark. But why may not drawer of a bill be Called the maker ? Besides the drawer of the bill was also the indorser. ■
   The opinion of the Court was delivered by

Tilghman C. J.

The question is,'whether it was an accommodation note within the meaning of -the clause of the assignment’ before mentioned. It is contended by the defendant, that it was not, because nothing but promissory notes wére intended to be provided, for. • If the provision had been for promissory notes, in express terms, the plaintiff would have had nothing to say, because he is not the holder of a promissory note. But the assignment- does not mention promissory notes expressly. We must endeavour to ascertain therefore, what kind of paper was intended to be preferred, and whether the words of the assignment are sufficient to carry the intention into effect. The intent seems to have been, to indemnify those.persons who had subscribed or indorsed negotiable paper, for the accommodation of the assignors. Since the expiration of the Bankrupt Law, this kind of preference has been very common, and has been deemed fair. That intent would embrace the paper held by the plaintiff, which was subscribed and indorsed-by Bauduy-, for the accommodation of the .assignors. But it is objected by the defendant, that it was not within the words of the assignment, because it is not a note, but a bill. „ Without doubt it is a bill, but it does not follow, that it may not be also anoté. I .confess, I think it may be more accurately called a bill, than a note; but yet the authorities produced on the argument, shew that note has been considered as a general term, comprehending both bills and promissory .notes.- -What were formerly called, goldsmith’s notes, were in form a bill, by which a person ordered his banker, to pay a sum of money to another, or sometimes the bearer, (see 1 Ld. Raym. 743. Tassel v. Lewis.) In the-case of Pearson v. Garrett, Skinn. 398, bill and note, ave used as synonymous terms. These, to be sure, are old cases, decided when commercial law had not made great progress, in England. But, to come to later' times. In Grant v. Vaughan, Lord Mansfield repeatedly speaks of an instrument' which was a bill, as a note. It wa3 jn these words. “ Pay to Ship Fortune or bearer.’7 3 Burr. 1516. And in Bull. N. P. 7 Ed. 269, is the following passage. “ Merchants notes are in nature of letters of credit passing between one correspondent and another, in this form. Pray pay to I. S. or order, such a sum ; witness my hand, &c.” This is great authority, to which I will add, that in strictness, 'when a promissory note is to be described, it is called a promissory note,- and not simply, a note. This appears from the form of declaration on a promissory note, in which it is set forth, that the defendant made his certain note in writing called a promissory note. Considering then, that these assignors did not make use of the expression promissory note, it would be hard that the drawer of the paper in question should remain exposed to loss. He lent his name', for the accommodation of the assignors ; his case falls within the spirit of the intended indemnification, and is therefore entitled to all the favour which can be lawfully shewn to it. I am of opinion, that the instrument-held by the plaintiff is an accommodation note, within the meaning of the assignment, and therefore he is entitled to judgment upon the case’stated.

Judgment for the plaintiff.

After the foregoing opinion was delivered, the following additional case was stated for the opinion of the Court.

The opinion of the Court is further requested upon.this question, with reference to: the former case stated ; whether the plaintiff and those who like him, hold Mr. Bauduy’s bills or notes, drawn or endorsed for the accommodation of J. G. & .V. M. Garesché, the assignors, are, under the terms of the assignment, entitled to be paid out of the assigned es»‘ tate, without regard to the state of the balance of accounts, and outstanding paper, existing between the said Bauduy, and the said J. P. V. M. Garesché, at the time of the assignment, and so continuing to this day, or whether those balances or either of them are to be taken into consideration by the assignee in distributing the assets among this class of creditors. ,

After, argument, the opinion of the Court was delivered by

Tilghman C. J.

It was intended by the - assignment 0f Messrs. Garesché, that the subscribers or indorsers of paper for their accommodation should be indemnified ; but there was no intention to give a preference to the holders of such accommodation paper, although it might happen that such holders would obtain a preference, because the subscribers or indorsers could not be indemnified otherwise than by paying the whole debt. But, if the subscribers or indoréers, were indebted to Messrs. Garesché, on other accounts, they would be indemnified, by deducting the balance of those accounts, from the amount of the accommodation paper, and paying the remainder to the holders of the paper. It would be unjust, that this fund assigned by Messrs. Garesché, for the benefit of their creditors, in general, should more than indemnify their friends, who had lent their names for their accommodation; which would be the case, if the .whole amount of the accommodation paper were paid,.without regard to the balance of 'other accounts. It is the opinion of the Court therefore,- that such balances should be taken into the calculation. As to accommodation paper which may have been issued by Messrs. Garesché, in exchange for other paper of like kindj on which their friends had become’responsible for them, the Court can give no opinion until they are informed of all circumstance attending it.

Gibson J.—Was absent at the argument and gave no opinion. .i  