Opinion
December 18, 1897.
PRESENT: Matteson, C.J., Stiness and Tillinghast, JJ.
Where a negotiable promissory note is made payable to the order of and endorsed by the maker, and is subsequently endorsed by others, the latter become successive endorsers and not joint makers. The liability of endorsers, in the absence of any agreement affecting the same, is determined by the order in which their names appear on the note. A promissory note is not so merged in a judgment thereon, obtained by the payee, as to affect the relations between the successive endorsers thereof.
ASSUMPSIT by a subsequent endorser of a promissory note against a prior endorser, brought after judgment thereon obtained by the payee and paid by the plaintiff. Heard on the defendant's petition for a new trial.
Dexter B. Potter, for plaintiff.
Samuel W.K. Allen, for defendant.
The defendant's claim is based on the assumption that the two accommodation endorsers were joint makers of the note in suit. The note itself shows, however, that they were not joint makers but successive endorsers, the note being payable to the order of the defendant and endorsed by him before being endorsed by the plaintiff. In this respect it differs from Carpenter v. McLaughlin, 12 R.I. 270. In the absence of any agreement affecting the liability of endorsers, their liability is determined by the order in which their names appear on the note. We find no error in the ruling of the court directing a verdict for the plaintiff.
The defendant makes the point that the judgment on the note in the suit brought by the bank operated as a merger of the note, is conclusive on the parties to it, and excludes a defence growing out of the relations of first and second endorser existing between them prior to the recovery of the judgment. The only case cited in support of the point is Marshall v. Aiken, 25 Vt. 328. That case, however, treats of the effect of a merger on the rights of a surety as against a creditor. The court held that, as against a creditor, judgment upon the note operated as a merger of the note at law, though it might not be so at equity, and became so far conclusive on the parties as to exclude a defence growing out of the relation of principal and surety existing between the parties in the judgment prior to its recovery. The court, on page 335 of its opinion, says: "We do not suppose that the judgment in any way affects the relation between the principal and surety. That stands, as before, between themselves." We do not think that the merger of the note in the judgment in favor of the bank affected the relation between the plaintiff and defendant as successive endorsers of the note.
New trial denied, and case remitted to the Common Pleas Division with direction to enter judgment on the verdict.