MCDONALD V. MAGRUDER, 28 U. S. 470 (1830)

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U.S. Supreme Court

McDonald v. Magruder, 28 U.S. 3 Pet. 470 470 (1830)

McDonald v. Magruder

28 U.S. (3 Pet.) 470


A note was discounted at the Office of Discount and Deposit of the Bank of the United States in the City of Washington for the accommodation of the drawer, endorsed by Magruder and by McDonald, neither of the endorsers receiving any value for his endorsement, but endorsing the note at the request of the drawer, without any communication with each other. The note was renewed from time to time under the same circumstances, and was at length protested for nonpayment, and separate suits having been brought by the bank against the endorsers, the drawer being insolvent, judgments in favor of the bank were obtained against both the endorsers. The bank issued an execution against Magruder, the first endorser, and he, having paid the whole debt and costs, instituted this suit against McDonald, the second endorser, for a contribution, claiming one-half of the sum so paid by him in satisfaction of the judgment obtained by the bank. Held that he was not entitled to recover.

That a prior endorser is, in the regular course of business, liable to his endorsee although that endorsee may have afterwards endorsed the note is unquestionable. When he takes up the note, he becomes the holder as entirely as if he had never parted with it, and may sue the endorser for the amount. The first endorser undertakes that the maker shall pay the note, or that he, if due diligence be used, will pay it for him. This undertaking makes him responsible to every holder and to every person whose name is on the note subsequent to his own and who has been compelled to pay its amount.

The endorser of a promissory note who receives no value for his endorsement from a subsequent endorser or from the drawer cannot set up the want of consideration received by himself; he is not permitted to say that the promise is made without consideration, because money paid by the promisee to another is as valid a consideration as if paid to the promisor himself.

Co-sureties are bound to contribute equally to the debt they have jointly undertaken to pay, but the undertaking must be joint, not separate and successive.

This was an action of assumpsit instituted in the circuit court by the defendant in error against the plaintiff in this Court. The matters in controversy were submitted to the jury by a case agreed which stated that the plaintiff produced in evidence a promissory note drawn by Samuel Turner, Jr., in favor of George B. Magruder or order at sixty days for $900, payable at the Office of Discount and Deposit at Washington for value received, which note was signed by

Page 28 U. S. 471

Samuel Turner and endorsed by George B. Magruder and by John G. McDonald.

The note was so drawn and endorsed with the understanding of all the parties thereto that it should be discounted in the Office of Discount and Deposit for the sole use and accommodation of the maker, Samuel Turner, no value being received by either of the endorsers. It was so discounted, and the proceeds thereof applied to the credit of Turner, in the office. Long before the making of the note, viz., in the year 1819, Turner had two notes discounted for his use and accommodation in the office, viz., one for $270, endorsed by George B. Magruder and by G. McDonald, and one for $710, endorsed by George B. Magruder and one Samuel Hambleton, which last mentioned note was continued, by renewal, with the endorsement of Magruder and Hambleton, until September, 1820, when, in consequence of Hambleton's absence, it was protested, after which the office permitted the accommodation to be renewed upon condition that Turner would get another good endorser in the place of Hambleton. Whereupon John G. McDonald, upon the solicitation of Turner, endorsed a note for the sum of $710, which was brought to him, already endorsed by George B. Magruder. That in March, 1821, a small part of the money having been paid, the two notes were consolidated and renewed by one note for $950, drawn by Turner and endorsed by Magruder and by McDonald, which was from time to time renewed by notes similarly drawn and endorsed, the last of which is this note, so produced in evidence by the plaintiff. Neither at the time of endorsing the notes respectively nor at any other time was there any communication between Magruder and McDonald upon the subject of such endorsement. Both of them, however, knew at the time of endorsement the notes were intended to be discounted for the accommodation of Turner, and in every instance Magruder was the first endorser. The note, so produced in evidence by the plaintiff, not having been paid when due, was duly protested, and the payment thereof having been duly demanded, and due notice given of such demand, and of nonpayment having been

Page 28 U. S. 472

given to the endorsers, judgments at law were recovered against both, by the Bank of the United States, and the whole amount having been paid by Magruder, he brought this suit to recover from McDonald one-half of the amount so paid by him.

By consent of the parties, a verdict was rendered for the plaintiff for one-half of the amount so paid by the said Magruder, in satisfaction of the judgment against him; subject to the opinion of the court upon the case agreed.

Upon the case stated, the court below gave judgment for the plaintiff, and the defendant sued out this writ of error.

Page 28 U. S. 474

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