supreme court of the United States that this defence is not available against the purchaser of the note and mortgage before maturity, for value, and without notice. The doctrine is old and indisputable that the holder of negotiable paper, before maturity and without notice, takes it clear of equities between the original parties, and neither fraud nor duress would invalidate it in his hands. See Clarke v. Pease, 41 N. H. 425, where this matter is fully discussed and authorities cited; also, Hogan v. Moore, 48 Ga. 162. So, also, is the doctrine that a purchaser, by deed of real estate, withoui noticll, may rely upon the record, and will take the title free of equities between the original parties. Boone v. Chiles, 10 Pet. 210; Deputy v. Stapleford, 19 Cal. 305; 1 Story's Eq. Jur. 64,434,436. As to the question whether the purchaser . in good faith of a promissory note before maturity, who takes an assignment of a mortgage securing the same, takes the security as the note free of equities, is one upon which there is some conflict among the decided cases, but the great weight of authority is to the affirmative. It is sufficient for this court that the supreme court of the United States has so held. The security is but an accessory to the debt, and follows the note and takes the same character. Carpenter v. Logan, 16 Wall. 271, 275; Sawyer v. Pickett, 19 Wall. 147; 1 Jones on Mort. § 834, and cases cited. It follows that the plaintiff is entitled to his decree as prayed for in his bill.
OF BmTIStI NORTH AMERICA V. ELLIS
(C'irclIit Court, D. Oregon.
XEGOTIABLE INSTRUMENTS-E.utLY BJ,AKK INDORSEMENT-SUIlSEQUENT IlSDORSERs.-The holder of a negotiable instrument who makes an early blank indorsement, payable to himself, does not thereby discharge all subsequent indorsers. SAME-ACCOMMODATION lNDORSERs-ATTORNEY FEE.-Accommodation indorsers are liable for the payment of a stipulated attorney fee in castl luit should be instituted for the payment of the note.
BANK OF BRITISH N. AlIERIOA V. ELLIS.
Ellis G. Hughes, for plaintiff. Ge01°ge II. Durham and W. M. Gregory, for defendant. DEADY, D. J. This action is brought to recover the sum of $2,025, on 43 promissory notes made on May 1, 1878, by as many different persons, to the order of the Dayton, Sheridan &; Grande Ronde Railway Company, and by it indorsed to J. Gaston. Afterwards, and before the maturity of sl1id notes, they were indorsed in blank by said Gaston and defendants, and acquired by the plaintiff in the due course of business.. The case was before the court November 12, 1879, on a demurrer to the original answer. The demurrer being sustained, the defendants had leave to file an amended answer, containing further defences to the action, to which the plaintiff also demurs. The complaint alleges that each of said notes contained a. stipulation that, in case suit should be instituted for the collection of the same, there should be paid such sum as the court might deem reasonable as an attorney fee in aaid 8uit, and that $220 is such fee. The amended answer denies that the plaintiff is entitled to recover any attorney fee in- this action; ·and, for a further defence, alleges that, after said notes had been indorsed in blank by said Gaston and the defendants, the said Gaston negotiated the same to the plaintiff, and it became the owner thereof; that afterwards, and before the commencement of this action, the plaintiff wrote over said Gaston's name thereon a special indorsement to itself-UPay to the - - of the Bank of British North America or order"-and "thereby released the defendants, and each of them, from any and all liability on said indorsements." The answer also shows the order in which the indorsement!! were made on said notes, from which it appears that Gaston's name was written first, and those of the five defendants immediately "thereunder, so that it was convenient, if not necessary, for the plaintiff, in writing the special directions thereon making the note payable to itself or order, to write the same as it did immediately above the name of Gaston. This assumes that the holder of a negotiable instru.
ment who makes an· early blank indorsement, payable to himself, thereby discharges all subsequent indorsers thereon from liability as such, the same as if he· had stricken their names therefrom. The only case cited which is directly in point is that of Gole v. Gushing, 8 Pick. 48, in which is was held that such an act did not discharge the subsequent indorsers, but they still remained liable to the holder. To the contrary of this there is a dictum or suggestion in 2 Par. on N. & B. 19, to the effect that "it might be said in such a case that when the holder made the note payable to himself by the first indorser, he made himself indorsee of that indorser, and thereby discharged all subsequent indorsers." The suggestion, "it might be said," however distinguished the source, scarcely amounts to a qucere, and certainly cannot overcome or cast doubt upon the well considered decision in Gole v. Cushing, with which my own judgment wholly concurs. It is not to be presumed that the holder of a note with a. number of indorsers thereon will intentionally discharge any of them without some reason or consideration commensurate with the loss of security for his debt thereby sustained. 1'he indorsers having no right to be discharged, the act of the plaintiff ought not to be construed to have that effect, unless it plainly appears that such was the intention with which it was done, than which nothing is more improbable. The direction written by the plaintiff over the indorsements upon the nqtes is not written over the signature of Gaston exclusively, and, under the circumstances, may be regarded as having been made with reference to those of the defendants as well as that of the former. The defendants were without interest in the notes. They were mere accommodation indorsers, and their signatures could not and did not have the effect to transfer them to any one, but only to give them currency so as to enable Gaston to dispose of them as he did. Under these circumstances there is no room for the inference that the plaintiff intended by this act, even if it had no
BANK OF BRITISH N. AMERIOA V. ELLIS.
reference to the infringements of the defendants,to discharge them. from all liability thereon. As to the attorney fee, the de fendants claim that the promise to pay one was only made by the makers of the notes, and that the subsequent parties thereto are under no such obligation to anyone. In the Wilson Sewing Machine 00. v. Moreno et al. (August 18, 1879,) this court held that a stipulation to pay a reasonable attorney fee to the holder of a promissory note, in case suit is brought to enforce the payment of the same, is just and valid, and that the negotiability of such note is not thereby affected or impaired. But the defendants herein claim that such a stipulation or contract is only the promise ot the maker, and therefore not that of the defendants; and also that such stipulation, not being an integral part of the note, but a contract collateral thereto, is not negot iable, and therefore can only be enforced as between the immediate parties to it, the maker and payee. In Smith v. The Muncie National Bank, 29 Ind. 158, it was held that tbe acceptor of a bill of exchange which contained a stipUlation for the payment of an attorney fee was bpund to pay the same. But this conclusion rests upon the fact that the acceptor of a bill of exchange sustains the same relation thereto as does' the maker of a note. In Hubba.rd v. HarriBon, 38 Ind., a stipulation in a promissory note to pay an attorney fee was entered in an action by the indorser against the payee, who was in fact an accommodation indorser; It was implied, rather than said, by the court, that the note, being negotiable, notwithstanding the stipulation, the latter passed with the former, and might be enforced by the holder thereof against any party to the instrument. In ID'an. Neg. Instr. § 62, it is said that the attorney fee need ndtribe sued for by the attorney, but may be recovered by the holder; and that the liability therefor, "as for every engagement imported by the bill or note, entered into the and indorser's contract. While there is a conflict in the authorities upon the question of wheth:Jr an instrument, otherwise negotiable, that COn-
tains a. stipulation for the payment of an attorney fee, is thus negotiable or not, no case has been cited which holds that such stipulation does not pass with the instrument, in case the same is deemed negotiable. A stipulation in a negotiable instrument for an attorney fee, which in effect provides for the payment of certain expenses of collection in case the same is not paid without suit, so far gives security and curre-ney to such instrument, and is therefore to be regarded with favor, as being a just and convenient means of promoting the general object and utility of the same. At common law the compensation of an attorney consisted of the various items allowed for his services, called collectively his "costs;" and, in case his client preYailed in the action, these were collected off the adverse party as a part of the judgment. Substantially, this stipulation for an attorney fee is a substitute for the allowance of costs at common law, and enables a party taking a negotiable instrument to provide, by agreement with the maker or indorser thereof, that if the same is not J?aid without suit the holder shall recover his attorney fee, as well as the principal and interest. The maker of these notes having agreed to pay an attorney fee to the holder thereof, if the same were not paid without action, in my judgment each subsequent party thereto assumed a like responsibility to such holders, and therefore the plaintiff is entitled to recover such fee from the defendants in this case. But I think the defendants are liable to the plaintiff in this action for an attorney fee, even if the stipulation therefor can o.ply between the immediate parties thereto. The defendant!! /;tre accommodation indorsers-in effect, makers of these notes. By their indorsement of them they authorized Gaston, the then holder, to transfer them to the plaintiff, which was done. Every stipulation in them, and every obligation incident thereto, thereby became the stipulation and obligation of the. defendants made directly to the plaintiff. The demurrer is sustained.
IIATHER V. A.MERICAN EXPRESS 00.
AMERICAN EXPRESS UO.
10ircuit Oourt, N. D. illinois. --,1880.)
COMMON CARRIER-LThlITATION OF LIABILITy-REFUSAL TO DISCI,OSllI
VALUE OF GOODs.-A statute of the state of Illinois, which prohibits a common carrier from limiting its common law liability, does not prevent such carrier from limiting its liability where the shipper refused to inform the carrier of the value of the goods at the time they were shipped.
BLODGETT, D.J. This case was tried by the court without lit jury, upon an agreed state of facts, the facts being, in substance, that a package containing two gold watches and five gold chains, and worth something over $500, was delivered to the agent of the Southern Express Company, at Bethany, Georgia, directed to the plaintiff in this city.· The Southern Company accepted the package and forwarded it to Cairo, in this state, where it was delivered to the American Express Company, who undertook its transportation to this city, the Southern Express Company not running to this point. No value was marked upon the package. The receipt given to the consignor stated, "Value asked but not given." The package 'Yas lost after arriving in this city, by theft, by reason of its not having been treated as a valuable package and placed in the safe where it would have been placed if its true value had been marked upon it. Suit is brought by the plaintiff, and the question is as to the extent of the recovery to which he is entitled. The defendant admits that it is liable to the amount of $50, there being a provision in the receipt given for this package that where the value of a package is not stated or disclosed to the company the liability shonld be limited to $50. The plaintiff insists that the case comes within the provisions of the act of 1874· of the legislature of Illinois, which prohibits any
." Whenever any property is received ty a 'lommon carrier to be trans· ported from ODe pliwe to another, within or without this state, it shall not be lawful for such carrier to limit his common law liability sl;tfely to deliver such property at the place to which the same is to he transported by any stipulation or limitation expressed in the receipt given fOlsuch property." Rev. St. of Ill. (1874) c. 27, p. 268. .