Eller v. Miller, 141 Wis. 225.

intention to take judgment without allowing the payment of interest, nor controverting defendant's statement as to his solvency.

George H. Katz, for the appellant.

For the respondent there was a brief by Miller, Mack & Fairchild, and oral argument by A. W. Fairchild and G. S. Canright.

MARSHALL, J. The claim is made that equity jurisdiction is invokable, generally, to restrain the enforcement of a judgment on cognovit, citing United Brethren Church v. Vandusen, 37 Wis. 54, and that, logically, it is available to prevent an unjust entry of such a judgment.

The learned counsel misapprehends the scope of United Brethren Church v. Vandusen. It is often found stated that a judgment on cognovit may be questioned in equity; that relief from injustice in such a case is not confined to such as may be obtained by motion in the proceedings, nor defenses to proceedings to enforce the judgment. Brown v. Parker, 28 Wis. 21; Smith v. Willing, 123 Wis. 377, 101 N. W. 692. The rule in that regard does not go to the extent of rendering equity jurisdiction available in all cases. It is proper when needed for efficient protection of the judgment debtor, ordinary remedies not reaching the case at all or doing so only inadequately. There is nothing otherwise in either of the cases cited to our attention, decided by this court.

Here, had judgment been entered according to the alleged threat, the court, on motion, would have set it aside as to excessiveness and protected plaintiff, in case of his having meritorious defenses or counterclaims, by opening the proceedings, so far as necessary for that purpose, and permitting proper issues to be formed and tried, as in an action in equity or at law, according to the necessities of the situation. Jones v. Keyes, 16 Wis. 562; Dilley v. Van Wie, 6 Wis. 209; Blaikie v. Griswold, 10 Wis. 293; Second Ward Bank v. Upman, 14 Wis.

Comstock v. Buckley, 141 Wis. 228.

596. No reason whatever is perceived why appellant could not readily have obtained all needed relief without an independent action in equity.

The circumstance that judgment had not been entered does not give any greater right to equitable interference than would have otherwise existed, since the mere threat to take an excessive judgment did not work any prejudice to appellant. The threat, if carried out, would, as to the excess, have been easily remediable on motion, and no showing was made, as stated, indicating that appellant cannot recover any sum respondent ought, under any circumstances, to credit on the note. Moreover, the uncontradicted affidavit of respondent states such competency.

Furthermore, it appears, uncontradicted, that there was no danger whatever of the entry of judgment for an excessive

amount.

It follows, that, whether the court dissolved the temporary injunction for want of equity to warrant the use of its extraordinary jurisdiction, or because, in any event, appellant did not need the temporary injunction for protection from any probable harm; in other words in the exercise of discretionary power, the order was proper.

By the Court.-Order affirmed.

COMSTOCK, Respondent, vs. BUCKLEY and others, Appellants.

December 8, 1909-January 11, 1910.

Bills and notes: Accommodation paper: Payment by person primarily liable: Subsequent transfers: Sale by broker: Repurchase in his own right: Fraudulent sale: Rights of holders.

1. If an accommodation note, after being once negotiated, is paid at maturity by the primary debtor, it is thereby discharged and ceases to have any legal existence, at least as to the accommodation parties. Marling v. Jones, 138 Wis. 82, distinguished.

Comstock v. Buckley, 141 Wis. 228.

2. If a broker employed to negotiate an accommodation note makes an honest sale thereof within his authority, he may afterwards purchase it back in his individual capacity and thereby acquire a good title which he may again transfer to another. 3. But if the broker fraudulently sells the note and retains the proceeds in pursuance of a general purpose to embezzle such proceeds in fraud of the rights of his principal, he thereby, as between himself and his principal, becomes the primary debtor and cannot thereafter purchase the note so as to acquire the good title which the original transferee had by virtue of being a holder in due course.

4. If, after such fraudulent sale, the broker pays to the transferee the amount due on the note and receives it back, it reassumes in his hands the position it formerly occupied, and he can again transfer it to another, not an innocent purchaser, only within the limits of his own rights and authority.

APPEAL from a judgment of the circuit court for Milwaukee county: LAWRENCE W. HALSEY, Circuit Judge. Reversed.

Action upon a promissory note, $2,500, dated April 21, 1900, signed by J. O. & W. S. Buckley, a copartnership, payable to the order of Thomas F. Somers, at six months date, with six per cent. interest, and indorsed by Thomas F. Somers, Charles Buehner, John Graf, Peter J. Somers, John Zilg, C. S. Otjen, H. F. Bosworth, and W. E. Haskin in the order aforesaid. It appeared that said note, so indorsed without any consideration to the indorsers, but for the accommodation of a mining company in which they were all concerned and for which the two Buckleys were financial agents, was delivered to Henry Herman, as a note broker, to negotiate and pay over the proceeds to said agents; that said Herman during the life of said note did dispose of the same fraudulently, as claimed, to one Wight, an innocent holder, who paid value to Herman, and concededly obtained good title to the note. Herman, it is claimed, applied the proceeds to his own use without informing defendants that he had disposed of the note. At maturity the note was protested for nonpayment, and shortly thereafter, October 25, 1900, was paid by Henry

Comstock v. Buckley, 141 Wis. 228.

Herman and returned to his possession. Thereafter, November 27, 1900, Herman sold said note for value approximating its face to the plaintiff, who had notice of its dishonor, the certificate of protest being attached, and who at the same time entered into an agreement with Herman for a definite date of extension of the time of payment. At the close of the trial, upon these facts, the court directed a verdict for the plaintiff for the full amount. From judgment on such verdict the defendants appeal.

For the appellants there were briefs by Kronshage, McGovern, Goff, Fritz & Hannan, and oral argument by G. D. Goff.

For the respondent there was a brief by Roemer & Aarons, attorneys, and Henry J. Killilea, counsel, and oral argument by Mr. Killilea.

DODGE, J. The direction of a verdict for the plaintiff is sought to be supported, first, on the authority of Marling v. Jones, 138 Wis. 82, 119 N. W. 931, for that, as asserted, the accommodated party, and Herman as its agent, had actual authority, by force of the note itself, to negotiate it, which authority was not limited by the maturity of the note. That rule of law was unambiguously adopted by this court upon weight of authority after carefully reviewing a conflict of decision elsewhere. The right of the creditor was not predicated upon an innocent holder's immunity from equities as between the parties, but upon the view that no equities existed to defeat such a note; that the accommodation makers had, by proper construction of their instrument, agreed to pay any one who should lend the amount of the note to the accommodatee either before or after maturity. This case presents a very marked difference in facts, for here, conceding that Herman acted within his authority, the accommodated party had once been accommodated when Wight lent money upon the note, which afterwards had been paid in full and returned to the original custody, all of which appeared upon the face of the

Comstock v. Buckley, 141 Wis. 228.

paper and doubtless was fully notified to any subsequent purchaser by the fact of maturity alone. The question on this branch of the present case is therefore whether the true contract between the accommodation parties to negotiable paper and the accommodatee is that the latter may repeatedly incur indebtedness upon their credit. The rule in the Marling Case, that the true construction of the contract authorized the accommodatee to borrow once on the accommodator's credit, even after the maturity of the note, was recognized as highly burdensome to the latter and fraught with much peril of inconvenience to commerce from its naturally deterrent effect on the granting of such accommodations. The weight of authority in favor of the rule, however, was found to be so overwhelming as to overcome the countervailing considerations. No authority, however, has been cited or found in support of the idea that the ordinary meaning of the parties in making accommodation paper extends to repeated use of the accommodator's credit, and the reasons against such a purpose are even more numerous and cogent than those which have caused many courts to pause short of the conclusion reached in Marl ing v. Jones. The accommodated party is of course the primary debtor. It is expected when others by signing accommodation paper become substantially sureties for him, at least as between them and him, that he will pay the debt and protect the sureties from liability. When he does so, and the note returns to his possession, it is hard to conceive any reason why the whole purpose of the transaction is not accomplished, and why the note, at least as to the accommodation makers, does not become discharged and cease to have any legal existence. It is a general rule of law that when an instrument upon which several are liable, some primarily and some secondarily, is satisfied by him who is primarily liable, a complete discharge results. It no longer has legal existence. Jaffray v. Crane, 50 Wis. 349, 7 N. W. 300; Snyder v. Malone, 124 Wis. 114, 102 N. W. 354; Northern Bank v. Cooke, 76 Ky.