then actually earned.527 And it has been held that, if only part of the amount due on a note is recovered by mistake, such recovery will be no bar to a recovery of the balance due, even without a special averment of the mistake.528

But an accommodation indorser is liable to one who purchased at a discount from the payee only for the amount actually paid by him,529 although he would be liable to a bona fide purchaser in due course of business for the face of the note, irrespective of the price paid.530 An indorsee is, however, entitled to recover against his immediate indorser only the amount actually paid.531 But, although the indorser may prove what he received, the face of the note is presumptive evidence of the amount recoverable.532 And, where an indorser's liability is conditioned on immediate suit against the maker, the judgment rendered against the maker is the measure of damages recoverable against the indorser.533

As against prior and remote parties interposing a substantial defense, the protection of a bona fide holder, and his right to recovery, extend only to the consideration paid by him, with interest,534 and statutory damages and costs, if any.

But even in such case the face of the note has been held to be,

527 Maine Mut. Marine Ins. Co. v. Farrar, 66 Me. 133; Same v. Stockwell, 67 Me. 382.

528 Conklin v. Field, 37 How. Prac. (N. Y.) 455.

529 Cook v. Clark, 4 E. D. Smith (N. Y.) 213.

530 Ingalls v. Lee, 9 Barb. (N. Y.) 647.

531 Braman v. Hess, 13 Johns. (N. Y.) 52; Munn v. Commission Co., 15 Johns. (N. Y.) 44; Aldrich v. Jackson, 5 R. I. 218; In re Many, 17 N. B. R. 514, Fed. Cas. No. 9,054; Muldrow v. Agnew, 11 Mo. 616; Cook v. Cockrill, 1 Stew. (Ala.) 475; Faulkner v. White, 33 Neb. 199, 49 N. W. 1122. So, upon the indorsement of a nonnegotiable note. Felton v. Smith, 88 Ind. 149; Whisler v. Bragg, 31 Mo. 124. In KENTUCKY the consideration for an assignment must always be averred, and only the consideration paid shall be recov ered (Ky. St. § 475).

532 Foust v. Gregg, 68 Ind. 399; Schmied v. Frank, 86 Ind. 250. But the indorser's liability will not be limited to damages for false representation. Fall River Nat. Bank v. Buffinton, 97 Mass. 498.

533 Watson v. Hahn, 1 Colo. 386.

534 See §§ 452, 994, supra: De Kay v. Water Co., 38 N. J. Eq. 158; Hyman 7. Forge Co., 18 Misc. Rep. 381, 41 N. Y. Supp. 655.

prima facie, the amount due, and the burden is on the maker to show that the holder purchased the note for less.535

Recovery of Costs.

§ 1727. An indorser who takes up a bill, and brings his suit against prior parties, is not entitled to recover the costs of a needless defense made by him before paying the bill.536 In like manner, an accommodation acceptor cannot recover against the drawer, whom he accommodated, the costs paid by him in defending needlessly an action brought by the holder,537 although the drawer has pledged the bill, and his pledgee has fraudulently transferred it to a bona fide purchaser after payment of the debt secured.538 Where the holder of a note has brought suit against the maker which has been defeated by the defense of usury, he may still recover on the note against his indorser; but such recovery will not include the costs incurred in the action against the maker.539

Damages against Surety-Guarantor.

§ 1728. One who signs a note as surety is liable to a purchaser from the payee only for the amount actually paid by him.5* But

535 Carpenter v. Bank, 119 Ill. 352, 10 N. E. 18.

540

536 Byles, Bills, 411; 2 Daniel, Neg. Inst. 465; 2 Pars. Notes & B. 458; Dawson v. Morgan, 9 Barn. & C. 618; Peers v. Kirkham, 46 Mo. 146; Fenn v. Dugdale, 31 Mo. 580; Simpson v. Griffin, 9 Johns. (N. Y.) 131; Buffalow v. Pipkin, 47 N. C. 130; Steele v. Sawyer, 2 McCord (S. C.) 459; or of sale suffered on execution against him, March v. Barnet, 114 Cal. 375, 46 Pac. 152. Especially where he had given his own note, and afterwards made defense against a bona fide holder, on the ground that the original note was forged. Whitney v. Bank, 45 N. Y. 303.

537 Byles, Bills, 412; Benj. Chalm. Dig. art. 229; 2 Daniel, Neg. Inst. 465; 2 Pars. Notes & B. 663; Beech v. Jones, 5 C. B. 696; Bagnall v. Andrews, 7 Bing. 217, 4 Moore & P. 839. But it is otherwise where he defended the action at the drawer's request. Garrard v. Cottrell, 10 Q. B. 679; Stratton v. Mathews, 3 Exch. 48.

538 Roach v. Thompson, 4 Car. & P. 194.

539 Copp v. McDugall, 9 Mass. 1. But see, contra, where the maker's defense was that the note had been forged, Whitney v. Bank, 45 N. Y. 303.

540 Cobb v. Titus, 10 N. Y. 198. This is true also of an accommodation in

a guarantor is liable to a bona fide holder for the value of a good bill for the same amount as that which was dishonored, although the guarantied bill was valued at a large discount in the market where it was drawn. 541 And, where one guaranties that there is a certain amount due and unpaid upon a note, he will be liable for the amount due at the beginning of the suit.542 And, in general, a guarantor of payment is liable for the amount of the note guarantied, and not merely for the consideration received by him.543

Damages Recoverable by Indorser-Surety.

546

§ 1729. Where a note is paid at maturity by an indorser in depreciated bills, and he afterwards transfers it to the plaintiff, the recovery against a prior indorser will be limited to the amount actually paid in taking up the bill.544 So, a surety who pays a bill can only recover from his principal the amount actually paid by him.545 And, if he has obtained his discharge by giving up a note made by the principal, his recovery against the principal will be limited to the face value of such note." But, if the guarantor takes up a bill by paying the amount loaned on it, he may recover from the acceptor the face of the bill, although as to the balance he may be only trustee for another owner." And an accommodation indorser, taking up a note at maturity, may recover, as payee, against the maker whom he accommodated, the entire face of the note, irrespective of the amount paid by him.548 If an indorser takes up a draft by payment or security given to his indorsee, he may recover against the acceptor the same amount that would have been recovered by his indorsee, without regard to the amount actually paid dorser at suit of one who is not a bona fide purchaser for value. Bramhall v. Bank, 36 N. J. Law, 243.

541 Delegal v. Naylor, 7 Bing. 460.

547

542 Head v. Green, 5 Biss. 311, Fed. Cas. No. 6,292.

543 Cooper v. Page, 24 Me. 73.

544 Bethune v. McCrary, 8 Ga. 114.

545 McLaughlin v. Rintels, 64 N. C. 634; or the dividend actually paid by his insolvent estate, In re Sterling, 1 Fed. 167.

546 Barber v. Gillson, 18 Nev. 89, 1 Pac. 452.

547 Reid v. Furnival, 1 Cromp. & M. 538, 5 Car. & P. 499.

548 Even though he has only paid one-half of the face of the note. Fowler v. Strickland, 107 Mass. 552.

to him.549 But one who purchases a bill from the drawer by indorsement after maturity can only recover from the acceptor the amount actually due by the acceptor to the drawer at the maturity of the bill.5 550

Partial Dividends.

§ 1730. A dividend received by the holder from the drawer's estate must be deducted from the proof made by him against the bankrupt acceptor.551 So, dividends received from the principal's estate must be deducted before proof against the surety.552

And, in like manner, dividends from the acceptor's estate must be deducted before proof is made against the drawer,553 unless they have been paid out of the drawer's funds in the acceptor's hands. 55+ The holder of a bill may, however, prove for the whole amount against both drawer and acceptor, and receive dividends on such amount until the entire bill is paid.555 But, where part of a note has been paid by the accommodation maker, the holder can only prove against the indorsers for the balance remaining due, and cannot receive dividends on such proofs against several indorsers, amounting in all to more than that sum.556 And when the amount of a second dividend exceeds the balance due on the claim as proved, although less than the accrued interest, such excess cannot be received by the holder

549 Deas v. Harvie, 2 Barb. Ch. (N. Y.) 448.

550 Adams v. Oakes, 6 Car. & P. 70.

551 Ex parte Tayler, 1 De Gex & J. 302; In re Oriental Commercial Bank, L. R. 6 Eq. 582. So, dividends from drawer and indorser. Ex parte Leers, 6 Ves. 644,

552 Lowell v. French, 54 Vt. 193. But, before dividends paid, proof may be made against each estate for the full amount, Ragsdale v. Bank (S. C.) 23 S. E. 947; and the entire claim may be proved against the insolvent estates of two joint makers, Roger Williams Nat. Bank v. Hall, 160 Mass. 171, 35 N. E. 666; or against the estate of a single debtor without deduction for collaterals still held, Chemical Nat. Bank v. Armstrong, 8 C. C. A. 155, 59 Fed. 372, reversing 50 Fed. 798. But double proof cannot be made against an indorser's estate on his original indorsement and his indorsement of a second note as collateral for the first. In re Sherry (Wis.) 76 N. W. 611.

553 Ex parte Royal Bank, 2 Rose, 197.

554 Ex parte Ryswicke, 2 P. Wms. $9.

555 Ex parte Wyldman, 2 Ves. Sr. 115.

556 In re Howard, 4 N. B. R. 571, Fed. Cas. No. 6,750.

until other creditors have received the full amount proved by them.557

Damages Recoverable by Pledgee.

§ 1731. Where suit is brought by the pledgee of a bill, his recovery should, as against good defenses, be limited to the amount actually due and secured to him; 558 e. g. to actual advances, where the note is made to secure advances.559 But, where a mortgage secures a negotiable note, the recovery will not be limited, as in the case of a bond, to the amount actually due from the mortgagor to the mortgagee. 560 Where notes are pledged to secure a debt, and are surrendered without authority to the maker on his payment of the debt, the pledgor may recover the balance due on the notes, of which their face value is prima facie evidence.561 But the pledgee may recover the entire amount due on a note, although it exceeds the debt secured, the balance being subject to any defense available against the payee.52

Where he holds it as indemnity against an acceptance given by him, he can only recover against the maker of the note, who has purchased the pledgor's equity in it, the amount actually paid by him on the acceptance, and such commissions as were agreed on, with interest and costs." 563 And where a broker, holding a note for sale, pledges it fraudulently for a loan to himself, and it is sold by the pledgee without notice, the owner may recover from the pledgee the difference between the debt secured and the face of the note.56

557 Blake v. Ames, 8 Allen (Mass.) 318.

558 Bell v. Bean, 75 Cal. 86, 16 Pac. 521; Brown v. Callaway, 41 Ark. 418; Id. 391; Hatcher v. Bank, 79 Ga. 547, 5 S. E. 111; St. Paul Nat. Bank v. Cannon, 46 Minn. 95, 48 N. W. 526; Haydon v. Nicoletti, 18 Nev. 290, 3 Pac. 473; Continental Nat. Bank v. Bell, 125 N. Y. 38, 25 N. E. 1070; Handy v. Sibley, 46 Ohio St. 9, 17 N. E. 329; Memphis Bethel v. Continental Nat. Bank (Tenn.) 45 S. W. 1072; Wright v. Hardie, 88 Tex. 653, 32 S. W. 885. And see § 797,

supra.

559 Vogan v. Caminetti, 65 Cal. 438, 4 Pac. 435.

560 Croft v. Bunster, 9 Wis. 503.

561 Union Trust Co. v. Rigdon, 93 Ill. 458.

562 Union Nat. Bank v. Roberts, 45 Wis. 373; Barmby v. Wolfe, 44 Neb. 77, 62 N. W. 318.

563 Warren v. Emerson, 1 Curt. 239, Fed. Cas. No. 17,195.

564 Davis v. Funk, 39 Pa. St. 243.