Legal subrogation results from the payment of a bill of exchange, or promissory note, by an endorser, though made before maturity. The endorser is included in the third paragraph of art. 2157 of the Civil Code, he being bound with, or for the maker or acceptor, and the article referring to all obligations whatever, whether absolute or conditional.

Though the obligation of an endorser or surety cannot be enforced till after the event on which it becomes absolute, it exists from the time when it was contracted, for it is susceptible of being compromised, released or transferred, and of passing to heirs, &c. So the rights of the endorser, or surety, against the maker or principal, exist before the obligation of the former becomes absolute.

In art. 2130 of the Civil Code, the word co-obligee, by an error of the press, is used for
co-obligor.

The provision of art. 2130 of the Civil Code, which declares, that "an obligation may
be discharged by any person concerned in it, such as a co-obligor or a security," re-
cognizes the right of a co-obligor, surety, or any person, like them, concerned in the
obligation, to pay, before his obligation becomes absolute; and the subsequent
clause of the same article, which provides that payment by a person in no way con-
cerned in the obligation does not give rise to subrogation, virtually declares that pay-
ment by a co-obligor, surety, or other person concerned in it, does create such subro-
gation.
Endorsers and sureties are, under the Civil Code, conditional obligors of the creditor
of the maker and principal, and at the same time, conditional creditors of the latter.
Though no conservatory acts can be exercised against the conditional debtor by en-
dorsement, until his obligation becomes absolute, both the endorser and the surety,
may, under art. 2037 of the Civil Code perform all acts conservatory of their re-
spective rights, even before their own obligations have become absolute.
A surety can claim nothing more than indemnification.

The rights of a surety subrogated to those of a creditor, whether payment was made
before the obligation of the surety became absolute, or after, result from his original
contract with his principal, and are restrained by it. Those of an endorser, not for
accommodation, in the same situation, are under no restraint from his original con-
tract with the maker, or acceptor, to wit, that the whole amount of the bill shoull be
paid to him, or his order. Aliter, as to an accommodation endorser, who, being view-
ed as a surety, will be restricted to the sum actually paid by him.
No obligation or right can result to any one from an act or contract, to which he was
not a party, until he manifests his intention to avail himself of such right.
Plaintiffs accepted a bill payable at a future period, which was endorsed by the payee
to third persons, by whom it was endorsed to a Bank, which discounted the bill in
their favor. The latter having paid the bill, before maturity, in notes of the
Bank, which were under par, claimed the whole amount of the bill from the accep-
tors. Held, that plaintiffs did not, by the endorsement and discount of the bill, and
the subsequent depreciation of the notes of the Bank, acquire ipsis factis, any more

Wiggin and another v. Flower and another.

than an inchoate and incomplete right to pay in such depreciated notes, not being parties to any act or contract from which such a right might result; that not having manifested any intention to avail themselves of the advantage which the depreciation of the Bank notes offered, until, by the payment of the bill, the endorsers had acquired the rights of the Bank thereto, plaintiffs were in the same situation in which they would have been, had the Bank transferred the note at any time after its discount; and that, by their acceptance, plaintiffs bound themselves to pay to the order of the payee, the whole amount of the bill, that the endorsers became entitled thereto by the transfer of the bill, that the Bank acquired their rights by the discount, and that, the endorsers, by the payment of the bill, acquired a legal subrogation to the rights of the Bank.

Ordinary endorsers are not placed on the same footing as sureties; nor can they, like the latter, claim the benefit of discussion.

APPEAL form the Commercial Court of New Orleans, Watts, J. The petitioners represent, that one Elam Bowman, drew a bill of exchange on them, in favor of A. L. Gaines, for $826 66, payable five months after date; that the bill was accepted by the petitioners, and endorsed by A. L. Gaines, to A. L. Gaines & Brother, who endorsed it to the Union Bank of Louisiana, by which the bill was discounted for account of A. L. Gaines & Brother; that the bill thus became the property of the Bank, and that due notice was given to the petitioners that the bill was there, payable at maturity, to wit, on the 7th-10th of August, 1842. They represent that, on or about the 11th July, 1842, before the maturity of the bill, the defendants gratuitously, and without being authorized by the petitioners, paid the bill, while in the possession of the Union Bank, in the depreciated notes of that institution; and that having thus possessed themselves of the bill, they deposited it for collection in the Bank of Louisiana, where the petitioners have been notified to pay the same, at maturity, in specie. The petitioners further allege, that by the said payment, before maturity, their obligation as acceptors, as well as that of the prior parties to the said bill, has been extinguished; that the defendants, the present holders, took the bill with full knowledge of all these facts; that they have no legal title to it, nor any right to demand payment thereof from the petitioners, who claim that the bill shall be given up to them to be cancelled and destroyed.

The petitioners prayed that the bill might be sequestered pending the suit, and be delivered up to them to be destroyed. The bill was filed on the 6th August, 1842.

Wiggin and another v. Flower and another.

The defendants answered by a general denial. They pleaded, in reconvention, that they are the holders and owners, for a valuable consideration, of the bill described in the petition, which they aver was transferred to them, in the regular course of business, before maturity, and under circumstances which entitled them to believe that all the parties thereto were bound by their signatures. They denied that they paid the note in Bank, or elsewhere, or knew of its having been paid, or of any fact calculated to excite their suspicion, or to deprive them of the rights of bona fide third holders of a negotiable instrument, acquired for a valuable consideration, before maturity. They pray that the plaintiffs may be condemned to pay them the amount of the note, and for general relief, &c.

The plaintiffs answered the demand in reconvention, by a general denial, annexing interrogatories to be propounded to the defendants, whose answers thereto were substantially: that the defendants received the bill from A. L. Gaines & Brother, between the 9th and 12th of July, 1842, and that they deposited it for collection in the Bank of Louisiana, on the 28th of July, 1842. That from the red marks and figures on the bill at the time when they received it, they concluded that it had been discounted in the Union Bank, and that it had been taken up by A. L. Gaines & Brother, who had had it discounted. That Gaines & Brother informed them, that they took up the bill because they were about to absent themselves for the summer, and were unwilling to risk being dishonored as endorsers, and not because they wished to speculate in the depreciation of the notes of the Union Bank. That the bill was received by the respondents, with two other notes, with a request to make certain payments for Gaines & Brother, amounting to about $710, and to reimburse the amount, and a balance of $315 35, previously due, out of the proceeds of the bill and notes. The bill was to be returned to Gaines & Brother, in case of non-payment, on their satisfying the debt due by them to the respondents. That no settlement or arrangement has been made with reference to the bill, except that the demand in reconvention is now conducted for the benefit of Gaines & Brother, though instituted at first for respondents' own account, as, since the filing of the demand in reconvention, they have collected from the other notes left in their

Wiggin and another v. Flower and another.

hands, sufficient to satisfy the debt due them by Gaines & Bro

ther.

It was proved, that the notes of the Union Bank were at a discount at the time of the payment of the bill. Chalın, a note-clerk of the Union Bank, testified, "that the acceptance of the plaintiffs, discounted in the Union Bank of Louisiana, due the 7th-10th of August, 1842, being the draft in contest, was paid in said Bank on the 11th July, 1842. That it was understood, that the payment was made by or for account of the acceptors, though no inquiry was made on the part of the Bank, when the acceptance was paid. That drafts or notes discounted in the Union Bank, have never been negotiated or transferred by it. That the acceptance of the plaintiffs could not have been obtained from the Bank, but by payment, at the time said acceptance was paid; and that the notes of the Union Bank were at a discount.

There was judgment in the Commercial Court dismissing the plaintiffs' petition, and in favor of the defendants, on their demand in reconvention, for the amount of the bill, with interest from maturity. The plaintiffs appealed.

Bradford, for the appellants. The evidence clearly establishes that the bill was paid on the 11th July, 1842. Holland v. Peirce, 2 Mart. N. S. 503. Civil Code, arts. 2048, 2130. The payment extinguished the obligation of the acceptors. See Ib. art. 2130, and the case from 2 Mart. N. S. 2 Kent's Comm. 616, 617. Chitty on Bills, 543. 7 Toullier, 125. Liv. 3, tit. 3. chap. 5. §. 102, 12 Duranton, 29, tit. 3, § 18. 32 Merlin, Rep. de Jurisprudence, p. 42, Verbo Subrogation de Personne. It is contended, that the endorsers who paid the bill in the Union Bank, were so bound on the bill as endorsers, that they had an interest in paying it, and that consequently, they were legally subrogated, on payment, to the rights of the holders, whom they paid. But it is answered, that the obligation of an endorser, is conditional only, and does not arise, till after protest of the bill, and legal notice of its dishonor; and, therefore, he cannot pay the bill, with the benefit of a legal subrogation, till his liability has become fixed. Such is believed to be the settled doctrine of the French law on this point. 12 Duranton, 172.

But should it be held, that a legal subrogation does take place VOL. V.

52

Wiggin and another v. Flower and another.

in favor of the endorser, who anticipates his liability by payment of the bill before maturity, what is the extent of the rights which he acquires by the subrogation? He pays as surety. It is well settled, that the surety who pays for his principal, is entitled to an indemnity only. He can recover what he has paid, and no more. In no case, can he speculate on his principal. If, therefore, he has paid the debt in a depreciated currency, he can only recover the specie value of what he gave in payment.

Such is the law, as to the rights acquired by subrogation, in every case. In 7 Toullier, 199, it is said, that "subrogation is founded on the grand principle, that it operates to no person's prejudice, or, at least, that it does not affect the condition of the debtor, and his other creditors. So far as they are concerned, it is necessary that things remain, after the payment, in the same state in which they were previously." It follows, that no person can acquire by subrogation, whether legal or conventional, the right to be paid in a more valuable currency, than the party to whose rights he succeeds, was entitled to demand, and in which he made payment himself.

On this subject, see a decision exactly in point, reported in Sirey, 1808, vol. 2, p. 154. Case of M. de Talleyrand Périgord. See also, Merlin, Questions de Droit, vol. 14, (Brussels ed.) page 387. Verbo, Subrogation de Personne.

Benjamin, for the defendants.

MARTIN, J.* This case presents two questions of law :

First. Whether an endorser who pays a bill of exchange before maturity, acquires a legal subrogation?

Second. Whether, if he has not paid the full amount of the bill, or if he has paid it in depreciated notes, he may require from the acceptor, more than he has paid, or more than the value of the depreciated notes?

The plaintiffs are appellants from a judgment, by which the defendants have recovered, in reconvention, the whole amount of a bill of exchange accepted by them, discounted in Bank, and, before maturity, paid by the endorser, or his agents, the defendants.

*BULLARD, J. was absent, by leave of the Court.