Case ID: misc_55/html/0584-01.html
Source: Caselaw Access Project
Author: {"author": "Wadhams, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John L. English, Plaintiff, v. Henry W. Schlesinger et al., Defendants.
    (City Court of City of New York, Trial Term,
    June, 1907.)
    
    Negotiable instruments — Accommodation paper — Liability as affected by notice.
    Where a promissory note is made at the request of and for the accommodation of the payee and the payee indorses and delivers it for value to plaintiff who has knowledge of what was done, the maker is liable thereon under section 55 of the Negotiable Instruments Law.
    . Actions upon promissory notes.
    Williams, Folsom & Strause, for plaintiff.
    Engel, Engel & Oppenheimer, for defendants.
    
      
       Received too late for insertion in proper place.
    
   Wadhams, J.,

Four separate actions are brought to recover on four promissory notes made by the defendant Schlesinger to the order of the defendants Lampert & Horn, and by Lampert & Horn indorsed and delivered to the plaintiff. Upon the trial it was stipulated that the evidence taken - should be applied to the four actions. It appears that Lam-pert & Horn purchased certain lumber of the plaintiff, for which they gave their paper from time to time; that by reason of their inability to meet their obligations the bank refused to discount any more of their paper; that it was then suggested that a party of financial standing be secured, and Lampert & Horn produced the defendant Schlesinger, who made the notes in 'question, which were then delivered to the plaintiff for value. ‘ There was some conflict in the evidence as to whether the plaintiff knew that the defendant Schlesinger was acting for the accommodation of the defendants Lampert & Horn. In my opinion it is immaterial whether plaintiff had notice of such fact or not. Section 55 of the negotiable Instrument Law provides: “An accommodation party is one who has signed the instrument as maker, drawer, acceptor or- indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person‘is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party.” The very purpose of the accommodation would be defeated if knowledge of the fact that the responsible party was acting as an accommodator were a good defense in an action by a party who parted with value relying upon the credit of the accommodating party. The defendant Schlesinger contends further that in this case he executed and delivered the notes for the accommodation of the plaintiff as well as for the accommodation of Lampert & Horn, and that Lampert & Horn were merely intermediary parties acting for the plaintiff. If such were the case the plaintiff would not be entitled to recover. It is well settled that when the note was without consideration and was delivered upon the condition that the maker should not be liable thereon the maker-is not liable to the party to whom he delivered the note. A conditional delivery as well as want of consideration may be shown in an action between the origInal parties and others having notice. Higgins v. Ridgway, 153 N. Y. 130. An accommodation party may specify what use shall he made of the instrument which he signs. He may impose terms and conditions, and no person who takes the note in violation of such terms and conditions, and with notice thereof, can enforce the instrument against him. Benjamin v. Rogers, 126 N. Y. 60; United States Natl. Bank v. Ewing, 131-id. 506. The burden of showing that the use of the notes was restricted is upon the accommodation maker. Isaacs v. Cohn, 10 App. Div. 216; 41 N. Y. Supp. 779; 161 N. Y. 663. Butin this case, although there is some evidence that plaintiff suggested toLampert &'Horn that they procure a customer or other good party whose paper would he honored, it is clear that such suggestion was to enable Lam-pert & Horn to meet their obligations to the plaintiff. It was for their accommodation and not for the accommodation of the plaintiff that these notes were made. Where a promissory note for the accommodation of the payee is taken in payment of an antecedent debt the holder may recover upon the note unless its use was restricted by the accommodation maker. Isaacs v. Cohn, 10 App. Div. 216; 41 N. Y. Supp. 779; affd., 161 N. Y. 663. In this case there was no conditional delivery nor the violation of any terms and conditions imposed by''the defendant Sehlesinger. He made the notes at the request of Lamport & Horn for their accommodation and they delivered them to the plaintiff for value. Although this may. have been done with the knowledge of the plaintiff, the defendant Sehlesinger must meet the obligation. It follows that judgment must be directed for the plaintiff against each of the defendants.

Judgment for plaintiff.