Middletown transcript., 1873-05-10
The Law of Accommodation Paper.

As some Of our readers are, perhaps,
not fully aware Of the responsibility that
attaches to the accommodation endorser,
we publish, by request, the following cx-
tract from the New York Journal II Com-
merce. which may be Of some benefit to
some Of our citizens who frequently en-
dorsr the notes Of friends without reflect
ing that they may be held liable for tue
payment Of the same:
=. An accommodation note in the hands
Of one who knows il to be such. and has
given no value for it. i. void for want of
valuable consideration An accommo
dation note in the hands Of one who
knows il to be such aud has given a valu-
able consideration for i, before it became
due, is good, and can be collected OF either
( drawer or cndorscrs. The distinction We
have made is vital as to the binding char
acter of the obligation \ man draws hi,
I note and lends it to friend for his accom-.
moda,lon that friend cannot hold him
| for it because he has given no cnn.idera.
ton for it. But il that friend sells Il IN
! The street. or has ii discounted in a bank
! the buyer or the discounter has a good
/ claim against the drawer having given a
\ consideration for il Aud il will ma.c no
difference about the liability il the seller
reveals the fact that the drawer ha. lent
his name gratu,ously, and that the note
is accommodation paper 10 the sanr
manner, a man wishing 10 borrow money
draws up his own uHtc and gets friend
to endorse il as security In his hands ii
is good for nothing against that friend
being void Tor want of valuable cousilrru-
ton But il he ucgo,iatrs ii, or ha. ii
discounted. it is good title against the
said indarscr IN the hands Of any Que who
gives the value of II and the fic, that
the said enlorscr has received nothing fnr
this use of hi, name and has written il
across the note merely for ,hs ac.7Hm7la-
ton of H. friend, wit! not ajlra the ciuim
against him, however widely il m1v be
known This j. equitable as well as legal
4 man who ltnd, hs name doe. not mca n
thereby 10 be bound 10 his friend to whom
he lcnds il gra,u,dusly. aud he Is not ~
bound to him: but he docs mean If he
f
Who NAV take Tor value this note Of his
friend. and hc is so bound to such third
person He puts his name on it 10 No..
commodaie his friend; Of what accommo
datiou is the use Of his name If it is not
o,i there as security TO enable his friend to
negotiate il; The moment that uhirct. for
which he signed, Is accomplished, and the
note Is discounted, his obligation to pay
! tif the drawer does not begins and is duly
binding II the drawer does not pay it
when due and i, is duly protested, it i, as
/ good claim against him rs il he had
/ given it for purchase Of -four TO feed his
family There is no question in regard to
] thi, matter, but il any Que seeks for con,
/ frma,ion OF our opinion from recognized
authority. We quote the following FROM
Judge Story:
- Neither is it any defense or bar that
the note was known to the holder to be an
accommodation note between the other
parties, il he takes it for value. bona nde,
before it has become due The reason i,
that the very obicc, Of every accommpia.
ton noto is to enable the parties thereto
by n sale or other negotiation thereof. Ia
obtain free credit and circulation thereof
and this object would be wholly frustrated
unless the purchaser, or other holder io'
value, could hold such note by as tiru
and valid title as il it were founded on
real business transaction. The mero fac,
shat an accommodation nstc has been in
dorsed even after il became due does no
Of itself, without some other equity in tn
maker, defeat the rights Of the holder
In short. the PARTIES to every accommoda
ton note hold themselves out to the pub
lie. by their signatures, to be absolu'cl,
bound to every person who shall take th'
same for value. to the same extent as
that value were personally advanced t.
them. or on their account. and u, their re
quest. "