Opinion ID: 2627401
Heading Depth: 1
Heading Rank: 5

Heading: Accommodation Party

Text: [¶ 12] Ms. Belden contends that she is an accommodation party, and is entitled to recover the amount that she paid on Note 2. An accommodation party is [a] person who, without recompense or other benefit, signs a negotiable instrument for the purpose of being a surety for another party (called the accommodated party ) to the instrument. Black's Law Dictionary 17 (8th ed. 1999) (first emphasis added). Accommodation of negotiable instruments in Wyoming is governed by Wyo. Stat. Ann. § 34.1-3-419 (LexisNexis 2007), which provides in pertinent part: (a) If an instrument is issued for value given for the benefit of a party to the instrument (accommodated party) and another party to the instrument (accommodation party) signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party for accommodation. . . . (e) An accommodation party who pays the instrument is entitled to reimbursement from the accommodated party and is entitled to enforce the instrument against the accommodated party. An accommodated party who pays the instrument has no right of recourse against, and is not entitled to contribution from, an accommodation party. (Emphasis added.) [¶ 13] As we have mentioned previously, there are two notes at issue. The maker of the first note was the partnership. Ms. Belden signed Note 1 as Margot Belden, Partner. Mr. Thorkildsen signed the note as John E. Thorkildsen, Partner. The evidence is undisputed that Ms. Belden made no payments on Note 1. The maker of Note 2 was the LLC. The evidence is undisputed that the partnership was not a party to Note 2. Ms. Belden signed Note 2 as Margot Belden, Fin Mngr. Mr. Thorkildsen signed Note 2 as John Thorkildsen, Ret Mngr. Neither Ms. Belden nor Mr. Thorkildsen signed Note 2 in their individual capacity. Ms. Belden contends that she was an accommodation party to both notes and that the district court erred in finding otherwise. [¶ 14] Whether a person is an accommodation party to a negotiable instrument is a question of fact. See Narans v. Paulsen, 803 P.2d 358, 360-62 (Wyo.1990); Wyo. Stat. Ann. § 34.1-3-419 cmt. 3. We review the district court's findings of fact for clear error. Baker v. Speaks, 2008 WY 20, ¶ 9, 177 P.3d 803, 806 (Wyo.2008). The factual findings of a judge are not entitled to the limited review afforded a jury verdict. While the findings are presumptively correct, the appellate court may examine all of the properly admissible evidence in the record. Due regard is given to the opportunity of the trial judge to assess the credibility of the witnesses, and our review does not entail re-weighing disputed evidence. Findings of fact will not be set aside unless they are clearly erroneous. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. Piroschak v. Whelan, 2005 WY 26, ¶ 7, 106 P.3d 887, 890 (Wyo.2005) (quoting Harber v. Jensen, 2004 WY 104, ¶ 7, 97 P.3d 57, 60 (Wyo.2004)). [¶ 15] In rejecting Ms. Belden's accommodation claim, [3] the district court stated: 4. The Court finds that there is no evidence within or without the promissory note to establish the plaintiff as an accommodation maker on the LLC note to the Bank of Jackson Hole. The evidence shows that the plaintiff was the instigator for the formation of the new design company. The company needed more money to pay the lease payments, and employees. The members of the LLC brought in various of their assets: her lease and location, customers, design projects in progress or planning, expertise, and so forth, along with their various, substantial, and additional business debt. She and one of the members ... purchased a nursery across the street, in order to expand their design capabilities. Plaintiff, more than any of the others, stood to benefit by the new company, with her expectation of stability and increased profits. All the evidence outside the note points to the benefits and value flowing to plaintiff from the success of this venture at the time it was funded. 5. The plaintiff has failed to sustain her burden of proof by credible, substantial evidence that she signed either of the two notes in question as an accommodation maker. [¶ 16] Ms. Belden relies heavily upon Narans v. Paulsen to support her challenge to the district court's finding that she was a direct beneficiary of the loan proceeds and, therefore, not an accommodation party. 803 P.2d 358 (Wyo.1990). In Narans, we addressed the question of whether Dr. Paulsen was an accommodation party. Id. at 359. At issue in Narans, was whether Dr. Paulsen had benefited directly from the loan. We set forth the following framework for determining whether a party to a promissory note is an accommodation party: A party claiming accommodation maker status has the burden of proof on the point. That a party signs as a co-maker does not establish that he is not an accommodation maker. A party cannot be an accommodation maker with respect to his own debt.... Whether one is an accommodation maker is a question of the intentions of the party claiming that status, the party alleged to be the accommodated party, and the party holding the note when the alleged accommodation maker signed the note. If the accommodation maker status is not readily apparent from the face of the note itself, parol evidence is admissible to establish the intentions of those concerned. A party who does not directly benefit from the note is likely to be held to be an accommodation maker.... No one of the above factors conclusively establishes the maker's status. Generally speaking, the courts have applied a two-stage analysis with these factors in mind. In the first stage, the court simply examines the note or renewals in question for evidence of any expression of limitation of liability accompanying the maker's signature. If no such expression is evident, as there was not on either the original note or any of the renewals in this case, the fact finder moves to the second stage and considers parol evidence as previously described. Id. at 361 (citations omitted). Applying this analysis, we affirmed the district court's conclusion that Dr. Paulsen was an accommodation party and held that the district court's finding that Dr. Paulsen had not benefited directly from the loan was not clearly erroneous. Id. at 361-62. Here, Appellants contend that the district court's finding that Ms. Belden benefited from the promissory note was clearly erroneous. We need not address that finding, however. Implicit in the first step of our Narans analysis is the proposition that the person claiming to be an accommodation party is a party to the instrument. In this case, the instrument clearly shows that Ms. Belden was not a party to Note 2. [¶ 17] In Narans, it was undisputed that Dr. Paulsen was a party to the note. He and several other partners had signed a promissory note in the name of the partnership, Energy Inn Partnership. Id. This note was renewed several times, including once after Dr. Paulsen had effectively left the partnership. Id. at 360. On that occasion, despite having left the partnership, Dr. Paulsen signed the renewal note as a partner of Energy Inn Partnership and as an individual. Id. After the partnership defaulted, Dr. Paulsen paid off the note. Id. He subsequently claimed accommodation party status and pursued a cause of action against the remaining partners. Id. [¶ 18] In upholding the district court's decision that Dr. Paulsen was an accommodation party, we found it significant that Dr. Paulsen's signature reappear[ed] on the last renewal ... not once but twice. Although he signed as a partner, he also signed as an individual. Id. at 362. We determined that the district court's conclusion that Dr. Paulsen was an accommodation party was adequately supported by record evidence and not contrary to the great weight of the evidence. Id. [¶ 19] In the current case, however, Ms. Belden is not a party to Note 2. Wyo. Stat. Ann. § 34.1-3-419 plainly requires that the accommodated and the accommodating parties be parties to the notes. Note 2 quite clearly had only one maker, the LLC. Although the signatures of all four members appear, they signed only in their capacities as officers of the LLC. The LLC's name precedes all four signatures, and each member's title is shown next to the printed name. Unlike the circumstances of Narans, where Dr. Paulsen's signature on the final renewal appeared twiceas a partner and as an individualboth Ms. Belden's and Mr. Thorkildsen's signatures appear only as officers of the LLC. Ms. Belden cannot be an accommodation party and Mr. Thorkildsen cannot be an accommodated party. [¶ 20] Ms. Belden's uncontradicted testimony that all four members signed separate guaranty agreements does not alter our analysis. The guaranty agreements do not make the shareholders parties to the promissory notes. See Transamerica v. Naef, 842 P.2d 539, 543 (Wyo.1992). A guaranty creates nothing more than a contract to pay the debt of another, and is secondary to the instrument it guarantees. Lee v. LPP Mortg. Ltd., 2003 WY 92, ¶ 27, 74 P.3d 152, 162 (Wyo.2003). Accord, e.g., Builders Supply Co. v. Czerwinski, 275 Neb. 622, 748 N.W.2d 645, 654 (2008); Dunn Indus. Group, Inc. v. City of Sugar Creek, 112 S.W.3d 421, 434 (Mo.2003); McDonald v. Nat'l Enters., Inc., 262 Va. 184, 547 S.E.2d 204, 207 (2001). Because the only maker of Note 2 was the LLC, neither it nor Ms. Belden may recover from Mr. Thorkildsen pursuant to Wyo. Stat. Ann. § 34.1-3-419(e). [¶ 21] To summarize, neither Ms. Belden nor Mr. Thorkildsen signed Note 2 in their individual capacities and were not parties to the note. Accordingly, Ms. Belden cannot be an accommodation party. In light of this determination, it is not necessary for us to determine whether the district court's factual finding that Ms. Belden directly benefited from the loan was clearly erroneous.