Opinion ID: 1937073
Heading Depth: 1
Heading Rank: 1

Heading: Richard v. Connie

Text: Since there is no dispute that Connie signed the note, the answer to the first question depends on her purpose in doing so. This is made clear by Maryland Code (1975), § 3-415(1) of the Commercial Law Article which provides that an accommodation party is one who signs the instrument in any capacity for the purpose of lending his name to another party to it. The undisputed evidence as presented by the Executive Vice-President of the Bank was to the effect that the wives' signatures were required before the Bank would make the loan to Walter and Richard. Such practices are common among lending institutions which recognize that [o]ne with money to lend, goods to sell or services to render may have doubts about a prospective debtor's ability to pay. In such cases he is likely to demand more assurance than the debtor's bare promise of payment. The prospective creditor can reduce his risk by requiring some sort of security. One form of security is the Article 9 security interest in the debtor's goods. Another type of security takes the form of joining a third person on the debtor's obligation. [J. White and R. Summers, Uniform Commercial Code § 13-12, at 425 (1972)]. It is readily apparent, therefore, that Connie lent her name to facilitate the loan transaction. As such she lent her name to two parties to the instrument, Richard and Walter, to enable them to receive a joint loan for the purchase of equipment for their printing business, thereby giving the Bank the added assurance of having another party to the obligation. Connie signed as an accommodation party as to both Walter and Richard. Nor is there any merit in the argument advanced by Richard that Connie must be either a co-maker or an accommodation party, that she cannot be both. The actual language of § 3-415(1) indicates that an accommodation party also signs in a particular capacity, as maker, acceptor or indorser of an instrument. The Official Comment 1 to § 3-415 explains that [s]ubsection (1) recognizes that an accommodation party is always a surety (which includes a guarantor), and it is his only distinguishing feature. He differs from other sureties only in that his liability is on the instrument and he is a surety for another party to it. His obligation is therefore determined by the capacity in which he signs. An accommodation maker or acceptor is bound on the instrument without any resort to his principal, while an accommodation indorser may be liable only after presentment, notice of dishonor and protest. Moreover, § 3-415(2) refers specifically to the liability of an accommodation party in the capacity in which he signed. It follows, therefore, that the fact that Connie was a co-maker of the note does not preclude her from also being an accommodation party. Section 3-415(5) of the Commercial Law Article states that an accommodation party is not liable to the party accommodated; thus, Connie is not liable to Richard. Our predecessors, prior to Maryland's adoption of the Uniform Commercial Code, explained the reasons for this proposition in Crothers v. National Bank, 158 Md. 587, 593, 149 A. 270 (1930): Since the accommodating party lends his credit by request to the party accommodated upon the assumption that the latter will discharge the debt when due, it is an implied term of this agreement that the party accommodated cannot acquire any right of action against the accommodating party. Richard contends, however, that Connie intended to accommodate only her husband, Walter. Even if there were evidence to this effect (and there is none), the subjective intent of a co-maker of a note is of little weight when objective facts and circumstances unambiguously demonstrate the capacity in which the note was signed. Seaboard Finance Co. of Connecticut, Inc. v. Dorman, 227 A.2d 441 (Conn. Cir.1966); Hover v. Magley, 116 App. Div. 84, 101 N.Y.S. 245 (1906). It is clear to us that the signatures of both wives were required to effect this joint business venture and thus Connie's signature was as much an accommodation to Richard as it was to Walter. We hold that Connie was an accommodation maker and that she cannot be liable to Richard, the party accommodated. The Court of Special Appeals erroneously held to the contrary.