Court Opinion

ID: 3318456
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:36:00.677866+00
Date Added: 2024-06-11T14:00:53.338098
License: Public Domain

General Statutes, § 4387, being § 29 of the Negotiable Instruments 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." Klein signed the note upon which the plaintiff, the payee of the note, brings this action, as an indorser. "Without receiving value," as used in this section, means without receiving value for the note, and not without receiving any consideration for lending his name.Morris County Brick Co. v. Austin, 79 N.J.L. 273,275, 75 A. 550; McGhee Inv. Co. v. Kirsher, 71 Colo. 137,204 P. 891; Brannan's Negotiable Instruments Law (3d Ed.), pp. 115, 119. Moreover, the only consideration for his indorsement was the promise of Friedman that he would pay Klein a debt which he owed him from the proceeds of the negotiation of a note made by him and indorsed by Klein. The promise to pay one's debt cannot be regarded as a consideration to him for his indorsement of a note made by the debtor who promises the indorser to pay his debt with the proceeds of the negotiation of the note. If he obtained the proceeds of the note, he would obtain only what was already owing him, and a promise to pay a prior debt cannot be held to be the giving of value for the indorsement. "`The value received', within the meaning of § 29 [§ 4387], must precede or be contemporaneous with the obligation upon the note; otherwise the party would be an accommodation party when the note was given and would cease to be such when the subsequent payment was made him. Nor can the promise to pay the commission out of the proceeds of the note, as distinct from the actual payment, constitute value for the endorsement, for that promise was merely one *Page 37 
to perform an existing legal obligation, and was therefore without consideration." Morris County Brick Co.
v. Austin, 79 N.J.L. 273, 275, 75 A. 550.
Klein was therefore an accommodation indorser. Gruber, the payee, charged Friedman, the maker of the note, a usurious rate of interest, and in addition interest upon the note from its date, although by its terms none was due until six months thereafter. This was done in violation of General Statutes, § 4798, and under § 4802, no action could be brought on any such loan, or upon any cause arising from the negotiation of such loan. The sole question for decision upon this appeal is whether Klein, an accommodation indorser, can take advantage of the defense of usury. The learned trial judge relied upon his interpretation of our opinion in Baggish v. Offengand, 97 Conn. 555,116 A. 614, and had not had the opportunity of seeing the opinion in Contino v. Turello, 101 Conn. 312,126 A. 725, in which we held that, "as a general rule, the accommodation indorser has the same right to contest a usurious note as the maker." We find nothing in the facts surrounding this transaction which would prevent Klein from availing himself of his defense of usury.
   There is error, the judgment is reversed and the Superior Court directed to render judgment for the defendant.
In this opinion the other judges concurred, except KELLOGG, J., who concurred in the result, but died before the opinion was written.