Court Opinion

ID: 3403172
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:15:39.393952+00
Date Added: 2024-06-11T08:41:11.936209
License: Public Domain

Unquestionably, if the contract of indorsement could be shown to be an accommodation indorsement and it could be shown by parol evidence that there was no consideration therefor, the legal evidence in this case authorized the verdict for the defendant, the accommodation indorser. "Parol evidence shall be admissible to show that the writing was either originally void or subsequently became so." Code, § 38-503. I think that all the other evidence, both written and oral, when considered in connection with the note sued on, would have authorized a finding by the jury that the defendant, when he said in his letter accompanying the note that "we will then be responsible for its payment," meant that he would be responsible for its payment as an accommodation indorser, and that the plaintiff so understood, or at least that the meaning was ambiguous and could be explained by parol. "An accommodation party is one who has signed the instrument as . . 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." Code, § 14-306. This code section is in the exact language of section 29 of the negotiable instruments law.
Promissory notes and indorsements thereon are subject to the rule that a valid written instrument can not be contradicted or varied by parol evidence. Code, § 38-501. But it is equally true that a matter going to the existence of a contract is not within the above rule. § 38-503. The evidence for the plaintiff was to the effect that there was a consideration for the indorsement, and that the note passed to the plaintiff before due, in due course of business. This made out a prima facie case for the plaintiff and in the absence of any showing to the contrary would have authorized a verdict in its behalf. However, the defendant contended, and if the parol evidence allowed by the court was properly admitted, his evidence would have authorized the jury to find that he was an accommodation indorser; that there was no consideration and the party accommodated was the plaintiff. In short, the defendant's contention was that there was in existence no legal contract between *Page 169 
him and the plaintiff. The evidence was undisputed that the plaintiff, the party who the defendant contended was the party accommodated, had not negotiated the note in question. An accommodation indorsement does not become a contract until it is negotiated to a bona fide holder for value. Dean v. Lyde,223 Ala. 394 (136 So. 857). As between an accommodation indorser and the party accommodated, an accommodation indorsement represents no obligation whatever, in that the contract of indorsement has no inception until it has been negotiated to a bona fide holder for value. Kennedy v. Heyman, 183 A.D. 421 (170 N. Y. Supp. 828); Second National Bank v. Howe, 40 Minn. 390 (42 N.W.. 200, 12 Am. St. Rep. 744); Dean v. Lyde, supra.
The indorsement being attacked as an invalid contract we think that parol evidence was admissible to prove that no valid contract was in existence. Hence we do not think the court erred in permitting parol evidence to show that the contract of indorsement had no legal inception and was not a valid contract.Jewell v. Norrell, 66 Ga. App. 11, 14 (16 S.E.2d 797). If the court was correct in permitting the parol evidence, which denied the existence of a valid legal contract between the plaintiff and the defendant, as we think he was, this testimony, together with the other evidence and the circumstances proved, authorized the jury to find: that the defendant was an accommodation indorser without consideration; that the plaintiff was the party accommodated; that the note had not been negotiated to a bona fide holder for value; that the contract of indorsement had no legal inception and was not binding; that the accommodation indorser, the defendant Barrett, who was prima facie liable to the plaintiff by virtue of the indorsement, had relieved himself from liability by showing by parol evidence and by circumstances surrounding the transaction that he was an indorser for the accommodation of the plaintiff, and that, as between himself and the plaintiff, it was understood and agreed that he should not be liable to the plaintiff for payment of the note. The evidence authorized the verdict in favor of the defendant Barrett, the indorser.
Even if the purported contract is reduced to writing and recites a consideration, the defendant can always prove a total want of consideration and that, by reason of the fact that there was no consideration, the contract was invalid or void. An accommodation *Page 170 
maker of a note containing the words "value received" was not estopped to deny consideration; such words being a mere admission, and insufficient even to make a jury question, if all other evidence shows that there was no consideration. Kennedyv. Heyman, supra. In the instant case the evidence was contradictory and a jury question was presented. In Stricklandv. Henry, 175 N.Y. 372 (67 N.E. 611), the Court of Appeals of New York said, in effect, that "where the defendant in an action on a note claimed that it was an accommodation note and without consideration, the question whether such evidence was true was one of fact for the jury; the testimony of the defendant being contradicted by his admission in the body of the note that it was given for value received and the testimony of the payee being in conflict with his admission resulting from the indorsement of the note; but that the "defendant [when he testified that the note was an accommodation note and without consideration] was contradicted by an admission of his own in the body of the note that it was given for value received. Now, while it was open to defendant to contradict that statement, and to show that, as a matter of fact, it was without consideration, the note in the possession of plaintiff raised the presumption that it was given for a good consideration, and passed to plaintiff in due course of business. The defendant's evidence tended to overthrow this presumption. Whether it was true was — in view of the legal presumption raised by plaintiff's possession of the note indorsed by the payee, and the recital therein that that defendant had received value for it — a question of fact to be determined by the jury." (Brackets mine.) Moreover, even if the letter which accompanied the note be considered as part of the transaction, and that the two papers constituted but one written contract, there is nothing in either of them, or both together, except an unconditional promise to pay. There is no other promise, or term, or condition which the defendant could contradict or vary, for there are none therein, unless they are ambiguously expressed, and if ambiguously expressed, the Code, § 38-502, would prevail. The defendant should be permitted to show by parol that there was no consideration for the alleged contract and hence there was no contract upon which to base the suit. A valid contract must have a consideration, otherwise it is void. The defendant was denying the existence of a contract, and I think he was entitled *Page 171 
to show by parol that no contract of indorsement had any legal inception. Jewell v. Norrell, supra. I think that the case should be affirmed.