§ 25-3-419. Instruments signed for accommodation.
§ 25‑3‑419. Instruments signed for accommodation.
(a) If an instrument isissued for value given for the benefit of a party to the instrument, the"accommodated party", and another party to the instrument, the"accommodation party", signs the instrument for the purpose ofincurring liability on the instrument without being a direct beneficiary of thevalue given for the instrument, the instrument is signed by the accommodationparty "for accommodation".
(b) An accommodationparty may sign the instrument as maker, drawer, acceptor, or indorser and,subject to subsection (d) of this section, is obliged to pay the instrument inthe capacity in which the accommodation party signs. The obligation of anaccommodation party may be enforced notwithstanding any statute of frauds andwhether or not the accommodation party receives consideration for theaccommodation.
(c) A person signing aninstrument is presumed to be an accommodation party and there is notice thatthe instrument is signed for accommodation if the signature is an anomalousindorsement or is accompanied by words indicating that the signer is acting assurety or guarantor with respect to the obligation of another party to theinstrument. Except as provided in G.S. 25‑3‑605, the obligation ofan accommodation party to pay the instrument is not affected by the fact thatthe person enforcing the obligation had notice when the instrument was taken bythat person that the accommodation party signed the instrument foraccommodation.
(d) If the signature ofa party to an instrument is accompanied by words indicating unambiguously thatthe party is guaranteeing collection rather than payment of the obligation ofanother party to the instrument, the signer is obliged to pay the amount due onthe instrument to a person entitled to enforce the instrument only if (i)execution of judgment against the other party has been returned unsatisfied,(ii) the other party is insolvent or in an insolvency proceeding, (iii) theother party cannot be served with process, or (iv) it is otherwise apparentthat payment cannot be obtained from the other party.
(e) An accommodationparty who pays the instrument is entitled to reimbursement from theaccommodated party and is entitled to enforce the instrument against theaccommodated party. An accommodated party who pays the instrument has no rightof recourse against, and is not entitled to contribution from, an accommodationparty. (1899, c. 733, ss. 28, 29, 64; Rev., ss. 2176, 2177,2213; C.S., ss. 3008, 3009, 3045; 1965, c. 700, s. 1; 1995, c. 232, s. 1.)