§ 6A-3-419 - Instruments signed for accommodation.
SECTION 6A-3-419
§ 6A-3-419 Instruments signed foraccommodation. – (a) If an instrument is issued for value given for the benefit of a party tothe instrument ("accommodated party") and another party to the instrument("accommodation party") signs the instrument for the purpose of incurringliability on the instrument without being a direct beneficiary of the valuegiven for the instrument, the instrument is signed by the accommodation party"for accommodation."
(b) An accommodation party may sign the instrument as maker,drawer, acceptor, or indorser and, subject to subsection (d), is obliged to paythe instrument in the capacity in which the accommodation party signs. Theobligation of an accommodation party may be enforced notwithstanding anystatute of frauds and whether or not the accommodation party receivesconsideration for the accommodation.
(c) A person signing an instrument is presumed to be anaccommodation party and there is notice that the instrument is signed foraccommodation if the signature is an anomalous indorsement or is accompanied bywords indicating that the signer is acting as surety or guarantor with respectto the obligation of another party to the instrument. Except as provided in§ 6A-3-605, the obligation of an accommodation party to pay the instrumentis not affected by the fact that the person enforcing the obligation had noticewhen the instrument was taken by that person that the accommodation partysigned the instrument for accommodation.
(d) If the signature of a party to an instrument isaccompanied by words indicating unambiguously that the party is guaranteeingcollection rather than payment of the obligation of another party to theinstrument, the signer is obliged to pay the amount due on the instrument to aperson entitled to enforce the instrument only if (i) execution of judgmentagainst the other party has been returned unsatisfied, (ii) the other party isinsolvent or in an insolvency proceeding, (iii) the other party cannot beserved with process, or (iv) it is otherwise apparent that payment cannot beobtained from the other party.
(e) An accommodation party who pays the instrument isentitled to reimbursement from the accommodated party and is entitled toenforce the instrument against the accommodated party. An accommodated partywho pays the instrument has no right of recourse against, and is not entitledto contribution from, an accommodation party.