8.3A-419 - A-419. Instruments signed for accommodation.
§ 8.3A-419. Instruments signed for accommodation.
(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 endorser and, subject to subsection (d), is obliged to pay theinstrument 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 an accommodation partyand there is notice that the instrument is signed for accommodation if thesignature is an anomalous endorsement or is accompanied by words indicatingthat the signer is acting as surety or guarantor with respect to theobligation of another party to the instrument. Except as provided in §8.3A-605, the obligation of an accommodation party to pay the instrument isnot 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 is accompanied by wordsindicating unambiguously that the party is guaranteeing collection ratherthan payment of the obligation of another party to the instrument, the signeris obliged to pay the amount due on the instrument to a person entitled toenforce the instrument only if (i) execution of judgment against the otherparty has been returned unsatisfied, (ii) the other party is insolvent or inan insolvency proceeding, (iii) the other party cannot be served withprocess, or (iv) it is otherwise apparent that payment cannot be obtainedfrom the other party.
(e) An accommodation party who pays the instrument is entitled toreimbursement from the accommodated party and is entitled to enforce theinstrument against the accommodated party. An accommodated party who paysthe instrument has no right of recourse against, and is not entitled tocontribution from, an accommodation party.
(Code 1950, §§ 6-381, 6-416; 1964, c. 219, §§ 8.3-415, 8.3-416; 1992, c. 693.)