CLARK V. SELINER- Liability Of An Accommodation Party

42 PHIL 384

FACTS:

Sellner with two other persons, signed a promissory note solidarily binding themselves  to  pay  to  the  order  of  R.N  Clark.    The  note  matured  but  the amount  wasn't  paid.    The  defendant  alleges  that  he  didn't  receive  any amount  of  the  debt;  that  the  instrument  wasn't  presented  to  him  for
payment  and  being  an  accommodation  party,  he  is  not  liable  unless  the note is negotiated, which wasn't done. 

HELD:

On the first issue, the liability of Sellner as one of the signers of the note, is not dependent on whether he has  or has not, received  any part of the debt.    The  defendant  is  really  and  expressly  one  of  the  joint  and  several debtors of the note and as such he is liable under the provisions of Section 60 of the Negotiable Instruments Law.  

As to the presentment for payment, such action is not necessary  in order to charge the person primarily  liable, as is the defendant Sellner.

As to whether or not Sellner is an accommodation party, it should be taken into account that by putting his signature to the note, he lent his name, not to the creditor, but to those who signed with him placing him in the same position and with the same liability as the said signers.  It should be noted that  the  phrase”without  receiving  value  therefore”  as  used  in  section  29 means “without receiving value by virtue of the instrument” and not, as it apparently is supposed to mean, “without receiving payment for lending his name.”  It is immaterial as far as the creditor is concerned, whether one of the signers has or has not received anything in payment for the use of his name.  In this case, the legal situation of Sellner is that of a joint surety who  upon  the  maturity  of  the  note,  pay  the  debt,  demand  the  collateral
security and dispose of it to his benefit.  As to the plaintiff, he is a holder for value.