Carr v. Wainwright

• Decision Date: 26 August 1930
• Docket Number: No. 4258.,4258.
• Parties: CARR v. WAINWRIGHT.
• Court: U.S. Court of Appeals — Third Circuit

43 F.2d 507 (1930)

CARR v. WAINWRIGHT.

No. 4258.

Circuit Court of Appeals, Third Circuit.

August 26, 1930.

McCarter & English, of Newark, N. J. (Geo. W. C. McCarter, of Newark, N. J., of counsel), for appellant.

Edward F. Merrey, of Paterson, N. J., for appellee.

Before WOOLLEY and DAVIS, Circuit Judges, and JOHNSON, District Judge.

DAVIS, Circuit Judge.

This is an appeal from a judgment entered against the appellant, who was defendant below, upon the verdict of a jury for $20,005.12.

The suit was brought by Cecil C. Wainwright against Charles Carr on two notes for $8,889 each. On one of the notes, however, there was indorsed a credit of $1,667. It appears that the two notes in suit, with another for $8,889 (all of which were made payable to the order of the plaintiff), were made November 2, 1925, by the corporation of Charles Carr, Inc., of which the defendant was president, and were given in part payment for land which the corporation had purchased from Wainwright, who tried to negotiate the notes, but had not been able to do so. He thought that, if the defendant would indorse them and make himself personally liable for their payment, he could negotiate them. Wainwright agreed to pay Carr $1,667 for his indorsement by crediting that amount on one of the notes as having been received by him. Carr indorsed them on February 20, 1926. It does not appear, however, that he ever actually received $1,667 or any other sum for the indorsement. Wainwright was apparently unable to sell the notes and brought this suit against Carr on two of them.

The facts as stated above are, in substance, the plaintiff's testimony, which differs somewhat from the defendant's.

Carr defended on the ground that he was an accommodation indorser, and, under the facts and the law, the plaintiff, the accommodated party, could not maintain the suit against him. The question, therefore, on which the case depends, is whether or not the facts as stated constitute Carr an accommodation indorser.

At the close of the plaintiff's case, the defendant moved for a nonsuit, but the trial judge denied this. When all the testimony was in, he moved for a directed verdict, but this motion was likewise denied.

Section 29 of the Uniform Negotiable Instruments Law in effect in both New Jersey (3 Comp. St. N. J. 1910, p. 3738, § 29), where the defendant resides, and Florida (Laws Fla. 1897, c. 4524, § 29), where the plaintiff resides, provides that: "Liability of Accommodation Party. An accommodation party is one who has signed the instrument as maker, drawer, acceptor or 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."

The question depends upon what the antecedent of the word "therefor" in the phrase, "without receiving value therefor," is. The plaintiff contends that it refers to the indorsement of the accommodation party, while the defendant says it refers to the word "instrument." If the plaintiff's contention is correct, the case should have been submitted to the jury and the judgment entered upon its verdict should stand. If, on the contrary, "therefor" refers to "instrument," a verdict should have been directed for the defendant.

If this section means that a person who loans his name to another and receives any consideration, however slight, for doing so, loses, as to that person, the right of an accommodation party, the language is unhappily chosen and is subject to just criticism. 14 Harvard Law Review, 248. Mr. Justice Swayze, speaking for the Supreme Court of New Jersey, in the case of Morris County Brick Co. v. Austin, 79 N. J. Law, 273, 275, 75 A. 550, 551, said: "A careful reading of the section shows that this construction that the words, `value therefor,' refer to the loan of one's name on a negotiable instrument is not necessary. The words are not `without receiving value,' but `without receiving value therefor.' The structure of the sentence is such that the last word can only refer to the negotiable instrument itself, not to the loan of the name by way of accommodation. This view was...