First New Haven Nat. Bank v. Clarke
| Decision Date | 15 December 1976 |
| Docket Number | No. 98530,98530 |
| Court | Connecticut Court of Common Pleas |
| Parties | , 20 UCC Rep.Serv. 1228 The FIRST NEW HAVEN NATIONAL BANK v. George B. CLARKE et al. |
Lattanzi, Vishno & Levine, New Haven, for plaintiff.
Belford, Belford & Floman, New Haven, for defendants.
In the complaint the plaintiff alleged that '(b)y a note dated October 23, 1974, Progressive Management Corp. promised to pay to the plaintiff on demand the sum of $9,805.25 plus interest and costs of collection including a reasonable attorney's fee in the event of default.' In paragraph two of the complaint the plaintiff further alleged that '(t)he defendants, George B. Clarke, Robert P. Williams and Elder Young, endorsed said note as follows: 'Presentment for payment and notice of nonpayment are hereby waived. Further each endorser consents without notice or further assent (a) to the terms and conditions of this note or any renewal or extension thereof, (b) to the exchange or surrender of the collateral, and (c) to extension of time for payment, or change of interest rate, of this note or of the collateral, and as endorser agrees that upon or after any default in the maker's liability or maker's agreement, holder may exercise, with respect to endorser's personal property at any time in the possession or control of holder in any capacity, the same rights of application to maker's liability and of addition to collateral under the within and foregoing notes as holder thereunder has with respect to maker's personal property." In paragraph three of the complaint, the plaintiff alleged that '(s)aid note is in default and there is presently due the sum of $9,805.25 plus interest from November 25, 1974 at the rate of twelve and 3/4 (12 3/4%) per cent per annum accrued at the rate of $3.47 per diem, plus reasonable attorney's fees and costs of collection as the Court may order.'
The defendants demurred to the complaint on the ground that the 'quoted language in Paragraph 2 . . . does not constitute a gurantee or obligation to pay said promissory note.' The defendants also demurred to the prayer for relief on the ground that the 'plaintiff is not entitled to such relief (money damages and attorney's fees) for the reason that the plaintiff's rights set forth in the quoted language appearing in Paragraph 2 apply only to personal property or collateral of the defendants and not with respect to any personal liability for payment of the promissory note or money damages.'
Problems arising from surety arrangements are as old as recorded history. 1
'Broadly defined, a surety is a party to a contract who agrees to pay the obligation of another under some circumstances.' Peters, 'Suretyship Under Article 3 of the Uniform Commercial Code,' 77 Yale L.J. 833, 836. 2 "The term surety is very often used in the broad sense as including both technical surety and guarantor, i.e., all obligations in which the promisor is answering for a loan or extension of credit from the creditor to the principal debtor." Id., n. 15; see Restatement, Security § 82 (). 'More than that of any other party to commercial paper, the endorser's liability is like that of a surety.' 2 Hart & Willier, Commercial Paper Under the U.C.C., Bender's Uniform Commercial Code Service, § 8.01; see American National Bank of Powell v. Foodbasket, 493 P.2d 403 (Wyo.). One who signs an instrument without clear indication of capacity or intention automatically becomes an endorser by virtue of § 42a-3-402 of the General Statutes, and such an endorser, makes the engagement of General Statutes § 42a-3-414(1) that he will pay if the instrument to which he has subscribed is dishonored by its designated payor. Thus, as pointed out, the concept of the secondary liability of an endorser finds something of a parallel in the liability of a surety. A surety may appear on a negotiable instrument as an 'accommodation party' who, pursuant to § 42a-3-415(1) of the General Statutes, signs 'in any capacity for the purpose of lending his name to another party to it.'
The endorser's liability, of course, is conditioned on certain formal procedures, such as due presentment and proper notice. See ...
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