McKinney v. Peters

GATES, J. A concern known as the Dakota Kerosene Gas Company sought to negotiate to plaintiff an unmatured promissory note for $5,000, payable to it executed by defendant Henry Peters. Upon investigation of the financial standing of said defendant, plaintiff 'declined to purchase the note, but offered to purchase it if defendant Luella W. Peters would sign the note and if she and her husband, her codefendant, would secure it by mortgage upon real estate owned by her. The terms of such offer were complied with, and plaintiff purchased the note, paying $4,800 therefor. This action was begun to foreclose the mortgage. The defendants answered separately. Trial was had before a referee, whose findings and conclusions were favorable to plaintiff and ■which were adopted by the trial court. From' the judgment and an order denying a new trial, the defendant Luella W. Peters appeals. The sole contention of appellant is that she and her mortgaged property are not liable to plaintiff because there was no considera [287] tion moving to her for signing the note; it having ¡been signed by her at a time after it had1 been uttered, relying upon the rule announced in 7 Cyc. 692; 3 R. C. L. 928. As was said toy Judge Bruce in First. Nat. Bit. v. Meyer, 30 N. D. 388, 152 N. W. 657: “We are not here construing the common law or the law merchant, but the provisions of the Negotiable Instruments Act.” That act, sections 29 and 26, c. 279, Laws 1913, provides:: “Sec. 29. 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.” ' “Sec. 26. Where value has at any time been given for the instrument, the holder is deemed a holder for value in respect to all parties who became suoh prior to that time.” Clearly respondent is a holder for value, and just as olearly appellant signed the note without receiving value therefor; but she did sign it “for the purpose of lending his [her] name to some other person,” viz, the Dakota Kerosene Gas Company, and she did sign it prior to the time that respondent became the holder thereof. To hold that since the adoption of the Negotiable Instruments Act the rule invoked by appellant may be applied would1 be to violate the plain and obvious meaning of the clause “in respect to all parties who became such prior to that time.” Appellant therefore cannot be permitted to defend upon the ground that there was no consideration moving to her. The judgment and order appealed from are affirmed.