Lessons Applicable: Consideration and Accommodation Party (Negotiable Instruments)
FACTS:
- promissory note: 3,000. Due 5th of September, 1912.
- We jointly and severally agree to pay to the order of Don Antonio G. Serrano on or before the 5th day of September, 1912, the sum of three thousand pesos (P3,000) for value received for commercial operations. Notice and protest renounced. If the sum herein mentioned is not completely paid on the 5th day of September, 1912, this instrument will draw interest at the rate of 1½ per cent per month from the date when due until the date of its complete payment. The makers hereof agree to pay the additional sum of P500 as attorney's fees in case of failure to pay the note.
Manila, June 5, 1912.
(Sgd.) For Padern, Moreno & Co., by F. Moreno, member of the firm. For Jose Padern, by F. Moreno. Angel Gimenez.
- The note was indorsed on the back as follows:
Pay note to the order of Don Fernando Maulini, value received. Manila, June 5, 1912. (Sgd.) A.G. Serrano.
- Maulini's business as a broker consisted in looking up and ascertaining persons who had money to loan as well as those who desired to borrow money and, acting as a mediary, negotiate a loan between the two
- Method usually followed: the broker delivered the money personally to the borrower, took note in his own name and immediately transferred it by indorsement to the lender
- done at the special request of the indorsee and simply as a favor to him, the latter stating to the broker that he did not wish his name to appear on the books of the borrowing company as a lender of money and that he desired that the broker take the note in his own name, immediately transferring to him title thereto by indorsement
- Trial Court: immaterial whether there was a consideration for the transfer or not, as the indorser, under the evidence offered, was an accommodation indorser.
ISSUES: W/N Serrano was an accomodation indorser
HELD: Judgment reversed.
- never was a moment when Serrano was the real owner of the note
- The only payment that the broker received was for his services in negotiating the loan.
- In cases of accommodation indorsement the indorser makes the indorsement for the accommodation of the maker. Such an indorsement is generally for the purpose of better securing the payment of the note
- lend his name to the maker, NOT to the holder
- indorsement is made as a favor to the indorsee, who requests it, not the better to secure payment, but to relieve himself from a distasteful situation, and where the only consideration for such indorsement passes from the indorser to the indorsee, the situation does not present one creating an accommodation indorsement, nor one where there is a consideration sufficient to sustain an action on the indorsement.
- Parol evidence was admissible for the purpose named.