364 A.2d 1191 | D.C. | 1976
Appellant McLachlen National Bank instituted this suit to recover on a promissory note indorsed by appellees Louis I. S. Fields and Constance B. Fields. The trial court dismissed the complaint after determining that the action was barred by a prior judgment obtained against the maker of the note. We conclude that dismissal was improper.
The facts pertinent to this appeal are the following. In 1970 McLachlen National Bank loaned a sum of money to H.V.H., Inc., a restaurant business. In return, the corporation, by its president Louis Fields, executed a promissory note in the amount of $4,452. Mr. Fields, in his individual capacity, and his wife Constance Fields indorsed the note on the back, guaranteeing payment if the corporation defaulted. The corporation subsequently failed to make in
Because the judgment was never satisfied, the bank brought this suit against the Fields to recover the unpaid portion of the note. In dismissing the complaint against the defendants (who were unrepresented by counsel), the trial court reasoned that the note had merged into the prior judgment and that the bank’s failure to join the Fields in the prior action precluded it from bringing a subsequent action against them on the note. Under the circumstances here, we conclude that this ruling was erroneous.
Appellees indorsed the note in question as sureties, assuming liability for the maker’s debt if it failed to pay. Under the provisions of the Uniform Commercial Code, they were “accommodation parties,” having the same obligations as other in-dorsers without surety status. See D.C. Code 1973, §§ 28:3-415(1), (2); Uniform Commercial Code § 3-415, Comment 1; J. White & R. Summers, Handbook of the Law Under the Uniform Commercial Code § 13-12 (1972)
The established rule is that an unsatisfied judgment against the maker of a note does not bar a subsequent action against an indorser. Cline v. Receiver of Commercial National Bank, 90 F.2d 968 (7th Cir. 1937); Staples v. Hendrick, 89 Conn. 100, 93 A. 5 (1915); Lambert v. Smilansky, 246 Mich. 125, 224 N.W. 442 (1929); First Discount Corp. v. Hatcher Auto Sales, 90 Ohio App. 553, 104 N.E.2d 587 (1950); Petri v. Manny, 99 Wash. 601, 170 P. 127 (1918); 2 A. Freeman, A Treatise of the Law of Judgments § 565 (5th ed. 1925).
Reversed and remanded.
. Although accommodation indorsers have the same liability as other indorsers, they may have special defenses not available to other parties. See D.C.Code 1973, § 28:3-606; White & Summers, The Law Under the Uniform Commercial Code, supra at §§ 13-12, 13-14.
. D.C.Code 1973, § 28:3-605(l) (a), which states that a holder may discharge a party “in any manner apparent on the face of the instrument . . . as by intentionally cancelling the instrument . . . ,” is not applicable here. Because appellant was required to surrender the note to the clerk of the Superior Court upon entry of the default judgment, ,the clerk’s markings on the instrument cannot be construed to be an intentional cancellation by the holder.
.See also Williams v. Reed, 113 Cal.App.2d 195, 248 P.2d 147 (1952); Hansen v. Bowers, 208 Iowa 545, 223 N.W. 891 (1929); cf. D’Andrea v. Feinberg, 45 Misc.2d 270, 256 N.Y.S.2d 504 (1965).