396 A.2d 952 | Conn. Super. Ct. | 1978
On January 2, 1970, Richard Larson, the third-party defendant in this action, executed a note in favor of the plaintiff bank for $3106.50. At the time, he was married to the named defendant who cosigned the note at the request of the bank. The entire proceeds of the loan were put in Larson's business account and were used for business purposes. The parties were divorced shortly thereafter. On March 15, 1974, judgment was rendered against Larson in favor of the plaintiff bank by reason of his default in payments on the note. A weekly order for payments on that judgment was entered on January 19, 1978, and the judgment debtor, Richard Larson, had been making payments under that order at the time of trial. On February 18, 1976, the present action against the named defendant was commenced by the bank, claiming a default in payments under the note. On April 1, 1976, the named defendant, pursuant to § 78A of the 1963 Practice Book, moved to implead Richard Larson as a third-party defendant, alleging that "he is or may be liable" to the plaintiff for the outstanding balance of the note. On January 27, 1978, by stipulation of the parties, a judgment in the amount of $1497.55 was entered in favor of the plaintiff bank against the named defendant. At the trial, one of the issues raised under the third-party complaint was whether the third-party plaintiff was an accommodation maker. The question of law raised by the third-party defendant pursuant to § 223 of the 1963 Practice Book was whether payment of an obligation by an accommodation party is a condition precedent to his right of recovery by way of indemnification from the accommodated party. *84
The Uniform Commercial Code has eliminated the requirement that an accommodation party sign the instrument without receiving value. The essential characteristic is that the accommodation party is a surety and not that he signed gratuitously. An accommodation party is one who signs the instrument in any capacity for the purpose of lending his name to another party to it. General Statutes §
Under ordinary principles of suretyship, the accommodation party who pays is subrogated to the rights of the holder. An accommodation party is not liable to the party accommodated, and if he pays the instrument he has a right of recourse on the instrument against that party. General Statutes §
In her brief the third-party plaintiff concedes that normally payment by the surety is a condition precedent to his right to recovery. Her claim, however, is that she has already sustained a loss in that she has incurred legal fees in defending the original *85 action by the bank and in pursuing the third-party action. Furthermore, she argues that by reason of the entry of the stipulated judgment against her, her status as a judgment debtor exposes her to the consequences of whatever steps the bank may take to collect that judgment. By way of bolstering her claim that she has suffered a genuine loss, her attorney, subsequent to the trial, asked the court to take judicial notice that the bank had in fact moved for an order of weekly payments and suggested that "it would obviously be unfair for such an order to be entered against the defendant while the third party defendant is able to pay."
In pressing the foregoing argument, the third-party plaintiff's counsel has attempted to equate an obligation to pay with actual payment, thereby in effect accelerating the surety's rights to the detriment of the unpaid creditor. One of the cases cited in support of that position clearly states the rule to be as follows: "On payment of the note and notuntil then the surety is entitled to maintain the common law action of indebitatus assumpsit . . . . [I]f he has been forced to pay the note, he has a right of action against the maker . . . ." Bishoff
v. Fehl,
In his posttrial communication counsel has made reference to the apparent inequity of allowing proceedings to enforce the judgment against his client while the third-party defendant is able to pay. The general rule that payment of part of the debt will not give rise to a right of subrogation on the part of the person seeking subrogation may appear to be a harsh one. It is, however, a rule for the protection and benefit of the creditor only. He is entitled to remain in entire control of the debt and of procedures for its collection so long as any of it remains owing to him. Mid-States Ins. Co. v. AmericanFidelity Casualty Co.,
For the foregoing reasons the court concludes that payment of the obligation by the accommodation party is a condition precedent to his right of recovery by way of indemnification from the accommodated party, and the question of law submitted by the third-party defendant must therefore be answered in the affirmative. *88
An issue not raised by the parties at the trial or in their briefs remains to be considered, namely, whether the third-party procedure utilized herein expedites the accrual of the third-party plaintiff's right of action against the third-party defendant. Section 78A of the 1963 Practice Book permits the impleading by a defendant of one not a party to the original action "who is or may be liable to him for all or part of the plaintiff's claim against him." This rule is patterned after Rule
Judgment may enter in favor of the third-party defendant, Richard Larson.