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UNITED REFRIGERATOR COMPANY v. APPLEBAUM. (03/19/63)

THE SUPREME COURT OF PENNSYLVANIA


March 19, 1963

UNITED REFRIGERATOR COMPANY, APPELLANT,
v.
APPLEBAUM.

Appeal, No. 81, Jan. T., 1963, from order of Court of Common Pleas No. 2 of Philadelphia County, June T., 1962, No. 1971, in case of United Refrigerator Company v. Herbert Applebaum and Judith D. Applebaum. Order affirmed.

COUNSEL

Mervin J. Hartman, with him William W. Cohan, and Zoob, Cohan & Matz, for appellant.

Irvin J. Kopf, with him Paul Silverstein, for appellees.

Before Musmanno, Jones, Cohen, Eagen and O'brien, JJ.

Author: Cohen

[ 410 Pa. Page 211]

OPINION BY MR. JUSTICE COHEN

Appellees, Herbert and Judith Applebaum, officers of the Economy Home Food Service, Inc. (Maker), issued several checks bearing the name of the Maker to appellant-United Refrigerator Company (Payee). Appellees signed the face of these checks in their capacity as officers of the Maker and endorsed the back of the checks as individuals.*fn1

Payee brought an action of assumpsit on these instruments against appellees in their capacity as individuals, alleging that appellees endorsed said checks for value received; that the checks were presented to the Maker's banks which refused payment because of insufficient funds; that notice of presentment and dishonor was given to appellees and demand for payment made; and that appellees have refused to make payment.

Appellees' answer to the complaint averred, inter alia, that they had "endorsed ... said checks, solely as an accommodation endorser for the benefit of [Payee], and that ... [they], did not receive any value or consideration whatsoever. ..." (Emphasis supplied).Payee's motion for judgment on the pleadings was denied and an appeal to this Court followed.

Section 3-415 of the Uniform Commercial Code provides that: "(1) An accommodation party is one who

[ 410 Pa. Page 212]

    signs an instrument in any capacity for the purpose of lending his name to another party to it. ... (5) An accommodation party is not liable to the party accommodated...." Act of April 6, 1953, P.L. 3, § 3-415, as amended by Act of October 2, 1959, P.L. 1023, § 3, 12A P.S. § 3-415(1) & (5) (1962 Supp.). (Emphasis supplied).

Under section 3-415(5) of the Code, if Payee is found to be the party accommodated then appellees, as accommodation parties,*fn2 would not be liable to Payee on the instrument. Thus the only question before us is whether the lower court correctly denied Payee's motion for judgment on the pleadings on the ground that appellees' answer properly raised the issue of fact that Payee is the party accommodated.*fn3 We agree with the court below.

Since the defense is based upon the very unusual circumstance of an accommodation endorsement being made for the Payee's behalf - instead of the normal arrangement where the maker is the party accommodated - it would have been better practice for appellees to have alleged in their answer the reason why they had

[ 410 Pa. Page 213]

    endorsed said checks. Nonetheless, under 1019(a) of the Pa. Rules of Civil Procedure, appellees' answer satisfies the requirement that "The material facts on which a ... defense is based shall be stated in a concise and summary form." Under this simplified rule of pleading it is only necessary to plead the ultimate facts upon which a defense is based - which appellees have done - and not evidentiary facts. Moreover, the lower court has broad discretion in determining the amount of detail that must be averred since the standard of pleading set forth in Rule 1019(a) is incapable of precise measurement. Goodrich-Amram § 1019(2)-10&11.

Payee relies on Chambers v. McClean, 24 Pa. Superior Ct. 567 (1904) to support its position. Although we think that Chambers took too strict a view of pleading,*fn4 nevertheless that case is distinguishable. In Chambers, the Superior Court was concerned with the vague allegations of the defendant that his accommodation endorsement was made for the benefit of the payee. Since an accommodation for the maker also accrues to the benefit of the payee, the court felt that the defendant's pleading did not exclude the more likely possibility that the endorsement was made primarily for the benefit and at the behest of the maker. However, in the instant case the restrictive language contained in appellees' answer, i.e., "endorsed ... said checks, solely as an accommodation endorser for the benefit of [Payee]," specifically precludes this possibility and therefore raises an issue of fact to be resolved at trial. (Emphasis supplied).

Disposition

Order affirmed.


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