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

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 ...


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