Ala. Code
Code of Alabama

Ala. Code § 7-3-419 (2026)

Instruments Signed for Accommodation.

✓ official Alabama Legislature (ALISON) text, current July 2026
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(a) If an instrument is issued for value given for the benefit of a party to the instrument (“accommodated party”) and another party to the instrument (“accommodation party”) signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party “for accommodation.”

(b) An accommodation party may sign the instrument as maker, drawer, acceptor, or indorser and, subject to subsection (d), is obliged to pay the instrument in the capacity in which the accommodation party signs. The obligation of an accommodation party may be enforced notwithstanding any statute of frauds and whether or not the accommodation party receives consideration for the accommodation.

(c) A person signing an instrument is presumed to be an accommodation party and there is notice that the instrument is signed for accommodation if the signature is an anomalous indorsement or is accompanied by words indicating that the signer is acting as surety or guarantor with respect to the obligation of another party to the instrument. Except as provided in Section 7-3-605, the obligation of an accommodation party to pay the instrument is not affected by the fact that the person enforcing the obligation had notice when the instrument was taken by that person that the accommodation party signed the instrument for accommodation.

(d) If the signature of a party to an instrument is accompanied by words indicating unambiguously that the party is guaranteeing collection rather than payment of the obligation of another party to the instrument, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument only if (i) execution of judgment against the other party has been returned unsatisfied, (ii) the other party is insolvent or in an insolvency proceeding, (iii) the other party cannot be served with process, or (iv) it is otherwise apparent that payment cannot be obtained from the other party.

(e) An accommodation party who pays the instrument is entitled to reimbursement from the accommodated party and is entitled to enforce the instrument against the accommodated party. An accommodated party who pays the instrument has no right of recourse against, and is not entitled to contribution from, an accommodation party.

(Acts 1995, No. 95-668, p. 1381, §1.)

Notes of Decisions
Cited in 4 cases, 1984–2002 · leading case: Am. Liberty Ins. Co. v. Amsouth Bank, 825 So. 2d 786 (Ala. 2002).
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Am. Liberty Ins. Co. v. Amsouth Bank, 825 So. 2d 786 (Ala. 2002). · cites it 31× “" Ala.Code 1975, § 7-3-419 (pre-1995 amendment, emphasis added).”
Strickland v. Kafko Mfg., Inc., 512 So. 2d 714 (Ala. 1987). · cites it 4× “Code 1975, § 7-3-419, states in pertinent part: "(1) An instrument is converted when: .”
Barrett v. Farmers & Merchants Bank, 451 So. 2d 257 (Ala. 1984). “)" Code 1975, § 7-3-419. See also, Ott v. Fox, 362 So.2d 836 (Ala.”
Union Bank & Trust Co. v. Elmore Cnty. Nat'l Bank, 592 So. 2d 560 (Ala. 1991). · cites it 3× “With respect to the conversion count, the trial court entered a summary judgment on the ground that Ala.Code 1975, § 7-3-419(3), bars conversion actions against a depositary or collecting bank (ECNB) beyond the amount of any proceeds remaining in its hands, except in cases of…”
— Ala. Code § 7-3-419(1)(b) — 1 case
Am. Liberty Ins. Co. v. Amsouth Bank, 825 So. 2d 786 (Ala. 2002). “" Ala.Code 1975, § 7-3-419 (pre-1995 amendment, emphasis added).”
— Ala. Code § 7-3-419(1)(c) — 1 case
Am. Liberty Ins. Co. v. Amsouth Bank, 825 So. 2d 786 (Ala. 2002). “" Ala.Code 1975, § 7-3-419 (pre-1995 amendment, emphasis added).”
— Ala. Code § 7-3-419(3) — 1 case
Union Bank & Trust Co. v. Elmore Cnty. Nat'l Bank, 592 So. 2d 560 (Ala. 1991). “With respect to the conversion count, the trial court entered a summary judgment on the ground that Ala.Code 1975, § 7-3-419(3), bars conversion actions against a depositary or collecting bank (ECNB) beyond the amount of any proceeds remaining in its hands, except in cases of…”
— Ala. Code § 7-3-419(l)(c) — 1 case
Union Bank & Trust Co. v. Elmore Cnty. Nat'l Bank, 592 So. 2d 560 (Ala. 1991). “With respect to the conversion count, the trial court entered a summary judgment on the ground that Ala.Code 1975, § 7-3-419(3), bars conversion actions against a depositary or collecting bank (ECNB) beyond the amount of any proceeds remaining in its hands, except in cases of…”
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