(1) 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."
(2) An accommodation party may sign the instrument as maker, drawer, acceptor, or indorser and, subject to subsection (4) of this section, 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.
(3) 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 KRS 355.3-605, 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.
(4) 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:
(a) Execution of judgment against the other party has been returned unsatisfied;
(b) The other party is insolvent or in an insolvency proceeding;
(c) The other party cannot be served with process; or
(d) It is otherwise apparent that payment cannot be obtained from the other party.
(5) If the signature of a party to an instrument is accompanied by words indicating that the party guarantees payment or the signer signs the instrument as an accommodation party in some other manner that does not unambiguously indicate an intention to guarantee collection rather than payment, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument in the same circumstances as the accommodated party would be obliged, without prior resort to the accommodated party by the person entitled to enforce the instrument.
(6) 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. In proper circumstances, an accommodation party may obtain relief that requires the accommodated party to perform its obligations on the instrument. An accommodated party that pays the instrument has no right of recourse against, and is not entitled to contribution from, an accommodation party. Effective: July 12, 2006 History: Amended 2006 Ky. Acts ch. 242, sec. 41, effective July 12, 2006. -- Repealed and reenacted 1996 Ky. Acts ch. 130, sec. 57, effective January 1, 1997. -- Created 1958 Ky. Acts ch. 77, sec. 3-419, effective July 1, 1960.
Notes of Decisions
First Commonwealth Bank of Prestonsburg v. West, 55 S.W.3d 829 (Ky. Ct. App. 2000).
· cites it 2× “Pursuant to KRS 355.3-419: 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…”
Winn v. First Bank of Irvington, 581 S.W.2d 21 (Ky. Ct. App. 1978).
· cites it 2× “Appellant sets out the following questions: 1) Did the trial court commit reversible error when it ruled that there must be a delivery of the check to the payee before the payee has the capacity to sue a collecting bank for payment of same on a forged endorsement, pursuant to…”
Bullitt Cnty. Bank v. Publishers Printing Co., 684 S.W.2d 289 (Ky. Ct. App. 1984).
· cites it 2× “§ 3-419(3); KRS 355.3-419(3) speaks also of limiting recovery against collecting banks for conversion where they have acted in good faith and followed reasonable commercial standards.”
First Nat'l Bank of Louisville v. Progressive Cas. Ins. Co., 517 S.W.2d 226 (Ky. Ct. App. 1974).
· cites it 4× “Theresa’s claim against First National was predicated on the theory of conversion as defined in KRS 355.3-419(1). First National contends that it should have been allowed to present evidence, as to both claims, that it acted in good faith and in accordance with reasonable…”
Parton v. Robinson, 574 S.W.2d 679 (Ky. Ct. App. 1978).
· cites it 3× “Thus, we are hard pressed to find a forgery in this instance under KRS 355.3-419(1)(c). Appellant also contends Loredo Es-tenfelder d/b/a Estenfelder Realty is liable for conversion under KRS 355.”
— Ky. Rev. Stat. § 355.3-419(1) — 1 case
First Nat'l Bank of Louisville v. Progressive Cas. Ins. Co., 517 S.W.2d 226 (Ky. Ct. App. 1974).
“Theresa’s claim against First National was predicated on the theory of conversion as defined in KRS 355.3-419(1). First National contends that it should have been allowed to present evidence, as to both claims, that it acted in good faith and in accordance with reasonable…”
— Ky. Rev. Stat. § 355.3-419(1)(c) — 1 case
Parton v. Robinson, 574 S.W.2d 679 (Ky. Ct. App. 1978).
“Thus, we are hard pressed to find a forgery in this instance under KRS 355.3-419(1)(c). Appellant also contends Loredo Es-tenfelder d/b/a Estenfelder Realty is liable for conversion under KRS 355.”
— Ky. Rev. Stat. § 355.3-419(3) — 2 cases
Bullitt Cnty. Bank v. Publishers Printing Co., 684 S.W.2d 289 (Ky. Ct. App. 1984).
“§ 3-419(3); KRS 355.3-419(3) speaks also of limiting recovery against collecting banks for conversion where they have acted in good faith and followed reasonable commercial standards.”
First Nat'l Bank of Louisville v. Progressive Cas. Ins. Co., 517 S.W.2d 226 (Ky. Ct. App. 1974).
“Theresa’s claim against First National was predicated on the theory of conversion as defined in KRS 355.3-419(1). First National contends that it should have been allowed to present evidence, as to both claims, that it acted in good faith and in accordance with reasonable…”
— Ky. Rev. Stat. § 355.3-419(c) — 1 case
Winn v. First Bank of Irvington, 581 S.W.2d 21 (Ky. Ct. App. 1978).
“Appellant sets out the following questions: 1) Did the trial court commit reversible error when it ruled that there must be a delivery of the check to the payee before the payee has the capacity to sue a collecting bank for payment of same on a forged endorsement, pursuant to…”
— Ky. Rev. Stat. § 355.3-419(c)(3) — 1 case
Winn v. First Bank of Irvington, 581 S.W.2d 21 (Ky. Ct. App. 1978).
“Appellant sets out the following questions: 1) Did the trial court commit reversible error when it ruled that there must be a delivery of the check to the payee before the payee has the capacity to sue a collecting bank for payment of same on a forged endorsement, pursuant to…”
— Ky. Rev. Stat. § 355.3-419(l) — 1 case
First Commonwealth Bank of Prestonsburg v. West, 55 S.W.3d 829 (Ky. Ct. App. 2000).
“Pursuant to KRS 355.3-419: 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…”
— Ky. Rev. Stat. § 355.3-419(l)(c) — 1 case
Parton v. Robinson, 574 S.W.2d 679 (Ky. Ct. App. 1978).
“Thus, we are hard pressed to find a forgery in this instance under KRS 355.3-419(1)(c). Appellant also contends Loredo Es-tenfelder d/b/a Estenfelder Realty is liable for conversion under KRS 355.”
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