Schimmel v. Cohen

Citations

• 275 Pa. 117
• 118 A. 735
• 1922 Pa. LEXIS 461

Syllabus

<p>Promissory notes — Negotiable instruments — Consideration—< Value — Antecedent debt — Extension of time — Accommodation endorser — Act of May 16, 1901, P. L. 19k — Affidavit of defense— Banlcruptcy — Preference—Fraud.</p> <p>1. Under the Negotiable Instruments Act of May 16, 1901, an antecedent or a preexisting debt constitutes value, whether the instrument is payable on demand or at a future time.</p> <p>2. Under the act, an accommodation endorser is liable to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party.</p> <p>3. In an action by the payee of a promissory note against an endorser, the defendant is liable where there is no fraud, and it appeárs that defendant endorsed the note at the request of and for the accommodation of the maker, that the note was given in lieu of a cash payment of a preexisting debt, that the entire transaction was known to both plaintiff and defendant, and that it was in fact carried out at defendant’s suggestion as an alternative to the immediate payment of the debt.</p> <p>4. In such case, it is immaterial that the maker of the note was at the time insolvent, and that this was known to plaintiff.</p> <p>5. The question of distribution of assets among the various creditors in bankruptcy proceedings has no bearing on the issue raised in such case.</p> <p>6. A man may prefer one creditor to another if he sees fit to do so, and the mere fact of such preference will not invalidate the transaction, in the absence of an allegation and proof of fraud.</p>