§ 41-03-56 — (3-419) Instruments signed for accommodation

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
endorser and, subject to subsection 4, 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 regardless of whether 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 endorsement 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 41-03-67, 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 execution of
judgment against the other party has been returned unsatisfied, the other party is
insolvent or in an insolvency proceeding, the other party cannot be served with
process, or it is otherwise apparent that payment cannot be obtained from the party
whose obligation is guaranteed.
5. An accommodation party that 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 that pays the instrument has no right of
recourse against, and is not entitled to contribution from, an accommodation party.