116. Corporation As Maker Or Endorser

A corporation may endorse an instrument when acting within the scope of its authority. When accepting the signature of the officer of a corporation on an obligation, it is well to ask oneself several questions: First, are the officers who sign the instrument the duly elected officers of the corporation at the present time; second, were they authorized to obligate the corporation as they are doing by signing the document in question.

When there is the least bit of doubt in the mind of the bank officer he should require a certified copy of the resolution of the board of directors authorizing the making of the obligation, duly attested and sealed. In lieu of this an affidavit made by the president of the corporation after signing an obligation stating that he is the president of the corporation whom he seeks to bind by his act, that the act is as per resolution of the board, that the impression of the seal affixed is the seal of the corporation, and that it was affixed by order of the board. This statement should be attested by the secretary of the corporation.

117. Executor, Administrator Or Trustee

An executor, administrator or trustee should always state the name of his principal. If he does not, he may be held as principal himself.

An accommodation party is one who has signed the instrument either as maker, drawer, acceptor, or indorser without receiving any value therefor, and for the purpose of lending his name to some other person.

The bank should be advised of the authority of one partner to sign the firm's name as accommodation party. A corporation may not be an accommodation party, because it was not chartered for that purpose.

The question of endorsement varies in different states, and the man who would become an efficient banker must know the laws of his own state first. The above notes and abstracts present only the most salient features of the subject.

118. Single And Double Name Paper Defined

The distinction between single and double name paper is usually made under the following rule:

Where a note is signed on the face or "made" by a single person, firm, company or corporation, and is not signed or endorsed by any other person, firm, company or corporation, it is called "single name" paper; if made by two parties or made by one party and endorsed it is "two name" paper.

The general understanding seems to be that there must be two "several" makers or a single maker and an endorser in order to classify the paper as "two name" paper. It would appear that a note signed "Atwood and Brown" would be a two name paper. And it is, provided the member of the firm who signed the paper was authorized to do so, because the holder has recourse not only to the assets of the firm, but to each of the partners in case default is made. However, if Atwood, for example, signed the note without authority, the bank would have recourse only to his assets, so that it is on the safe side to call notes signed by a firm "single name" paper.

Many banks refuse to loan on a single name, and to evade the rule of their own making resort to trickery to get two names. A business man who carries all his assets in his own name, requests a loan on his own note and the bank requires an endorser. Usually his wife is the one called upon to become his surety. If he is unmarried and the rule is inflexible, he must get some other relative, neighbor or friend to become contingently liable for his debts. If the bank has implicit confidence in his ability and willingness to pay at the time appointed, he may get his office boy to endorse it for him and the theory of the rule is respected. The theory is good. Two names are better than one, but three are better than two, and four are better than three, and so we might go on indefinitely. It is not well to hedge one's bank about with a rule to demand two names no matter what may come.