KRS 355.3-419: 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

indorser and, subject to subsectio n (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 receiv es 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 t hat 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.