[Roommate Troubles] Dexter, Bernard, and Garren were roommates who do not get along and decide to go their separate ways when their lease expires on May 31. Dexter owes Bernard $500 and signs a promissory note that he will pay Bernard $500 by July 1. Bernard, who owes Garren money, endorses the back of the note and writes "Pay to the order of Garren" on the back and gives the note to Garren. On July 2, Garren tells Dexter that Bernard signed the promissory note to him, so Dexter should just pay Garren the $500. Dexter refuses to pay Garren anything. Garren then tells Bernard that Dexter dishonored the note and sues Bernard for the value of the note.
-Assuming there is proper presentment and notice of dishonor, can Bernard be held liable on the promissory note?

Question

Quizplus · Accepted Answer

Bernard can be held liable on the promissory note because, by endorsing the note and delivering it to Garren, he essentially guaranteed payment. As an endorser, Bernard can be held secondarily liable if Dexter, the primary obligor, fails to pay. Bernard can then pursue Dexter for reimbursement, as Dexter is primarily liable for the note.

[Roommate Troubles] Dexter, Bernard, and Garren Were Roommates Who Do