(a) Except as otherwise provided in the instrument, two or more persons who have the same liability on an instrument as makers, drawers, acceptors, indorsers who indorse as joint payees or anomalous indorsers are jointly and severally liable in the capacity in which they sign.
(b) Except as provided in Section 55-3-419(e) NMSA 1978 or by agreement of the affected parties, a party having joint and several liability who pays the instrument is entitled to receive from any party having the same joint and several liability contribution in accordance with applicable law.
History: 1978 Comp., § 55-3-116, enacted by Laws 1992, ch. 114, § 103; 2009, ch. 234, § 4.
ANNOTATIONSOFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
1. Subsection (a) replaces subsection (e) of former Section 3-118 [55-3-118 NMSA 1978]. Subsection (b) states contribution rights of parties with joint and several liability by referring to applicable law. But subsection (b) is subject to Section 3-419(f) [55-3-419 NMSA 1978]. If one of the parties with joint and several liability is an accommodation party and the other is the accommodated party, Section 3-419(f) applies. Because one of the joint and several obligors may have recourse against the other joint and several obligor under Subsection (b), each party that is jointly and severally liable under Subsection (a) is a secondary obligor in part and a principal obligor in part, as those terms are defined in Section 3-103(a) [55-3-103 NMSA 1978]. Accordingly, Section 3-605 [55-3-605 NMSA 1978] determines the effect of a release, an extension of time, or a modification of the obligation of one of the joint and several obligors, as well as the effect of an impairment of collateral provided by one of those obligors.
2. Indorsers normally do not have joint and several liability. Rather, an earlier indorser has liability to a later indorser. But indorsers can have joint and several liability in two cases. If an instrument is payable to two payees jointly, both payees must indorse. The indorsement is a joint indorsement and the indorser have joint and several liability and subsection (b) applies. The other case is that two or more anomalous indorsers. The term is defined in Section 3-205(d) [55-3-205 NMSA 1978]. An anomalous indorsement normally indicates that the indorser signed as an accommodation party. If more than one accommodation party indorses a note as an accommodation to the maker, the indorsers have a joint and several liability and subsection (b) applies.
Repeals. — Laws 1992, ch. 114, § 237 repealed former 55-3-115 NMSA 1978, as enacted by Laws 1961, ch. 96, § 3-116, relating to instruments payable to two or more persons, effective July 1, 1992. Laws 1992, ch. 114, § 103, enacted a new section, effective July 1, 1992. For provisions of former section, see the 1991 NMSA 1978 on NMOneSource.com.
The 2009 amendment, effective January 1, 2010, deleted former Subsection (c), which provided that the discharge of one party having joint and several liability by a person entitled to enforce the instrument does not affect the right under Subsection (b) of a party having the same liability to receive contribution from the party discharged.