Archive note: This text comes from the old archive of Nomika Epilekta and is preserved with care for historical and informational reading.

By the final decision no. 17/2013 of the Single-Member Court of First Instance of Chalkida a payment order issued by the judge of the Single-Member Court of First Instance of Chalkida was annulled; the order had been obtained by a banking société anonyme because it was based on “accommodation” bills of exchange. That is, bills of exchange issued without a lawful reason for their issuance, namely without any debt owed by the acceptor of the bills to their drawer. For this reason, the acceptor of the bills could not be liable for their payment, as was correctly held by the court decision.

In

particular, the decision accepted the opposition of the alleged debtor under the bills of exchange, annulled the payment order and released the acceptor, debtor, of the bills from the obligation to pay them. According to the decision, the objector, by the opposition under consideration, requests annulment of the payment order issued by the judge of the Single-Member Court of First Instance of Chalkida, by which he was ordered to pay to the banking société anonyme against which the opposition is directed the amount of €58,300, for a claim arising from bills of exchange that the objector accepted. The reasoning of the decision states that, from the combination of the provisions of articles 1, 3, 9, 11, 15, 17, 21 and 28 of Law 5325/1932 “on bills of exchange and promissory notes”, it follows that the obligation, namely the duty and liability, arising from a bill of exchange is indeed abstract, since the cause of its issuance is not an element of its validity and therefore not an element of an action for its payment; however, the debtor under a bill of exchange, above all its acceptor , may invoke and disclose the internal (underlying or basic) relationship linking him with the drawer or even the holder, the person holding the bill, of the bill of exchange, provided he has a personal relationship with that person or if that person, when acquiring the bill of exchange, acted knowingly, that is, with intent, to the detriment of the debtor, by raising the defense that there is no cause for the issuance or endorsement of the bill, either because that cause was non-existent from the outset, unlawful, immoral or defective, for example simulated, or because it ended or did not follow, in which case, if his defense is proved, the claim arising from the bill of exchange becomes inactive and the debtor is released, since otherwise payment of the bill would lead to the unjustified enrichment of the bill’s holder at his expense, under articles 904 et seq. of the Civil Code. In any event, for the debtor to be released it is not necessary expressly to invoke the holder’s unjustified enrichment caused at his expense by payment of the bill of exchange; it is sufficient to refer to the facts that make his obligation without lawful cause and, consequently, payment of the bill not owed. The holder acts to the detriment of the debtor when, at the time of acquiring the bill of exchange, he knew of the absence or defectiveness of the cause of issuance or endorsement and acquired it in order to prevent the debtor from raising substantial defenses arising from his personal relations with the drawer or the previous holder of the bill, and thus to achieve payment of the bill, which, without its transfer, would not have been achieved. Therefore, mere knowledge of the existence of the defenses is not sufficient; the holder must act for the purpose of having the bill of exchange (or the cheque) paid. Where the holder is a legal person, the knowledge and purpose of harming the debtor are assessed in principle in the person of its statutory representative [article 70 of the Code of Civil Procedure - Supreme Court 1847/2005, DEE 2006/645]. By the first ground of his statement of opposition, the objector states that the bills of exchange on the basis of which the contested payment order was issued and whose payment he had accepted were accommodation bills of exchange and did not embody a claim of their drawer against him, a fact known to the opposing party, that is, the bank through its representatives, when it acquired them; nevertheless, it acted to his detriment and received the bills as pledge value in order to frustrate the raising of the above defense by the objector against the drawer of the bills. This ground is lawful, in accordance with what is stated above in the legal reasoning, and must be examined further on the merits. The decision then accepts that it was proved that the bills of exchange (which were issued by a client of the bank, accepted by the objector and, afterwards, delivered by the drawer, the bank’s client, to the bank as collateral pledge and were not paid at maturity) were accommodation bills of exchange. They were accepted by the objector because of his friendly relations with the drawer of the bills, the bank’s client, in order to facilitate the financing of the drawer’s business by the bank against which the opposition was directed, through their endorsement by way of pledge. That is, the objector’s acceptance of those bills was not serious and was not made for the purpose of assuming any obligation by the acceptor, against whom the payment order was issued, toward their drawer, but only ostensibly; under their agreement, the acceptance was made to facilitate financing of the business, a société anonyme, of the drawer of the bills. The business of the drawer of the bills faced a liquidity problem in 2008 and was unable to pay its debts to the bank against which the opposition was directed, arising from the use of a specific credit agreement with a mutual current account. The opposing bank knew the poor financial condition of the company of the drawer of the bills. In order for that credit agreement not to be terminated and for the société anonyme, the bank’s client, to continue being financed, its representative asked the objector to facilitate the financing of the company by accepting payment of the bills of exchange, which the company would then transfer to the bank by way of pledge. However, there was no other relationship linking him with the company that would justify acceptance of the bills, which were “accommodation” bills. Consequently, when acquiring the bills of exchange, the bank against which the opposition was directed acted to the detriment of their acceptor and specifically sought to cause the acceptor to lose the substantial defense of absence of a claim, which was based on the personal relations between him and the representative of the société anonyme, the bank’s client. It follows from the evidence that, beyond the stated knowledge of the representative of the bank against which the opposition was directed, its manager, that the bills in question are accommodation bills and were issued to facilitate the financing of the société anonyme, the bank’s client, the organs of the opposing bank competent to receive negotiable instruments, namely employees, perceiving that there was no underlying relationship justifying the issuance and acceptance of the instruments, bills of exchange, deliberately carried out no check to ascertain whether there was an underlying relationship justifying the objector’s acceptance of the disputed bills; they confined themselves formally to receiving the above documents, which had been produced by the representative of the société anonyme, the bank’s client, according to a specific note elsewhere in the reasoning of the decision, documents that had no relation at all to the issuance and acceptance of the disputed bills, in order to be “formally” covered. Accordingly, at the time it acquired the bills, the bank knew that they were “accommodation” bills and nevertheless received them as pledge value, acting in this way to the detriment of their acceptor, since by acquiring them the bank sought the loss of the acceptor’s defense, the person against whom the payment order was issued, against the drawer of the bills for absence of a debt justifying acceptance of bills of exchange. In view of the above, the first ground of the opposition must be accepted as well-founded on the merits and the contested payment order must be annulled. This is one of the important judicial decisions through which cases are investigated in depth and substantively, and formalistic and superficial solutions are avoided. After all, accommodation negotiable instruments, mainly cheques and bills of exchange, are well known in the market; many good-faith and honest traders accept and sign them, believing that they themselves will not be burdened with debts for which they are not liable. In the end, however, they face fierce attacks by banks, which rarely observe the principles of good faith and fair dealing. Consequently, the above decision broadens the road toward approaching true Justice, which is being harshly tested together with the countless tragic victims of the banks. E. Papadakis