Re: A question on honor

["Michael Houghton" <herveus@volsung.hfsi.com>]

OK, to restate the problem:
   Jon borrows from Tom; therefore Tom holds a (virtual) note payable by Jon.
   Tom "sells" the "note" at face value to Sarah. Further, Tom offers to 
   "cosign" the note, which is still payable by Jon. Sarah declines the offer,
   having faith in Jon.

At this point, Jon still owes payment on the virtual note, which is now 
owned by Sarah, to whom payment is due. Tom does not appear anywhere in this
chain.

Two weeks later, Sarah asks Tom to pay up (presumably as the cosigner).
Tom sez "no way". Accusations follow.

My take on this:

Tom's honor is not at issue here. Perhaps he and Sarah should have been 
more clear on exactly what terms attached to the "note" Sarah bought from Tom.
I chalk that up to imperfect communication, not honor. Jon still owes someone
the money; Sarah is still owed the money. If Sarah has not dunned Jon for
the money, she is now acting dishonorably. Further, by dunning Tom, she is
acting dishonorably if not fraudulently. If Jon is ducking, he, too is being
dishonorable. There is not enough information to speak to Jon's culpability,
but that is not the issue.

I say that Tom is not acting dishonorably, based on the information given. 
His offer to remain liable for the debt was declined. Since the offer was
not accepted, even declined, it does not exist to be accepted in the future.
You might say it was declined with prejudice.

Consider a different scenario. I take out a mortgage loan from bank A. Bank
A sells the note to investor B. I default on the loan. Investor B can 
and should come after me, but investor B has no claim against bank A. Tom's
role in this is as bank A. In both cases, one party made a loan and 
subsequently sold the debt to a third party. The original maker did not
remain a party to the note.

	yours,
	Herveus, neither lawyer nor accountant