Chase National Bank v. Faurot

| N.Y. Sup. Ct. | Oct 13, 1893

O’BRIEN, J.

This action was brought against defendant as indorser of a promissory note, the face of which was as follows:

“16,787.02. Lima, Ohio, July 8th, 1890.

“Four months after date we promise to pay to the order of B. O. Faurot sixteen thousand seven hundred eighty-seven and 2-100 dollars at Lima Nat’l Bank, Lima, Ohio. Value received.

“New York Construction Co.

“[Seal of the Company.] By F. P. Graf, Secy.”

The defendant indorsed this note, and it was given to his attorney for the purpose of carrying out an agreement entered into between the defendant and one Simon in connection with certain negotiations relating to the construction of a railroad, for which Simon agreed to procure the capitalists. The unquestioned arrangement between the defendant and Simon was that until such time as Simon had procured the execution of a proper agreement by the capitalists, whose names were given, to construct the road, the note in suit was not to be delivered to him. Simon, however, succeeded in obtaining possession of the note without procuring the execution of the agreement, 'as he had promised, and subsequently delivered it to the president of his own bank, who, through note brokers, sold it to the plaintiff for value. The amount paid by the brokers was $16,000, and upon the purchase of the note from the brokers the plaintiff paid $16,500. These figures are referred to because upon them was' predicated one of the defenses,'—that of usury,—which may at the outset be disposed of by the statement that it is not available to defendant for two reasons, the first being that the plaintiff is a national bank, against whom the plea of usury could not be urged; and, secondly, it was not usury to purchase the note for less than its face in the manner in which the plaintiff purchased it, nor could such purchase in any way be tortured into an agreement by which the plaintiff exacted a greater sum than the legal interest for the loan of $16,000. It appearing that the note had been diverted, the question of the good faith of the plaintiff, and as to whether or not it had paid value for the note, were under proper instructions submitted to the jury, who having found in favor of the plaintiff, their verdict should be sustained, unless there are some valid legal grounds for disturbing it.

The principal ground relied upon by appellant is that the presence upon the note of the words “Hew York Construction Company Seal,” stamped or impressed upon the paper, detracts from its character as a negotiable promissory note. The question thus presented, therefore, is- whether the instrument sued on was a negotiable promissory note, or, as the result of the impression upon the paper of what appears to be the seal of the corporation, it became a specialty, and thus lost its negotiable character. We can see no distinction, upon the facts here appearing, between this case and the one recently decided by this general term, of Weeks v. Esler, 68 Hun, 518, 23 N. Y. Supp. 54, wherein it was held that “before an instrument in the form of a promissory note made by a corporation, with what purports to be the seal of the corporation impressed thereon, and containing no words indicating an intention to execute it as an instrument under seal, can be held to be a specialty, and not a negotiable promissory note, it must be shown that the seal is the seal of the corporation, and was affixed by its authority, and that it was the intention of the parties to the instrument that it should be an instrument under seal, and not negotiable.” The appellant concedes that, if the rule thus laid down in Weeks v. Esler is sound in law, it is difficult to distinguish it from the present case, so far as, the question of indorsement is concerned, and would result in an affirmance of the view taken by the court below as to the negotiability of the note. Because pressed upon us with considerable force and ability, we have examined the question anew, and are satisfied with the correctness of the ruling in the case cited, which conclusion practically disposes of the contentions raised upon this appeal, and obviates the necessity of our examining the many other suggestions made of what, if a different rule were to prevail, might be the law controlling the rights of the parties. We think that the judgment was right, and should be affirmed, with costs. All concur.