Fleischmann v. . Stern

90 N.Y. 110 | NY | 1882

There are two appeals in this case: one from an order of the General Term, reversing the judgment herein and granting a new trial, the other from an order of that court denying the defendant's application for a reargument. Over the latter we have no jurisdiction. Whether more than one argument of a question shall be had, is exclusively for the court in which it is pending to determine.

In the first order we find no error. The plaintiffs are merchants. They brought this action upon a promissory note of $1,000, bearing date October 13, 1877, made by Z. Stern Co., payable three months after date, to the order of the defendant, and indorsed to the plaintiffs, in payment of an indebtedness to them, of about $1,000, for goods theretofore purchased by him. These facts are stated in the complaint. The defendant denied none of them, but pleaded that the note was made for his accommodation, and indorsed to the plaintiffs upon a usurious agreement, whereby they were to give him $941.92 for the note, and a credit on their books for $35.83 more, thus taking to themselves $22.25, the difference between the face of the note and these sums, being $7.10, in addition to legal interest while the note should be running to maturity, and demanded as an affirmative judgment that the complaint be dismissed and that "he recover his costs and disbursements and an allowance of five per cent on the plaintiffs' claim."

It is obvious that this demand by one, who, if the contract was illegal, was himself a party to it, has nothing to commend it to the court, and there was no reason why it should not have been denied under the provision of the Code that "each material allegation of the complaint not controverted by the answer must, for the purposes of the action, be taken as true." (§ 522.) Here the complaint stated a clear cause of action, and under the pleadings the plaintiffs were not required to prove any thing, nor was the defendant at liberty either to deny the existence of the facts constituting the cause of action, or to prove any state of facts inconsistent with such admission. (Tell v. Beyer,38 N.Y. 161.) It is true that the agreement set up in the answer as the one by which the plaintiffs acquired the note is different from the one stated for that purpose in the complaint, but that is not enough to put the latter in issue (West v. AmericanExchange Bank, 44 Barb. 175; Marston v. Swett, 66 N.Y. 206,210; 23 Am. Rep. 43), and so it was thought at the trial. The defendant took the burden upon himself, and if we now assume with the appellant's counsel that the evidence given established the agreement stated by the answer, it could not help defendant, nor enable him to avoid the effect of an omission to controvert by answer the plaintiff's allegations. The Code (§ 522, supra) gives to such omission the force of a formal admission and makes it conclusive as such upon the parties and upon the court. (Paige v. Willet, 38 N.Y. 28;Tell v. Beyer, supra.) But in the next place, while it appeared from the evidence of one of the plaintiffs upon his examination in behalf of the defendant, that at the time the plaintiffs received the note, they agreed to credit it to the defendant's account then due for goods sold, deducting for interest at the rate of nine per cent, and that this was done, leaving a balance to the defendant's credit of $35.83, it was also shown that when the defendant applied to the plaintiffs to take the note, he said it was a business note received from Z. Stern in exchange for other paper. If this was so, the defendant could not be permitted to assert the contrary. His claim that the contract of indorsement between himself and the plaintiffs was illegal has no force, when it appears that the plaintiffs acted upon his persuasion and to his advantage, in the belief caused by him that the note was the subject of lawful sale, and valid in his hands. (Roe v. Jerome, 18 Conn. 138; Payne v.Burnham, 62 N.Y. 69; Mason v. Anthony, 3 Abb. Ct. of App. Dec. 207.)

The account was enforceable by action at the time of the transfer of the note, and its effect was to suspend that right until maturity, for until that time the creditor could neither legally commence nor sustain a suit for the original indebtedness. (Putnam v. Lewis, 8 Johns. 389; Fellows v.Prentiss, 3 Denio, 512.) The transaction then in effect was an extension of credit, and this was sufficient, as between the parties, to prevent the defendant from denying the truth of the representation, upon faith in which the forbearance of the creditor, or extension of credit, had been obtained. (Boyd v.Cummings, 17 N.Y. 101; Continental Bank v. National Bank, 50 id. 575.) The plaintiffs' title then is as good by estoppel as it would have been if every thing asserted by the defendant in regard to the note had been true. The cases (Phœnix Ins. Co. v.Church, 81 N.Y. 218; 37 Am. Rep. 494; Lawrence v. Clark, 36 N.Y. 128) cited by the learned counsel for the appellant in support of an opposite view, relate to the effect of such a transaction upon the prior equities of third persons, and have no application to a controversy between the parties to the transaction. To hold otherwise would give the defendant an advantage from his own fraud, and to prevent this is the very object and foundation of an estoppel in pais. (Dezell v. Odell, 3 Hill, 215;Pickard v. Sears, 6 Ad. Ell. 469.)

We think, therefore, the plaintiffs were entitled to have the jury inquire whether the representation was in fact made, and as the trial court refused their request in that respect, the General Term were right in granting a new trial. As the defendant by his stipulation has made another trial impossible, it is unnecessary to consider the other questions raised.

The appeal from the order denying a reargument should be dismissed, with costs, and the order reversing the judgment and granting a new trial should be affirmed, and judgment absolute in accordance with the stipulation be rendered for the plaintiffs, with costs.

All concur, except MILLER, J., absent.

Judgment accordingly.