166 Misc. 720 | N.Y. Sup. Ct. | 1938
The plaintiff holds two promissory notes of the defendant, one, dated September 27, 1937, a discounted note, payable three months after date, in the sum of $5,300, due December 27, 1937; the other, dated October 2, 1937, payable three months after date, with interest at four per cent, in the sum of $12,800, due January 2, 1938, which latter note is upon a collateral form and is secured by collateral listed thereon. On or about December 21, 1937, the plaintiff notified the defendant that it would not renew these notes or either of them at maturity, and demanded that the defendant pay them in full on or before their respective maturity dates, as follows: $5,300 on December 27, 1937, and $12,800, with $128 interest, total $12,928, on January 2, 1938. On December 27, 1937, the defendant failed to pay the $5,300
In action No. 1 the defendant served an answer, verified January 7,1938. In action No. 2 the defendant served an answer, verified January 18, 1938. In neither of the answers does the defendant raise any issue controverting any of the allegations in either complaint, but in each of his answers he makes identical allegations as a defense and as a counterclaim, and, on account of these identical allegations, seeks to recover from the plaintiff an affirmative judgment in the sum of $15,000.
The plaintiff moves in each action for an order striking out the answer of the defendant on the ground that the answer constitutes no defense and alleges no basis for a counterclaim, and for judgments as prayed for in each complaint.
There has been no consolidation of these actions, and, there being a separate motion in each, each motion must be separately considered, although, as the answers by way of defense and counterclaim are identical, the consideration here of the answer in one motion will be the same as in the other, The motions were argued together, and briefs have been submitted entitled in both actions. If the answers of the defendant, upon the uncontroverted facts shown by the pleadings and the affidavits submitted by the parties upon the motions, fail to set up a valid defense, or, so far as counterclaim is concerned, a cause of action, or if it appears by the nncontroverted facts deducible from the pleadings and the affidavits submitted by the parties upon the motions that there is no real defense or no real counterclaim, then the motions of the plaintiff should be granted; otherwise, denied. (Curry v. MacKenzie, 239 N. Y. 267; Barrett v. Jacobs, 255 id. 520.)
First, as to action No. In this action, which is upon a note secured by collateral and on a collateral form, the plaintiff seeks to recover judgment upon the promise without resort to the collateral it holds as security for the payment of the note. This the plaintiff has a right to do; that is, upon default in payment, it need not first
It is evident that the allegations of the answers, to which particular attention later will be called, constitute no defense in either action to the claim of the plaintiff, excepting by way of counterclaim to the extent of any damages which, on account of the allegations of the answers, the defendant might recover affirmatively against the plaintiff.
Under such circumstances it is clear that the defendant has here, in effect, two causes of action by way of counterclaim, based upon the same set of facts. May we have two causes of action at the same time to recover the same damages upon the same cause or causes of action? It is evident that, having set up these bases of recovery in action No. 1, he in that action, if he be entitled to recover, will recover full relief; he may not try the action on the counterclaim a second time in action No. 2. Action No. 1 was at issue first, and if the defendant would recover damages on his counterclaim he must recover them in that action; he cannot recover in both. Had he moved to consolidate the actions, and had that motion been granted, the situation might have been different, for the reason that under such circumstances there would have been in effect only one action upon the causes of action set up in the counterclaim. But that has not been done, and we must bake the situation as it is.
The ruling above made is amply supported by authority. (Tuckerman v. Corbin, 66 How. Pr. 404, and cases cited; Security Trust Co. v. Pritchard, 122 Misc. 760.)
Irrespective of the questions as to whether the counterclaims set up a basis for affirmative relief by way of damages, the motion of the plaintiff in action No. 2 to strike out the answer and for judgment as demanded in the complaint must be granted.
As to action No. 1: In the answer there are set up two bases for damages by way of counterclaims. The first of these is set up in paragraphs 1 to 7, inclusive, which seemS to be founded upon alleged negligence on the part of the plaintiff in failing to sell the securities of the defendant held by it as collateral in March, 1937, at a time when the market value thereof was greater than at the time when this action was brought; the second, at paragraph 8 of the answer, where the defendant seeks to recover damages by way of claimed injury to his credit by reason of the application by the plaintiff of the amount of his cash balance on deposit in his checking account upon the note of $5,300 in action No. 1, and dishonoring checks drawn by defendant on that account.
The defendant claims that there was such an agreement, not a general agreement, but an agreement affecting outstanding checks drawn by bfm against his checking account in said bank. The defendant has made no motion for permission to serve an amended answer. He does, however, by his answering affidavit, verified January 26, 1938, depose and say that, immediately upon receipt of the communication from the plaintiff, under date of about December 21, 1937, which was the communication in which the plaintiff gave notice that it could not or would not renew defendant’s notes, and calling upon him to pay them upon maturity, he went to the plaintiff seeking an explanation, and “ took up with the said
In his affidavit, verified the 18th day of January, 1938, E. Kenneth Hanson, assistant cashier of the plaintiff, shows that, after the closing of said bank December 27, 1937, he informed the president of the bank that the defendant’s note of $5,300, which matured on that date, had not been paid, and was directed by said president to offset against the same the amounts then" on deposit with said bank in the name of said defendant, which was then done; and, in an affidavit, verified January 26, 1938, said Hanson categorically denies the allegations above quoted from the defendant’s affidavit of January 26, 1938, and further alleges that he informed said defendant that the setoffs of his account would be made; and further alleges “ that after said offsets had been made he called said Dusckas on the phone, so informed him, advised him that a certain check or checks had come in for payment, that there was no money with which to pay the same, and advised Dusckas to bring in a sufficient amount of money with which to pay said checks; that if this were not done the bank would have to return the same; that said Dusckas declined to bring in' any money or to take care of said checks, whereupon the same were returned.”
While the affidavit of the defendant is of no importance in opposition to the motion for summary judgment, and, therefore, the motion of the plaintiff must be granted, the affidavit may be of value as bearing upon the question whether the motion should be granted conditionally and unless the defendant serve within a definite time an amended answer.
Where, as here, the plaintiff had an absolute right to make the setoff, it would seem that either it should appear that there was consideration for the agreement or that the agreement was in writing. No consideration is alleged, nor is there any agreement
As to the first alleged cause of action set up as a counterclaim, it appears that this refers to the circumstances Under which the collateral note, dated October 2, 1937, and payable three months after date, was issued, It may be assumed that this collateral nóte was a renewal of a former note of a similar type.
, In the third paragraph Of the answer, after reciting the course Of dealing in reference to borrowing money for the purpose of 'purchasing securities, commencing as far back as the year 1926, the defendant alleges generally that the representatives Of the bank stated to him from time to time that they would not call for the payment of the loan so long as the interest was paid; and, in the fourth paragraph, that on many Occasions during a decline in stock market values he was told by the plaintiff that there should be no sale of the securities and that there would be no calling of the loan so long as the ifitferést was paid. He comes down to the period of March, 1937, and in the fifth paragraph of his answer alleges that at that time there was a rise in the stock market, and that he “ consulted With the president of the plaintiff bank, Daniel B. Schuyler, relative to the sale of said securities and the payment of the indebtedness, and that Mr. Schuyler advised against the sale and reiterated that SO long as the interest was paid upon the note as heretofore the bank would not call the loan, and that it would hold the securities Until there was such a rise in price, when it would Sell them and thereby pay the indebtedness to the bank
In the sixth paragraph of his answer the defendant alleges that by reason of the negligence of the plaintiff bank, as aforesaid, and by reason of the bank’s failure to sell, the plaintiff has occasioned and the defendant has sustained damages.
Neither in the reply of the plaintiff to the defendant’s answer nor in the affidavits submitted by the plaintiff upon this motion is there any denial of these allegations of the answer. The plaintiff relies upon the note itself, dated October 2, 1937. The note recites the deposit of securities listed therein as collateral security for the payment of this note, or any note given in extension or renewal thereof, as well as for the payment of any other obligation or liability of the maker of the note to the bank, due or to become due, whether now existing or hereafter arising. The note further provides that the maker agrees to deliver to the bank additional securities or to make payments on account to its satisfaction, should the market value of said securities as a whole suffer any decline; and gives a hen to the bank upon said securities, and “ also upon any balance of the deposit account of the maker of the note.” It further provides that, upon the non-performance of this promise, or upon the non-payment of any of the obligations or liabilities above mentioned, or upon the failure to furnish additional securities, or to make payments on account in case of decline, or in case of insolvency, bankruptcy or failure in business of the maker of the note, that the same shall forthwith become due and payable without demand, and authorizes the sale of the securities, and provides for the use to which the proceeds thereof aré to be put.
Of course, this instrument, by its very terms, negatives the allegations of the bases of the counterclaim, which are not in writing, but are oral. There is no allegation that the defendant executed
As between the parties to the instrument, where there is no question as to the delivery of the note or the inception thereof as such, a claimed oral condition precedent which negatives the provisions of the written instrument itself may not be set up as a defense to a recovery upon the instrument. (10 R. C. L. p. 1016 [and this rule applies to promissory notes]; Id. p. 1021; Jamestown Business College Assn. v. Allen, 172 N. Y. 291.) It is my opinion that such an allegation as that contained in the answer is not within the meaning of a condition precedent, even had it been alleged as such.
The relation between the plaintiff and the defendant, under this instrument, was simply that of pledgee and pledgor. What took place between the plaintiff and the defendant, as set up in this counterclaim, was merely, at most, a consultation in which the defendant sought and received advice as to the best policy to be pursued. Apparently the president of the bank thought, in March, 1937, that it was inadvisable to sell securities at that time. It is unimportant here, but it is generally known that such was the judgment of the large majority of people interested in securities. It may be that there was a mistake in advice, but the defendant did not have to accept the advice; the securities were his; he could have directed the plaintiff to sell his securities then, and, provided the market prices were high enough so there could have been realized upon them sufficient money to satisfy the obligations of the defendant to the plaintiff for which the securities were held as collateral, and if the plaintiff had refused to obey such command and thereafter the securities had fallen in price and the defendant had suffered damage thereby, there might have been laid the foundation for an action in negligence.
This subject has been-fully considered in the case of First Trust & Deposit Co. v. Potter (155 Misc. 106) and the authorities cited therein.
The defendant, having failed to allege facts formulating the basis of a cause of action in negligence, it follows that this counterclaim is of no avail, either as a defense or as a counterclaim.
Orderéd accordingly.