Martin L. Hall Co. v. Todd

139 N.Y.S. 111 | N.Y. App. Term. | 1912

LEHMAN, J.

The plaintiff sues upon a note made by defendant to plaintiff’s order. The answer sets forth as a defense that the note was made for the accommodation of the plaintiff, and that no value or consideration for the making of the note passed to the defendant.

[1] At the trial the defendant showed that the note was a part renewal of a note previously made to the plaintiff; that he had no personal transactions with the payee, but that he made the note at the request of a man named Phoenix, who owed money to.the plaintiff, and who transferred the note to the plaintiff, either in payment of or as collateral security for a pre-existing debt. -Conceding that the note was made for the accommodation of Phoenix, and that no consideration passed directly to the defendant, the defendant has no defense to the note, if plaintiff parted with consideration to Phoenix sufficient to sustain the note.

[2] The plaintiff is a holder for value, if it received the note upon consideration sufficient to support a simple contract, and the accommodation maker is liable on it, notwithstanding that, at the time of taking the instrument, it knew the maker to be only an accommodation party. Sections 51 and 55 of the Negotiable Instruments Law. In the case of Grocers’ Bank v. Penfield, 69 N. Y. 502, at page 504 (25 Am. Rep. 231), the Court of Appeals stated:

“it is universally conceded that the holder oí an accommodation note, without restriction as to the mode oí using it, may transfer it, either in payment or as collateral security for an antecedent debt, and the maker will have no defense. The existing debt is a sufficient consideration for the transfer, and no new'consideration need be shown.”

See, also, Lehrenkrauss v. Bonnell, 199 N. Y. 240, 92 N. E. 637, where the court stated:

“A pre-existing debt, without extension or forbearance, is sufficient consideration upon which to hold the accommodation maker of a promissory note, where there has been no restriction placed upon its use.”

It follows that the judgment must be reversed, and a new trial, ordered, with costs to appellant to abide the event. All concur. .