National Citizens' Bank v. . Toplitz

178 N.Y. 464 | NY | 1904

The learned trial court and the Appellate Division were of the opinion that under sections 3 and 55 of the Negotiable Instruments Law (L. 1897, ch. 612), the facts set forth in the answer did not constitute a defense. The question whether these sections of the statute referred to have made a change in the liability assumed by an accommodation maker of a promissory note, is an interesting one which we do not deem it necessary to discuss at this time, because we have reached the conclusion that the answer does not present a legal defense in any aspect of the case. The defendant claims to be released from liability on the note in question because the holder thereof, with knowledge of the fact that she was an accommodation maker and merely a surety for the payees, gave the latter an extension of time of payment without defendant's knowledge or consent.

Prior to the enactment of the Negotiable Instruments Law it was the well settled rule in this state that a valid and binding agreement to extend the time of payment between the holder of a promissory note and the principal debtor, without the knowledge or consent of the surety, operated to release the latter, provided the holder knew of his true relation to the note. Whether that rule has been changed by the Negotiable Instruments Law is a question that will have to be decided when it is fairly presented. To have the effect of discharging the surety, however, it has always been the rule that such an agreement must be upon a valid consideration and must be sufficient to preclude the creditor, during the extended period, from enforcing the debt against the principal. (Olmstead v.Latimer, 158 N.Y. 313.) The answer of the defendant and her counsel's opening address disclose that an agreement was made between the plaintiff and the principal debtors for an extension of time, but there is neither allegation nor statement of any consideration for such agreement. That a valid consideration is an essential element of such an agreement cannot be doubted. (Parmelee v. Thompson, 45 N.Y. 58.) Where an action or defense is based upon a contract, the pleading in which it is set forth should allege all the material facts. Consideration is a material and indispensable element of every contract. "In declaring upon a contract not under seal, it is in all cases necessary to state that it was a contract that imports and implies consideration, as a bill of exchange or promissory note, or expressly to state the particular consideration upon which it is founded." (1 Chitty on Pleading [13th Am. ed.], 292, and cases cited; Moak's Van Santvoord's Pleading, 164; Bliss on Code Pleading [2d ed.], sec. 268; Beach on Modern Law of Contracts, vol. 2, sec. 1691; Bailey v. Freeman, 4 Johns. 280; Dolcher v. Fry, 37 Barb. 152.) "Where a consideration is not implied, or a request is essential to the defendant's liability, it is of the gist of the action, and must be specially averred." (Spear v. Downing, 34 Barb. 522; Gould Pleadings, 176.)

Under our Code of Civil Procedure a complaint must contain a plain and concise statement of the facts constituting each cause of action, without unnecessary repetition. (Sec. 481, sub. 2.) An answer must contain (1) "a general or specific denial of each material allegation of the complaint controverted by the defendants * * * (2) a statement of any new matter constituting a defense or counterclaim, in ordinary and concise language, without repetition." (Sec. 500, Code Civ. Pro.) This is nothing more than a restatement of the rule as it existed prior to the adoption of the present Code. While it is no longer necessary, as it was under the old system, to plead the conclusions of law which followed the facts previously stated, it is essential to set forth every material fact which forms a part of the cause of action or defense. This was so under the old Code of Procedure (People ex rel. Crane v.Ryder, 12 N.Y. 433), and it is still the rule, as the present Code has made no change in this respect. Under our liberal practice, a very broad and general allegation of consideration has been held sufficient, as for instance in Prindle v.Caruthers (15 N.Y. 425), where it was held that the words "for value received" constituted a good averment of consideration, and a demurrer to the complaint was overruled, although it was held that a motion to have the complaint made more definite would have been proper. In the case at bar there is no averment in the answer, and no statement in the opening of the defendant's counsel of any consideration whatever. The contract alleged is not one which necessarily imports a consideration, and without an averment of consideration it cannot be assumed that it is such a contract as will constitute a defense to plaintiff's cause of action.

We think the judgment should be affirmed, with costs.

PARKER, Ch. J., O'BRIEN, BARTLETT, HAIGHT, VANN and CULLEN, JJ., concur.

Judgment affirmed.