147 N.Y.S. 280 | N.Y. App. Div. | 1914
This action is brought to procure the cancellation of a promissory note made by the appellant and held by the respondent. The latter, in his answer, set up a general denial of the material allegations of the complaint, and also, as a counterclaim, asked judgment against the plaintiff for the amount of the note. After trial at Special Term the court granted judgment on the counterclaim and dismissed the complaint upon the merits. The plaintiff appeals.
There is little dispute of fact between the parties as to the origin and subsequent use of the note. It was for $2,167.50, made by the appellant, payable to his own order four months after date, at the First National Bank of Chicago. He indorsed it in blank and delivered it to the defendant Fowle'r for the purpose of having it discounted and the proceeds turned over to him. Fowler delivered it at Chicago to the defendant Phillips for a similar purpose. Phillips indorsed it in blank and mailed it to the respondent Alton, who was in New York. The evidence is uncontradicted, and the court found as a fact, that the plaintiff delivered the note to Fowler and the latter delivered it to Phillips solely for the purpose of having it discounted and the proceeds turned over to the plaintiff. Phillips promised, when he received the note, to have it discounted for plaintiff’s benefit and to pay the proceeds to him. Instead of doing so, Phillips delivered the note to Alton for the purpose of having it discounted and the proceeds remitted to him, either for his own interest or the joint interest of himself and Alton. Alton did not discount the note and remit the proceeds to Phillips, but held it and the plaintiff has never received any consideration whatever for it. The court found that Alton was a holder in due course and for value, and, therefore, the defense of want of consideration was not available as against him. I think this finding is against the evidence. When all of it is
This finding, I think, is also against the evidence because it is clear from the correspondence between Phillips and Alton, and from the latter’s own testimony, that the note was not received in payment of anything, but solely for the purpose of having the same discounted and remitting the proceeds to Phillips, either for his own or their joint interest. In the letter which Phillips sent to Alton with the note he said: “ It is time to be up and doing, so use this at once and let me have proceeds; ” and in a telegram preceding the mailing of the letter, Phillips said: “Note sent special delivery Twentieth Century; get it and act promptly; our interests demand it.” A few days after Alton received the note, Phillips wrote him saying: “What I sent is good. * * Keep at it until something is done. If not 100 per cent get 75, and if not that then 60, or even 50 per cent.” The note was not delivered to Alton as collateral security for the payment of a pre
I am unable to reach any other conclusion than that Alton gave no consideration for the note and is not, therefore, a holder in due course.
The court admitted, over plaintiff’s objection, proof of the statutes of Illinois to the effect that a negotiable instrument shall be deemed to have been taken for a valuable consideration if it is taken as collateral security for a pre-existing debt. The note, as indicated, was made and delivered in Illinois and was there payable and respondent contends that the maker’s liability should be determined in accordance with the law of that State. However that may be, the Illinois statute was not pleaded and it should not have been received in evidence. (Southworth v. Morgan, 205 N. Y. 293.) But even if the statute be considered, the conclusion reached must be the same because the note was not taken as collateral security for the payment of a debt and respondent’s counsel does not so claim.
Ingraham, P. J., Laughlin, Scott and Dowling, JJ., concurred.
Judgment reversed and new trial ordered, with costs to appellant to abide event. Order to be settled on notice.