80 A.D. 103 | N.Y. App. Div. | 1903
This aetion'was brought to recover upon a promissory note made by the defendant Deshong, upon which the appellants were accommodation indorsers. It appeared upon the hearing of the motion that the defendant Palleske was indebted to the appellants upon a promissory note for the sum of $1,000; that as such note was about falling due and on the 15th day of April, 1902, Palleske requested the appellants to accept in payment of such note the promissory note executed by Deshong, set forth in the complaint in the action ; that they refused so to accept the same unless Palleske could procure it to be discounted and would deliver the proceeds thereof to the appellants, and for such purpose the appellants indorsed said note in their firm name and the defendant Palleske took the same
This action was brought by the plaintiff to enforce the note ; all of the defendants made default in answering. Judgment was thereupon entered by the plaintiff for the full amount secured to be paid by the note, with interest. Thereafter the accommodation indorsers, the appellants herein, made a motion to open the default and for leave to serve an answer. The court denied such motion upon the ground that the answer which accompanied the motion papers and which was proposed to be served as a defense to the note was insufficient for such purpose in that it failed to aver the fraudulent diversion of the note in suit, and for this reason the motion was denied. It is clear that the court made correct disposition of such motion and placed the denial upon a proper ground. There was no statement in the answer which raised any issue of a fraudulent diversion, consequently the plaintiff would have been entitled to judgment thereunder. The fraudulent diversion of the note constituted an affirmative defense, and the defendants in order to avail themselves of it were required to plead the same. (Metropolita Nat. Bank v. Loyd, 90 N. Y. 530; Grant v. Walsh, 145 id. 502.) Thereupon, without obtaining leave so to do, the appellants made a motion to set aside the judgment or in the alternative to modify the same by reducing the recovery upon the note in suit to the sum of $150, with interest thereon from the day of its date. This motion was based upon the facts and circumstances connected with the delivery of the note to Palleske, as has been previously stated, and also upon an affidavit made by the plaintiff in the action that he had only paid to Palleske for the note $150 in cash and held the r same as collateral security for the payment of a pre-existing debt. It was made to appear by the moving papers that the appellants herein were ignorant of the consideration paid by the plaintiff for the note prior to the time when the application was made to open the default when the affidavit was read. Upon learning these facts
The motion to vacate or reduce the judgment was an entirely different motion from the one made to open the default. That was based solely upon the fraudulent diversion of the note and upon an insufficient answer to raise such question. The present facts were wholly unknown to the appellants at the time when the motion was made. The present motion is for an entirely different purpose, viz., to set aside the judgment based upon a state of facts, showing that the plaintiff was only entitled to enforce the payment of the note to the extent to which he had parted with value therefor, and upon the conceded facts he was not entitled to the judgment which had been entered, unless entitled to enforce the note for the full amount. These facts did not before appear and were unknown to the moving party. This application was accompanied by a verified answer setting up these facts. It is evident, therefore, that the motion was entirely different from the first motion, made for entirely different relief and was based upon papers which fully and completely set forth the appellant’s defense. It was, therefore, properly made and the former motion was no bar to the court’s entertaining the same.
It is said, however, that the Negotiable Instruments Law has changed the rule in respect to what constitutes consideration for a promissory note, it being claimed that a pre-existing indebtedness is a good consideration and renders the holder thereof a holder for value of a note taken as security therefor, as against accommodation indorsers, even though the note has been fraudulently diverted from the purpose for which it was given and the indorsers have received no value. Since 1822, when Coddington v. Bay (20 Johns. 637) was decided, it has been the settled law of this State that accommodation makers or indorsers of negotiable paper were not liable to a holder thez-eof where the same had been fraudulently diverted from the purpose for which it was made or the indorsement given and the holder had received it solely as collateral security for an antecedent debt. (Comstock v.
Section 52 of the Negotiable Instruments Law defines what con
It is evident from these provisions that the Legislature did not intend to wipe out the defenses to a promissory note where the same had been procured from the maker by fraud, or where the indorsement had been given for a specific purpose, and a fraudulent diversion of the paper had been had. If the holder took the
The doctrine of estoppel based upon the certificate executed by the appellants and delivered to the plaintiff that the note was a genuine business note given for value received; that there was no defense to the same, either in law or in equity, does not estop the appellants from interposing the defense of fraudulent diversion. The certificate was in harmony with the facts. It was genuine business paper executed for a particular purpose, and in the hands of a holder in due course may be enforced. In order to constitute an estoppel in jyais it must appear that the act which concludes the party was expressly designed to influence the conduct of another, and did so influence him, and when a denial of the act will operate to the injury of the holder. (Payne v. Burnham,, 62 N. Y. 69.) Such is the doctrine of the cases cited by the respondent. They are without application in the present case for the reason that the certificate can add nothing to the rights of the present holder of the note. If the note had been delivered to him without consideration he could not have enforced it against these accommodation indorsers as he would not have been misled or injured by the certificate which was given. To the extent that he parted with value he is entitled to enforce the note, with or without the certificate. In holding it as collateral security for the payment of his pre-existing debt the certificate in nowise prejudices him as he has suffered nothing thereby and parted with no value on account thereof.
If these views be correct, it follows that the order should be reversed, and the judgment set aside upon payment of costs and disbursements of the action and $10 costs of the motion to the respondent, and defendants allowed to answer. As the defendants, appel
Van Brunt, P. J., O’Brien, Ingraham and McLaughlin, JJ., concurrred.
Order reversed, with ten dollars costs and disbursements.