102 N.Y.S. 386 | N.Y. App. Div. | 1907
The action was - to recover upon a certain promissory note made by the defendant to the Trust Company of America upon which there was due .$140,000, for which certain stock was .deposited as collateral security, a portion of which was owned and deposited by the plaintiffs. Subsequently the plaintiffs paid the trust company the amount due them and became the owners of the note. This summons and complaint was served upon the secretary of the defendant corporation on the 25th day of October, 1906. The corporation having failed to appear or answer, judgment was entered on the default on November 17,1906. Subsequently., and on the 27th day of November, 1906, a motion was made by counsel who appeared in the action for the defendant for leave to serve an answer on behalf of the defendant, a copy of which was annexed to the moving papers. This answer was verified by George C. De Lacy and Edward L...Lewis, who state that they are a liquidating committee appointed by the creditors and directors -of the defendant. It appears that after the giving of the note to the trust company the creditors and stockholders of the defendant corporation, including the plaintiffs, signed an agreement by which the corporation was to be liquidated, and the board of directors were empowered to appoint a committee who should have full power and authority to carry into effect, manage and conduct such liquidation, and that the committee was to have authority to “ take any and all legal proceedings ■to carry such liquidation into full force and effect.” In pursuance of this agreement De Lacy and Lewis were appointed as a liquidating committee by'the directors of the company, and after their
Assuming that the trust company did not have the right to demand additional security, - if the plaintiffs paid the note and received it with the collateral securities they became the owners of the note and entitled to enforce it when it became due. Tlie noté was dated January 9, 1906, and was payable six months after date. It became due July 9, 1906. The action was commenced in October, 1906. The note was, therefore, due when the action was commenced. The plaintiffs were the owners of the note, and there does not seem any way that the defendant can avoid paying it.
The allegation that the plaintiffs had converted the stock deposited as collateral security for the note is not a defense to plaintiffs’ cause of action. It is not alleged as a set-off or counterclaim, nor that it is of any value, or that plaintiffs have sustained any damages. When a defendant asks to be allowed to defend an action in which the judgment has been entered by default, the proposed answer
Patterson, P. J., and Laughlin, J., concurred; McLaughlin and Houghton, JJ., concurred in result.
Order affirmed, with ten dollars costs and disbursements. ■ Order tiled.