Modern Industrial Bank v. Taub

The suit is by a banking corporation of New York State, against maker and endorsers of a promissory note made by the appellant Taub to the order of "Riker Co. Inc." and bearing the endorsements of Taub and of appellant Isador Ostroff, besides others. Riker Co., the payees, seem to have discounted it with Modern Industrial Bank, the present respondent, plaintiff below. It was not paid at maturity, and the bank brought this suit against Taub and Ostroff "severally and jointly" in the Atlantic Common Pleas. The defendants answered jointly, with a general denial and specified eighteen distinct defenses, to which they added a "reservation" of right to move to strike out the complaint as not stating any cause of action. On plaintiff's motion to strike out the answer and for summary judgment, Judge Haneman in the Atlantic Pleas struck out twelve of the eighteen separate defenses, allowing the other six to stand, but some two months later, after a reargument, struck out the remaining six, taking the ground that although he had held previously that the note was subject to the usual defenses as regards the maker, the contract of an endorser was different; and that in view of the rule, enacted into statute by the Negotiable Instruments Act, R.S. 7:2-66, that an endorser warrants the validity of the instrument endorsed, the six defenses in question should also be stricken, as to both defendants. The general rule seems well settled. 8 C.J. 375, 396. As regards the appellant Ostroff, the case seems clear. The situation of Taub differs to the extent that he was the maker of the note, though he signed also the first indorsement. We are unable to subscribe to the view that the maker of a note to the order of another cuts off whatever defenses he may have as maker by repeating his own signature on the back of his own note. No adequate authority is cited for that proposition and we find none on our examination. It may be well to observe that as between Taub, the maker of the note, and the payees, Riker Co., the case is apparently open to the defense by Taub that the note was invalid because of our statute relating to real estate brokers, R.S. 45:15-1, etseq., in that Riker Co., a New York corporation, was not a licensed real estate broker of this state, and therefore not entitled to recover commissions as such. Kenney v. PatersonMilk and Cream Co., 110 N.J.L. 141.

As regards appellant Ostroff, the judgment is affirmed; but as to appellant Taub there will be a reversal and remand for trial.