Higgins v. . Ridgway

This action was brought by the plaintiff, as receiver of the North River Bank, upon a promissory note, dated October 31, 1890, whereby the defendant promised to pay to the order of himself fourteen thousand two hundred and fifty dollars at the North River Bank. The note was indorsed by the defendant and delivered to the president of the bank at which it was payable.

The defendant interposed an answer denying that the note was delivered for value, or that there was any amount due thereon. As a further defense, he alleged that it was without consideration, made for the accommodation of the bank, and delivered upon an express agreement that the defendant should not be held liable thereon. At the time the note was made, the defendant was a clerk for Paige, Carey Co. Paige was a director of the bank and the firm had extensive dealings with it.

There was a conflict in the evidence as to what occurred between the parties when the note was delivered, but, as the jury found in favor of the defendant, his version of the transaction must be regarded as correct. He testified that he knew the president and cashier of the bank, and that he had a conversation with the former at the time the note in suit was given, and also when the original note was made which it was given to renew; that in 1889, when the first note was delivered, the president told him he wanted him to make a note for fifteen thousand dollars; that he asked him what it was for; told him that he was a clerk; was not responsible for fifteen thousand cents; his note was not good; he could not pay it; that he didn't want to do any such thing; that he then asked the president what it was for; that the latter replied, it was for the bank; that he then replied, "I don't want to make a note for any purpose, because I am not responsible and could not pay it, and I don't want to do it;" to which the president then replied, "You will not be responsible for it; you will not be held on the note; you will get nothing for it, and I tell you that you will not be held on the note." He further testified that he had another conversation with the president at the time the note in suit was delivered; that he did not want to renew it, and he told the president he did not, to which he replied, "You take no risk on it; you are not held on the note; you assume no obligation on that note." The defendant also testified that he received no benefit from the note, either from the bank or otherwise.

On the trial the plaintiff requested the court to direct a verdict in his favor for the amount of the note, which was denied, and he duly excepted. He also excepted to that portion of the charge which submitted to the jury the question whether the agreements or transactions were as claimed by the defendant, and instructed them that if they found they were, their verdict should be for the defendant. These exceptions present the only matters to be determined upon this appeal.

In the discussion of them, the facts testified to by the defendant must be regarded as established. The defendant's indorsement was for the accommodation of the bank, and he received no benefit from the note. This was known and understood by the president when the note was delivered. It was delivered to him while acting for the bank. Thus, the question is presented, whether the transactions and agreements testified to by the defendant constituted a valid defense to the action, his note having been without consideration, and delivered upon the express condition that he should not be liable thereon. InGarfield National Bank v. Colwell (57 Hun, 169), where, at the time a note was discounted, there was a distinct understanding between the maker and the bank discounting it, that the former should incur no liability by signing the note, it was held that he was not liable thereon to the bank which discounted it. The decision in that case was based upon Benton v. Martin (52 N.Y. 570) and Seymour v. Cowing (4 Abb. Ct. App. Dec. 200). In the Benton case it was held that instruments, not under seal, may be delivered to one to whom they are payable upon conditions, the observance of which is essential to their validity; that the annexing of such conditions to the delivery is not an oral contradiction of the written obligation; that, as it needs a delivery to make an obligation operative, the effect of it, and the extent to which the instrument is to become operative, may be limited by the condition attending its delivery, and that, as between the original parties and others having notice, the want of consideration may be shown. InSeymour v. Cowing it was in substance held, that where one party delivered his notes to another, the person delivering them might prove that they were not delivered as binding obligations against him, and that they were without consideration, and, consequently, void. In Bookstaver v. Jayne (60 N.Y. 146) it was held that any instrument not under seal, including a promissory note, may be delivered upon conditions, the observance of which between the parties is essential to its validity.

The question here arises whether the transaction, as testified to by the defendant, constituted a conditional delivery of the note so as to fall within the principle of the foregoing cases, or whether the defendant's testimony was an attempt to vary or contradict the written contract between the parties, and, consequently, inadmissible. We think the import of the defendant's evidence is that the delivery of the note in suit, as well as the note it was given to renew, was conditional and was for the accommodation and to serve some particular purpose of the bank. Therefore, as there was no consideration for the note, and as the bank could not be regarded as a bona fide holder, we are of the opinion that the plaintiff's exceptions to the refusal of the court to direct a verdict for the plaintiff, and to the charge of the court, were invalid.

We think the learned General Term properly disposed of the case and that the judgment should be affirmed, with costs.

All concur.

Judgment affirmed.