Case ID: ad_170/html/0349-01.html
Source: Caselaw Access Project
Author: {"author": "Jenks, P. J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

S. Demon Smith, Respondent, v. Dayton Hedges, Appellant.
    (Actions Nos. 1 and 2.)
    Second Department,
    November 24, 1915.
    Bills and notes—action on note given as payment under construction contract — defenses — parol agreement of payee to release maker upon failure to complete contract — rescission of contract—restoration of benefits received—practice — striking out insufficient defenses.
    It is no defense to an action on promissory notes given by the maker in part payment for machinery which was to be constructed and installed in the maker’s plant by the payee to allege a parol agreement whereby the payee was to release the maker and cancel the notes provided the contract for the installment of the machinery was not completed when the notes fell due. Such defense seeks to vary the written obligation of the notes by proof of a parol condition subsequent and is properly stricken out by the trial court.
    Even if evidence of such parol agreement for the cancellation of the notes were admissible it would amount to a rescission of the contract for the installment of the machinery by the maker of the notes and would obligate him to show a return of the machinery and benefits received under the contract, or to prove an offer of such restoration, in order to defeat a recovery on the notes.
    The trial court has power to strike out such insufficient defenses.
    Appeal by the defendant, Dayton Hedges, from two judgments of the Supreme Court in favor of the plaintiff, both entered in the office of the clerk of the county of Nassau on the 27th day of January, 1915, upon the verdict of a jury rendered by direction of the court, and also from two orders, both entered in said clerk’s office on said day denying motions for a new trial made upon the minutes.
    
      John R. Vunk, for the appellant.
    
      Gustav Lange. Jr., for the respondent.
   Jenks, P. J.:

These two actions were tried together and the defendant’s appeals are united. The plaintiff, assignee of the Pioneer Iron Works, payee, brought the actions upon as many promissory notes of the defendant. The Trial Term, upon motion of the plaintiff, struck out the parts of the answers that set up separate and distinct defenses, tried the issue — as to the assignment of the notes — and directed verdicts for the plaintiff. The opinion of Mr. Justice Crane, who presided at Trial Term, that was handed down upon denial of the motion to set aside the verdicts, thoroughly and correctly disposes of several of the questions now raised upon this appeal, so that further discussion of them is unnecessary. (Smith v. Hedges, 89 Misc. Rep. 183.) Moreover, in an action brought by this defendant against the said Pioneer Iron Works, which involved the contract under which the notes in the present action were procured, we discussed some principles applicable to the present pleadings. (Hedges v. Pioneer Iron Works, 166 App. Div. 208.)

The appellant contends that the notes were given upon a condition precedent. The said Pioneer Iron Works and the defendant made a contract whereby the Pioneer Iron Works was to construct and to set up certain machinery for an asphalt plant for the defendant. There was a time limit in the contract and a provision for a penalty of $20 a day for delay, conditioned that the defendant would not delay the construction of the brick work and foundations and that the said time limit should exclude inclement weather. There were to be four payments, one-fourth at the time of the order, one-fourth .when the principal parts were delivered and the remainder by notes at sixty and ninety days, to have a good indorser, to be • delivered at the time of the said second payment. The first note sued upon was a renewal of one of the said notes after a cash payment of $850, and the second note sued upon was the original note for 90 days. There is no plea in the defenses that the notes were non-negotiable or were not immediately available. The learned counsel for the appellant cites Smith v. Dotterweich (200 N. Y. 299) and Blewitt v. Boorum (142 id. 357). But I think that this case falls within the “converse of this rule,” referred to in Smith v. Dotterweich (supra), of which the court in that case said Jamestown Business College Assn. v. Allen (172 N. Y. 291) was “a salient illustration,” inasmuch as the notes in the case at bar were “rendered effective and complete by an unconditional delivery,” and the plea is that the payee was to release the maker and to cancel the note provided the contract was not completed when the note fell due — a future contingency. In Smith v. Dotterweich (supra) the court, per Werner, J., say: “The case oí Jamestown Business College Assn. v. Allen (supra) is a salient illustration of the converse of this rule. There the promissory note was rendered effective and complete by an unconditional delivery. The payee agreed to release the maker, and to cancel the note, upon a future contingency which might or might not arise. That was clearly a condition subsequent which brought the case within the general rule that a contract reduced to writing and complete in its terms, cannot be varied and contradicted by oral testimony. (Eighmie v. Taylor, 98 N. Y. 288; Thomas v. Scutt, 127 N. Y. 133; Stowell v. Greenwich Ins. Co., 163 N. Y. 298; Mead v. Dunlevie, 174 N. Y. 108.) Thus, to state the difference most concretely, the case at bar is one in which the oral testimony tends to show that the writing purporting to be a contract is in fact no contract at all, while in the case of the Jamestown Business College the oral testimony was in direct contradiction of the written contract as to the existence and validity of which there was no controversy. ” But even if the defendant could vary the obligation by parol testimony as to the agreement pleaded for cancellation of the notes if at maturity thereof the work was not completed, this is but rescission and leaves unaffected his obligation to return the machinery and benefits obtained under the contract. But there is no allegation of restoration or of offer thereof. I fail to find that the present theory of condition precedent was raised or suggested at the trial, and it certainly was not pleaded.

It is further contended that the court was powerless to strike out the defenses. Smith v. Countryman (30 N. Y. 655) and Moss v. Witteman (4 Misc. Rep. 81), cited by the appellant, so far as the practice in this case is concerned, would seem to be overruled by Ampersand Hotel Co. v. Home Ins. Co. (198 N. Y. 495), wherein the respondent cited both Smith’s Case (supra) and Moss’ Case (supra).

The judgments and orders must be affirmed, with costs.

Thomas, Stapleton, Mills and Putnam, JJ., concurred.

Judgments and orders affirmed, with costs.