Case ID: ny-super-ct_20/html/0366-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court. Moncrief, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

George Lewis, Plaintiff v. George Jones, Defendant. Same v. Same.
    1. In an action by an indorsee against his immediate indorser of a promissory note, or by the payee against the maker, the defendant cannot prove a verbal • , agreement, cotemporaneous with the indorsing or making of the note, by which the note is not to be paid or become payable until the defendant has realized the amount thereof from specified sources; where the alleged agreement and facts connected with it, do not show a failure of consideration, or that there was no consideration for indorsing or making the note.
    (Before-Wood rum', Mmtobiee and Robebtson,’J. J.)
    Heard October 7,
    decided November 10, 1860.
    Exceptions ordered at the trial to be first' heard at the general term, and the entry of judgment in the meantime to be suspended. Two several actions between these parties were tried the same day, and were argued together before the court, in banc.
    
    In suit (No. 1) Geo. Jones is sued as indorser of three several notes, made by one Earl W: Johnson, and payable to the defendant’s order, and by him indorsed; and in suit
    • (No. 2) as the maker of a note, payable to the plaintiff's order; all of which are alleged to have been delivered by the defendant to the plaintiff, George.Lewis; and the first three to have been indorsed to him by the defendant.
    The defense contained in the answers, is the same in both suits—and is, in substance, that the plaintiff and defendant were partners, composing the firm of Lewis & Jones; that said Earl W. Johnson owed them about $13,600, and subsequently failed, “ and took the benefit of,the bankrupt laws of Massachusetts, of which State he was a resident,” and his estate payed only about six cents on the dollar.
    
      It was subsequently discovered that one Simon P. Atkins held, by assignment from Johnson, a lease, as security for paying the cost of several buildings which Atkins had erected for Johnson, on the demised premises, and on which about $5,000 was due to Atkins.
    At the request of the plaintiff, and in order to secure the debt due to Lewis & Jones, from Johnson, the defendant entered into an arrangement with Johnson and Atkins, by which Atkins assigned the lease to the defendant, who paid Atkins therefor the $5,000, and who also received from Johnson his three notes for about $4,500 each, at one, two and three years, from May 1, 1856 ; the defendant to re-assign the lease to Johnson in case he paid said notes at maturity. The plaintiff requested the defendant to enter into said arrangement; to take the assignment of theiease in the defendant's name, and “to give the defendant’s notes to said plaintiff, for said plaintiff's interest in said debt due from Johnson—upon this express condition, however, that the said-notes were not to be payable', nor was this defendant to be liable to pay the same, unless and until he had received, out of the net rents, issues and profits of said leasehold property, sufficient to pay said notes, so to be given by said defendant, after all other charges, including defendant’s aforesaid advance, had been repaid.”
    The note prosecuted in suit (No. 2), is one of the notes so given by the defendant to the plaintiff, and the notes sued upon in suit (No. 1), are renewals of another of the notes so given by the ,defendant to the plaintiff. These renewal notes were made and given “under the same agreement and consideration,” as the original notes. The answers further state, that the defendant “ has not received from the said notes given by said Johnson, nor from said leasehold property, nor from its rents, issues and profits, the amount of said notes, and that the same are not now due and payable.”
    At the trial before Robertson, J., April 18, 1860, the defendant offered to prove, as a defense, the facts alleged in the answer. The plaintiff objecting, the court excluded the evidence, and ordered a verdict in each case for the plaintiff, for the amount claimed therein, to which decisions the defendant excepted.
    The judge then ordered the questions of law arising on the exceptions, to be heard in the first instance at the general term, and the entry of judgment in the meantime to be suspended.
    
      James W. Gerard, for Defendant.
    I. The evidence excluded related to the condition on which the notes in question were delivered.
    .Its object was not to vary the notes, as notes in the hands of the plaintiff, but to show in substance, that the plaintiff only held these notes on condition that they were not to take effect until the happening of the events in the answer stated.
    All facts relating to the execution and delivery of any instrument, tending to show the circumstances under which it was delivered, and the nature and character of the delivery, may always be shown. (Chester v. The Bank of Kingston, 16 New York Rep. 336, 343 ; Prall v. Hinchman, 6 Duer Rep. 351.)
    This last case especially applies to the notes in suit No. 1, on which defendant is sued as indorser. (Bowen v. Russell, 13 Pick. 75 ; Bernhard v. Brunner, 4 Bosw. 528 ; Goddard v. Cutts, 2 Fairfi. R. 440, 442.)
    That evidence is now admissible of the intention of parties to a note, in opposition to that raised by the paper itself, (see Moore v. Cross, 19 New York Rep. 127,) where the second indorser of a note was held liable to the payee, on proof that such was the intention of the parties when the note was given.
    II. The evidence offered, tended to show either an entire or partial failure of consideration to the notes, and as such was admissible.
    III. The answer set up a perfect equitable defense to the enforcement of these notes by the plaintiff, against the defendant.
    
      Equitable defenses are now admissible. (Code, § 150; Dobson v. Pearce, 2 Kernan, 166 ; Crary v. Goodman, 2 Kernan, 266.)
    
      Peter Y. Cutler, for Plaintiff.
    I. Parol evidence is inadmissible to contradict or vary the terms of a written instrument. (1 Greenleaf's Evidence, § 275—the reason of the rule is stated in § 281; Durgin v. Ireland, 4 Kernan, 322; 1 Phill. & Amos on Ev. 753; 2 Starkie’s Ev. 544, 548; Adams v. Wordley, 1 M. & W. 379, 380 ; Boorman v. Johntson, 12 Wend. 573.)
    II. The defendant is estopped from saying that he made any other contract than the absolute one on the face of the notes. (Adams v. Wordley, 1 M. & W. 379, 380 ; Saunders on Pl. and Ev. 696; Fleming v. Gilbert, 3 Johns. 528.)
    III. The answer contains no equitable defense. It does not allege fraud. Nor mistake: as, that the notes should have contained the condition, but that it was omitted by mistake, with a prayer that the clause left out should be restored. Nor any other ground of equitable defense. This is easily tested. Suppose the facts stated in this answer to be stated in a bill in equity, what prayer for relief would they sustain? Obviously none.
    Judgment should be ordered for the plaintiff on the verdicts.
   By the Court. Moncrief, J.

—The law presumes in favor of negotiable paper a good consideration until the contrary appears ; the notes upon their face express a consideration ; the defendant in his answer, éxpressly and distinctly avers, that the notes were given to him, said plaintiff, “for said plaintiffs’ interest in the debt due from Johnson to the defendant and the plaintiff, as copartners.”

The evidence offered, did not show or tend to show, either an entire or partial failure of consideration.

A note which has been executed and delivered, cannot be contradicted, nor can its legal effect be controlled by oral evidence that it was to have no validity except in a certain event.

When the parties have deliberately put their engagement in writing in such terms as import a legal obligation without any uncertainty as to the object or extent of such engagement, it is presumed that the whole contract of the parties and the extent and manner of their undertaking have been reduced to writing; and hence oral testimony, of a previous colloquium between the parties, or of -conversations and declarations at the time when it was completed, will not be admitted to substitute a new and different contract for that actually committed to writing. Thus, parol proof, is inadmissible to show that an absolute agreement for the paymént of money was to be performed only in a certain event. (1 Greenl. on Ev. § 275 ; Thompson v. Ketcham, 8 J. R. 192 ; Wells v. Baldwin, 18 J. R. 45 ; 1 Cowen, 249 ; 1 Hill, 116 ; 1 Greenl. on Ev. § 281.) So where the instrument purported to be an absolute engagement to pay at a specified day, parol evidence of an oral agreement at the same time that the payment should be prolonged or depend "upon a contingency, or be made out of a particular fund, has been rejected. (3 Camp. 57 ; 5 Pick. 506 ; 5 Verm. 114, 152; 7 Mass. 518; 17 Wend. 190; 13 Wend. 527 ; 8 J. R. 192; 4 Gray, 504, 506 ; Woodbridge v. Spooner, 3 B. & Ald. 233 ; 1 Gow. R. 74 ; Edwards on Rills, and notes from 313, 314, 315, and cases cited.) This court, at general term, in Haucksr. Hund, (1 Bosw. 431,) (disapproved by the court of appeals upon another point) holds to the same effect.

In Chester v. The Bank of Kingston, (16 N. Y. R. 336,) the only question necessarily arising and decided is, that the bond in question having been given as collateral security for the notes of the respondents, evidence of the parol agreement would be admissible to show that payment of the debt satisfied the bond. The evidence would not contradict the terms of the bond. The eyidence merely goes t'o show that the purpose and intent for which it was given had been accomplished. The debt for which, the bond was given having been paid, satisfied the bond. The evidence clearly established a total failure of the consideration of the bond, and under all the authorities, was. clearly admissible.

Comstock, J., at page 341, says : “ Where there is a perfect delivery of a written obligation, it is plain that evidence cannot be given of a cotemporaneous parol agreement contradicting the terms of the instrument or impairing its force.”

In Prall v. Hinchman, (6 Duer, 351,) the question now under consideration did not arise, nor was it discussed.

In Bernhard v. Brunner, (4 Bosw. 528,) the defense set up was a quasi fraudulent possession of the check sued upon by the plaintiff, and also an averment of an entire want of consideration.

The evidence did not seek to vary the terms of the contract as imported by the check, but tended and was offered, as tending to show, an impeachment of the title of the plaintiff; that the delivery of the check by the defendants was conditional, and a total want of consideration.

In Moore v. Cross, (19 N. Y. R. 227,) no such question arose, and it was simply held that where one who, for the accommodation of the maker, indorses his note payable to the order of a third person, is liable thereon to such payee as an indorser, and not as maker or guarantor. McGevey made his note to the order of the plaintiff, and in pursuance of an agreement the note was indorsed by the defendant for the accommodation of the maker. The note was discounted at a bank, and being unpaid at maturity, was duly protested and taken up by the plaintiff.

The case of Hauck v. Hund, (1 Bosw. 431,) involved the same principle, and in that respect, was overruled by the court of appeals.

It is clear that the evidence offered was not admissible, inasmuch as it directly tended to vary the times of payment and terms of the written instruments upon which these actions are brought. The ruling and direction given by the learned court below, were correct, and judgment must be entered for the plaintiff in each action, in accordance with the verdict, with costs.

Ordered accordingly.