Case ID: ny-st-rep_21/html/0447-01.html
Source: Caselaw Access Project
Author: {"author": "Sedgwick, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Benjamin R. Arnold et al., Respts, v. George T. Trowbridge, Surviving Partner, etc., App’lt.
    
      (New York Superior Court, General Term,
    
    
      Filed January 7, 1889.)
    
    1. Bills and notes—Sueeiciency oe answer.
    In an action upon two promissory notes the answer averred as a defense the execution of two agreements, the first providing for the making of promissory notes in consideration of a loan made by the plaintiff, and the second for a renewal of the notes from time to time for the space of two years, except in case of unusual disaster. The plaintiff subsequently declined to renew the notes, and insisted upon a general assignment being made, which defendant averred they were induced to make by the acts of the plaintiff. Held, that there were no averments in the answer by which it appeared that the plaintiffs were bound to renew the notes after the making of the assignment.
    2. Assignment—Construction oe agreement as to.
    The plaintiffs by requesting the execution of the assignment did not deprive themselves of the right of considering it an unusual disaster.
    Appeal by defendant from a judgment entered upon a verdict for plaintiff as directed by court.
    
      Flamen B. Qandler, for app’lt; George L. Cheney, for resp’ts.
   Sedgwick, Ch. J.

The question upon the trial was whether the answer contained a defense. • The complaint was upon two promissory notes made by the firm of which the defendant was the survivor. The defendant claimed that the answer made the defense that the plaintiffs had agreed to renew the notes.

The answer averred that the defendant’s firm and plaintiff’s firm made two agreements, which it is now assumed were upon consideration and are to be construed together. The first was signed by the members of the defendant’s firm. Its substance was that in consideration of a loan made to them by the plaintiff, “and for which we gave you our notes at six months from the 14th inst., which, everything being satisfactory, are to be renewed so as to make the loan of two years’ duration, we agree in the event of any disaster to us that shall necessitate the Winding up of our affairs or an assignment to make your loan of $7,500 a preferred debt above any or all other loans or debts of ours.”

The second agreement was, among other things, that the plaintiff agreed that they would renew from time to time the notes (“ as might be necessary, 'except in case of unusual disaster to the said firm of Seely & Trowbridge), so that the same should be continued for two years, as mentioned in said, agreement above set forth, from the said 14th day of May, 1887, and the said Seely & Trowbridge also further agree to allow the said Arnold & Co. to exercise such supervision over the business of the said firm of Seely dp Trowbridge, by way of examining their books of account and bank and cash books, and by way of advising in regard to what payment of notes or other considerable payments, the said Seely & Trowbridge should make, as is usually exercised and directed by persons who are partners together in business.”

The answer averred that the defendant’s firm, before the maturity of the notes, made a general assignment for the benefit of its creditors. The making of this prevented any obligation of the plaintiffs to renew the notes, unless there were other averments of facts which, if proven, would show, notwithstanding the occurrence of an unusual disaster, namely, the assigment, the plaintiffs were bound to renew. The defendants claimed that there were such averments, and these are now to be examined.

The answer averred that the assignment was induced by the wrongful acts of the plaintiff. These wrongful acts, as alleged, were that the plaintiffs claimed the right to dictate and direct in regard to the conduct of defendant’s firm, and especially attempted to dictate and control that firm in regard to the payment of certain notes made by the firm, and claimed and insisted that under the agreements the defendant’s firm had no right to pay the note without the permission of the plaintiffs ; and further insisted that under- the agreements the plaintiffs had the-right to dictate, and, as far as they saw fit, to control the management, and conduct the business of the defendant’s firm ; that the plaintiffs afterwards notified the defendant’s firm that the plaintiffs would not renew the notes, but would insist upon their payment, and subsequently claimed and insisted that defendant’s firm should make an assignment for the benefit of their creditors.

These averments do not disclose any wrongful act by plaintiff. No one of the acts was a violation of law, or of any contract duty to the defendant’s firm. If the attempted dictation or control, was in excess of the privileges of the plaintiff to supervise the business of the defendant and to advise as to it, as is usually done by a partner, yet as to such an excess, the plaintiffs would not be guilty of a tort or wrong, more than a third person doing or saying the same things would be guilty. The answer also averred that the plaintiff threatened that if defendant’s firm did not make an assignment, the plaintiffs would pursue the defendant's firm, in every way possible under the law until all the plaintiffs claims should be paid in full with interest and also that the plaintiffs would buy up all claims against defendant’s firm that they could buy and hold them to the detriment of defendant’s firm until the claims should be paid in full, principal and interest and that the plaintiffs would never let go upon the defendant’s firm “until they had paid the last dollar.”

The holding of the obligation of a person cannot be a detriment to that person, in the form of a legal injury and the so called threats were declarations that the plaintiffs would do what they had a legal right to do.

The answer also averred that before the plaintiffs had notified the defendant’s firm that the plaintiffs would insist upon the payment of the notes at maturity, that the defendant’s firm had made such arrangements in their business, that if the plaintiffs should renew the notes that business could have been continued to a profit but that by aforesaid wrongful acts of the plaintiffs especially in view of the depressing effect which the said wrongful acts of the plaintiffs had upon the mind of Guy B. Seely one of the defendants 'firm, which incapacitated him, in a great measure from transacting the business to an advantage, this defendant and the said Seely were unable to further prosecute their business successfully, as they would have otherwise have been able to have done and their business and affairs were so disarranged, that it became necessary to make the assignment for the benefit of creditors.

So far as the ability of the firm to continue business, after the maturity of the notes, was affected by the plaintiffs declaring that they would not renew the notes, it is clear that this declaration did not tend to lessen the resources of the defendant’s firm. The plaintiffs, notwithstanding their declarations, could not compel defendant’s firm to pay the notes, if there were a valid agreement to renew which could be enforced. N. Y. Loan and Trust Company v Helmer, 77 N. Y., 64; Pomeroy v. Tanner, 70 id., 547. This declaration could hot be considered to be a cause of the defendant’s firm stopping business or making an assignment, for which the plaintiffs would be responsible.

The effect upon the mind of one of the partners, that incapacitated him from business to a certain extent, certainly did not make the assignment an act of defendants not voluntary on their part, especially when the mind of the .present defendant was not disturbed.

The plaintiffs were not deprived of the right to consider the making of the assignment as an unusual disaster, which freed them from the obligation to renew, because they had requested this assignment to be made. One of the contin- . gencies of the agreement was that the plaintiffs should advise, as a partner might, and giving advice was not to deprive the plaintiffs of the benefits that would accrue to-them, if the advice were taken.

I am of opinion, therefore, that there were no avermentsof the answer which modified the inference from the making of the assignment, and that it did not appear that the plaintiffs were bound to renew the notes.

The answer did not set out a defense of usury. Judgment affirmed with costs.

Freedman and Ingraham, JJ., concur.