Case ID: ny-st-rep_48/html/0777-01.html
Source: Caselaw Access Project
Author: {"author": "Bischoff, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Western National Bank, Resp’t, v. Frederick Wood, Impl’d, App’lt.
    
    
      (New York Common Pleas General Term,
    
    
      Filed November 7, 1892.)
    
    Bills and notes—-Failube oe consideration.
    In an action by the endorsee of a note against the maker, the evidence showed that the note was given to a bank to secure repayment of moneys advanced to complete buildings being constructed on joint account; that it was agreed that said moneys should be repaid out of a permanent loan upon or sale of the buildings when completed; that the buildings were not completed nor the loan procured, and that plaintiff's cashier had knowledge of such agreement before the transfer of the note. Held, that these facts constituted a complete defense, and that it was error to direct a verdict for the plaintiff.
    Appeal from a judgment of the general term of the city court, affirming a judgment for plaintiff which was entered on a verdict directed by the trial court, and an order denying defendant’s motion on the minutes" for a new trial. Action to recover by plaintiff, as endorsee, against defendant, as maker, upon a promissory note.
    
      
      Charles F. MacLean, for resp’t; Artemas B. Smith and Henry H. Bowman, for app’lt.
    
      
       Reversing 42 St. Rep., 675.
    
   Bischoff, J.

Plaintiff, as endorsee, sued defendant Wood, to recover upon a promissory note made by him to the order of J. Wesley Smith, by whom it was endorsed, and thereupon delivered by Wood to the Homestead Bank, before maturity. Wood did not dispute the making of the note, nor its delivery to the Homestead Bank, but asserted, as a defense to any liability on his part, that the note was made and delivered to the Homestead Bank to secure it for the repayment of an equivalent sum advanced to Wood to enable him to complete certain buildings, then in course-of construction, for their joint account; that it was agreed that the sum so advanced should be repaid out of the proceeds of a. permanent loan upon, or the sale of the buildings, when completed, and not otherwise, that the buildings were neither completed, nor sold, and that the loan had not been procured ; and that plaintiff received the note from the Homestead Bank with knowledge of the facts.

On the trial defendant Wood testified to the fact of an oral understanding between himself and the officers of the Homestead Bank, with the sanction of its board of directors, substantially in accord with the agreement above mentioned, and that plaintiff's-cashier had knowledge thereof before the note was endorsed and transferred by the Homestead Bank to plaintiff. When both sides rested plaintiff’s counsel moved for the direction of a verdict for plaintiff, which was opposed by counsel for defendant, -who asked, that the fact of the agreement be submitted to the jury for determination. The court granted plaintiff’s motion and defendant, duly excepted.

The facts appearing in evidence from defendant Wood’s testimony constituted a complete defense to his liability on the note, and it was, therefore, error to direct a verdict for the plaintiff, for which the judgment and order appealed from must be reversed. Precisely the same question has been determined by us in The Homestead Bank v. Frederick Wood, impleaded, etc., the opinion wherein is herewith handed down, the two cases differing only in that in The Homestead Bank v. Wood, impleaded, etc., the action was between endorsee and endorser, while here it is between an endorsee, with notice, and maker, but what has been said with reference to the one applies with equal force to the other.

The judgment of the general and trial terms of the court below, and the order denying defendant’s motion for a new trial, should be reversed and a new trial ordered, with costs to the appellant to abide the event

Daly, Ch. J., and Pryor, J., concur.