Case ID: nys_17/html/0003-01.html
Source: Caselaw Access Project
Author: {"author": "Van Brunt, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

McElwee Manuf’g Co. v. Trowbridge.
    
      (Supreme Court, General Term, First Department.
    
    December 31, 1891.)
    1. Negotiable Instruments—Bona Fide Holders before Maturity.
    Promissory notes¡ transferred by the payees to plaintiff, who had succeeded the payees in their business, were again transferred by plaintiff before maturity, and, after being protested for non-payment, were taken up by plaintiff. Held, that plaintiff was not a holder of the notes for value, and that, in an action thereon by plaintiff against the maker, the latter might prove an offset, alleged in his answer, for a breach of the contract out of which the notes arose.
    2. Appeal—Review—Objections not Raised Below.
    Objection that an incorporation was not established on a trial will not avail when improper proof of such incorporation was admitted without objection.
    Appeal from circuit court, Hew York county.
    Action by the McElwee Manufacturing Company against Benjamin A. Trowbridge upon promissory notes.
    Judgment reversed.
    Argued before Van Brunt, P. J., and Barrett and Andrews, JJ.
    
      B. C. Chetwood, for appellant. John E. Eustis, for respondent.
   Van Brunt, P. J.

This action was brought by the plaintiff, a foreign corporation, to recover upon two promissory notes, made by the defendant, whereby he promised to pay to the order of Don A. Gaylord & Co. the sums in said notes mentioned. The complaint alleged that before maturity Gaylord & Co. assigned the notes for value to the plaintiff. The answer admitted the making of the notes, but denied their indorsement to the plaintiff, and alleged want of knowledge or information sufficient to form a belief as to the incorporation of the plaintiff, and set up by way of a separate and distinct defense an offset against the amount of said notes, because of a breach of contract by Gaylord So Co. out of which these notes arose. It appears from the evidence that the plaintiff in this action succeeded to the business of Gay-lord & Co., and that Mr. McElwee, of said firm, was the treasurer of the plaintiff, and Mr. Gaylord, also of said firm, was the secretary. It further appeared that one R. D. Cotter had paid for these notes to the plaintiff, and, upon their being protested at maturity, they were taken up by the plaintiff, payment being made to Cotter therefor. It would thus appear that the plaintiff was not the holder for value before maturity of this paper, but the mere successor to the rights of Gaylord & Co., whatever they were. Upon the trial the defendant offered to prove the defense set up in the answer. This defense was ruled out, and an exception taken, and a verdict directed for the plaintiff. We think this was error. Whether the defendant could or could not establish the defense which he set up as an offset to the note it is not now necessary to consider. But it is clear that the plaintiff was not the holder of this paper for value, before maturity, without notice. It was the mere successor of Gaylord & Co. The whole of the officers, as far as the record shows, with the exception of the president, were members of the firm of Gaylord & Co., and there is no proof that the plaintiff paid any special consideration upon the transfer of the notes to it. The jury, under these cirsuinstances, would have had the right to find that plaintiff merely represented Gaylord & Co.; and, if there was any defense or offset to the notes, had they been sued upon by Gaylord & Co., the defendant had a right to establish it. The claim that there was no evidence to show that the plaintiff had any knowledge of any agreement between the defendant and Gaylord & Co. is not well founded. As already stated, the evidence showed that the plaintiff had full knowledge, because it was the mere successor of Gaylord & Co., and the members of that firm were the officers of the plaintiff. The objections that the incorporation of the plaintiff was not established would have been well taken had not improper evidence proving the incorporation been admitted without objection. The judgment should be reversed, and a new trial ordered, costs to appellant to abide the event. All concur.