Case ID: ny-st-rep_58/html/0239-01.html
Source: Caselaw Access Project
Author: {"author": "Bradley, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Central Bank of Rochester, Resp’t, v. John G. Thein et al., App’lts.
    
      (Supreme Court, General Term, Fifth Department.
    
    
      Filed April, 1894.)
    
    1. Bills and notes—Bank—Payment.
    Where' a bank, which is holder of a note, has funds of the maker sufficient to pay it, it is its duty to charge up the amount of the note to the maker and thus satisfy it.
    3. Same—Defense.
    If such balance continue up to the time the action is commenced by the bank against the indorsers, it is a defense to the defendant if the maker is primarily liable.
    3.. Pleadings—Answer—Sham.
    A verified answer, containing matter of affirmative defense, will not be stricken out as sham.
    4. Same—Denial.
    The issue presented by denial, in an answer of material allegation in the complaint, cannot be disposed of on motion to strike out the answer as false or sham.
    Appeal from order of Monroe special term striking out the defendants’ answer, and from the judgment thereupon entered against them.
    The plaintiff by its complaint alleges that the Solidarity Cooperative Clothing Company made its promissory note, of date December 23, 1892, whereby it promised to pay at the banking office of the plaintiff $2,000, to the order of the defendant Thein three months after its date and delivered it to the payee, that the note was endorsed by him and the other defendants and before its maturity transferred to the plaintiff. That when it became due the note was duly presented at the place where payable, payment thereof demanded, and refused, and due notice of such presentment, demand, and refusal and protest was given to the defendants.
    The defendants by their answer admitted the making and endorsement of the note as.alleged in the complaint and the transfer of it to the plaintiff. They further alleged that the company, the maker of the note, deposited money from time to time to its credit in the plaintiff’s bank, and that prior to and at the time the note became due there remained of the amount of the money, so deposited, $2,203.50, in the possession of the plaintiff, and that on March 25, 1893, the maker of the note by order directed the plaintiff to pay and apply $2,000 of the amount, so remaining with the plaintiff of the money so deposited, upon and in payment of the note.
    And they “ deny each and every allegation in said complaint contained not hereinbefore specifically admitted, modified or explained.”
    
      The plaintiff’s motion was made upon the pleadings and an affidavit of the cashier of -the plaintiff to the effect that the Cooperative Company did not have a balance to its credit with the plaintiff sufficient to pay the note, and it so appeared by a statement, of the account set forth in the affidavit One of the defendants by his affidavit stated that if the plaintiff had correctly kept the account with the Co-operative Company the balance as stated in the answer would have been represented by it. The affidavit ■ also stated on information and belief that the plaintiff had erroneously reduced upon its books the balance of the company by charging to its account the amount of checks forged by one .Adler. And further that the answer was interposed in good faith and not for the purpose of delay.
    The answer was stricken out as false.
    
      Forsyth & Brothers, for app’lts; Hubbell & McGuire, for resp’t.
   Bradley, J.

The allegations of the answer are to the effect that the plaintiff had of the amount of the funds deposited by the makers of the note, at the time of its maturity, sufficient to pay it. If that were so it was the duty of the plaintiff to charge up the amount of the note to the maker and thus satisfy it. Aetna National Bank v. Fourth National Bank, 46 N. Y. 82-88; Indiq v. National Ctiy Bank, 80 N. Y. 100-106; Roberts v. Tucker, 16 Ad. & El. N. S. 560-578. And if the balance continued to be and was adequate to pay the note up to the time this action was commenced that fact was then a defense available to the defendants as endorsers of the paper, assuming as we must that the maker was primarily liable, as between it and the defendants to pay the note.

The defendants by their answer therefore did set up matter , which, if supported by evidence, might constitute a defense and the note be treated as paid. Whether it was demurrable for want of allegation to the effect that the balance due the maker in his bank account with the plaintiff sufficient to satisfy the note at maturity was permitted and did still remain there, it is unnecessary to inquire or determine for the purpose of the question here. The defendant’s answer was duly verified, and the affidavit in opposition to the motion was contradictory of that on the part of the plaintiff, and contained the statement, that the answer was put in, in good faith, and not for purposes of delay. In such case it is quite well settled that an answer containing matter of affirmative defense will not be stricken out as sham, but that the party alleging it is entitled to the opportunity of a trial, and to have the fact determined upon evidence in the usual manner. Webb v. Foster, 13 J. & S. 311 ; Henderson v. Manning, 5 Civ. Pro. R. 221; Barney v. King, 37 St. Rep. 533-535; Rogers v. Vosburg, 87 N. Y. 228.

There may be cases where an answer or defense may be stricken out as sham. This was within the contemplation of the Code § 538. But as has been elsewhere said it is applicable to matter set up in a pleading as mere pretense, in bad faith and without color of fact. Farnsworth v. Halstead, 18 Civ. Pro. R. 227. And in Barney v. King, it was held that it did not apply to matter of defense in a verified answer.

The allegations of affirmative defense in the answer in the present case may be false, but that question is not triable by or to be determined upon conflicting affidavits without infringing the defendant's right to trial by jury.

While the allegations in the answer tending to specifically deny the service and receipt of notice of presentment of the note and of demand and default in payment are not sufficient to put the due service of such notice in issue, the defendants do not expressly admit the service of it, nor do they admit the allegation of the complaint that the note was presented at the place where payable, and payment demanded and refused. This was an essential allegation as against the defendants. And the latter allegation at least seems to come within the denial made by the answer of the defendants. The issue presented by denial, in an answer of material allegations in the complaint, cannot be disposed of on motion to strike out the answer as false or sham. Wayland v. Tysen, 45 N. Y. 281; Robert Gere Bank v. Inman, 51 Hun, 97; 24 St. Rep. 160. If these views are correct the order should be reversed, the motion denied and the judgment set aside.

All concur.