Case ID: ny-super-ct_43/html/0176-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Freedman, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

WILLIAM PAINE, Plaintiff and Respondent, v. PETER NOELKE, Impleaded, &c., Defendant and Appellant.
    
      Decided January 7, 1878.
    promissory note.
    Negotiable and Non-Negotiable.—Maker and Indorser.— Consideration, when Implied, &c.—Effect of Indorsement in Blank before Delivery to the Payee, &c.—Practice and Pleadings.—Questions of, must be determined according to the Rules prevailing' in the Courts of this State.
    When the action is pending therein, and in the absence of proof to the contrary, it will be presumed by the courts of this State, that the law of another State in regard to a subject-matter before the court, is the same as the law in this State.
    The law and decisions in regard to several kinds of promissory notes, and the practice and pleadings when they are the subject-matter of the action, fully discussed in the points of counsel and the opinion of the court.
    Before Curtis, Ch. J., and Freedman, J.
    Appeal from order overruling demurrer.
    The complaint averred: (1) That on June 1, 1874, at Bergen, in the State of New Jersey, the defendant, Charles D. J. Noelke, made his certain promissory note in writing, dated on that day, and thereby promised to pay to the plaintiff the sum of §1,000, with interest, payable semi-annually, one year from said date.
    (2) That the defendant P. Foelke indorsed said note, when said Charles D. J. Foelke delivered the same to the plaintiff.
    (3) That said note at maturity was duly presented for payment to the said Charles D. J. Foelke, but was not paid, of all which due notice was given to the defendant, P. Foelke.
    (4) That no part of said note has been paid, ,&c., &c.
    The defendant, Peter Foelke, demurred on the ground that the said complaint did' not state facts sufficient to constitute a cause of action against him.
    The demurrer was overruled and judgment ordered in favor of the plaintiff thereon, with liberty to defendant to answer on payment of costs.
    
      James Wiley, attorney, and A. O. Anderson, of counsel for appellant.
    —I. It is presumed that the plaintiff, in his complaint, stated his case as strongly as it could be presented or the facts would warrant. The court will not assume anything to exist which the plaintiff has not alleged in his complaint (Roosevelt v. Dean, 3 Caines, 105). The plaintiff brings his action and.charges against the appellant as “indorser” only. The complaint is bad; it does not allege: (a) That there was any consideration for the instrument. (b) It does not appear to have been given for value, (c) It contains no allegation of any consideration for the appellant’s indorsement. ' (d) It contains no allegation that the maker received any credit or that the plaintiff, the payee, parted with any value on the strength of the indorsement. Fo allegation that any amount is due from the appellant by reason of or upon the instrument. No copy of the note is given, no allegation of any intent by the appellant- to charge himself as maker or guarantor. There is no allegation of any intent of the appellant to obtain or give credit to the maker by the indorsement. No allegation that the plaintiff took the note upon the faith of the appellant’s indorsement, (e) It does not contain any averment of any agreement or understanding with the appellant, or any one, that the appellant would pay the note. (f) It does not allege any facts which go to take the case out of the ordinary presumption of law as to the intent of the appellant to be a second indorser. No instrument of contract is set forth, only the legal effect of the supposed contract of the appellant, and that is pleaded as indorsement. And for aught that appears the indorsement by the appellant may have been to accommodate the plaintiff and not the maker.
    II. The complaint must allege every fact which it is necessary for the plaintiff to prove in order to recover (Draper v. Chase Mfg. Co., 2 Abb. N. C. 79, and cases there cited ; White v. Brown, 14 How. Pr. 282; Conklin v. Gundall, 1 Keyes, 228).
    III. There is no presumption of a consideration; it should be alleged. If the words “ value received ” had been stated it might have, under some of the cases, been sufficient without any further statement of the consideration (Prindle v. Caruthers, 15 N. Y. 425). Johnson, J., says, at page 430, “It is necessary, therefore, that the promise should, from the complaint, appear to have been made upon consideration” (and see Brewster v. Silence, 8 N. Y. 207). The rule of pleading is stated to be “every valid contract of whatever form or nature, must be founded upon some consideration, and as a general rule every complaint in an action founded upon such contract must allege the existence of consideration sufficient to sustain the contract.” There are two exceptions to this rule, viz.: 1st, in actions upon sealed instruments, and, 2nd, those upon negotiable notes (2 Wait's Practice, 379). But these exceptions do not apply to a non-negoliable note; the rule in that case is as follows : “ Where the instrument is not a negotiable one and it does not recite a consideration, as ‘ for value received ’ or the like, there is no presumption of consideration, and one must be proved on the trial as in the case of other contracts” (Wait’s Actions and Defences, vol. 1, page 608), and Edwards on Bills states the rule to be, "but where a promissory note is not negotiable a consideration must be alleged and proved on the trial” (Edwards on Bills and Promissory Notes, p. 677). It is only as to bills of exchange and negotiable promissory notes, that the rule that they are" prima facie evidence of valuable consideration applies (Manderville v. Welch, 5 Wheaton, 277). A promissory note not negotiable and not purporting on its face to be for value received, does not imply a consideration (Bristol v. Warner, 19 Conn. 16; Richardson v. Carpenter, 2 Sweeny, 360). In this last case Judge Monell, at p. 367, says of the instrument sued upon, that it “did not import a consideration, and it was necessary for the plaintiff to aver and prove, and the referee to find that there was a sufficient consideration for the acceptance.” And Jones, J., says: “It is perfectly clear that the instrument in question is not a draft nor any description of negotiable mercantile paper. It was therefore necessary to prove a consideration for the acceptance before the defendant could be held liable.” This case was reversed in the court of appeals (46 N. Y. 660) on the facts, but the law is stated by Gtrover, J., to be “ the mere acceptance did not of itself create a presumption of a sufficient consideration.” The case of Lynch v. Levy, 11 Hun, 145, is somewhat similar to the one under consideration, except that the note was made in the city of Hew York, and the complaint charged the defendant with indorsing the same to the plaintiff for value, and delivered to the plaintiff for value, and that the plaintiff became the owner thereof for value. At special term, Donohue, J., overruled the demurrer for the reason, as stated by him, that “the complaint here states that the note before its delivery to the plaintiff was for value paid to' the defendant indorsed by him.” At the general term the special term decision was sustained. Beady, J., delivering the opinion says, “There can be no doubt that if in such a case as this there are allegations showing that the indorsement was made to give the maker credit with the payee, the action can be maintained,” and that he (the defendant) “became bound to the plaintiff by a legal consideration for the promise to pay the amount of the note to him,” and that "the allegations of consideration in the "complaint with regard to the transaction are sufficient, as signalized by the words “for value” to express the fact that a consideration moved to the defendant from the plaintiff for the indorsement.” This case seems to have been decided both at special and general term upon the greund, and that solely, that the complaint contained a sufficient allegation of consideration for the indorsement. We submit that the case Richards v. Waring, cited by Sanford, J., does not help the complaint. The question in that case is stated by Potter, J. (39 Barb. 43), as follows: “What then is the legal effect to one who writes his name, without anything more, upon the back of a promissory note not negotiable, which is thereupon transferred to the payee named in the note, and who at the time of the delivery thereof to him parts with the full consideration mentioned in it, upon the credit of the note % That is, I think, this case fairly stated.” A copy of the instrument sued upon was set out in the complaint and recited “value received,” and that the consideration was given upon the faith of the indorsement. The case came before the court after trial, and the question was whether the person indorsing the note was entitled to notice of demand. Judge Hogteboom, in giving the opinion of the court of appeals (1 Keyes, at p. 579), says: “I think a complaint setting out the circumstances under which the note was executed, the manner of the signature, and the intent of the party to become liable thereon, would show a cause of action which would entitle the plaintiff to recover.” It will be found on examination that the words “value received” and the “intent of the person to become liable to pay” were considered, under the evidence and finding in the case, sufficient to entitle the plaintiff to recover. In the case now before the court, the complaint does not set forth the manner of the signature, or any intent to pay on the part of the appellant;' and while we do not dispute the soundness of the maxim cited (in part) by Judge Sanford, we claim that we are entitled to it in its entirety. Benignce faciendw sunt interpretaciones propter Simplicitatem Laicorum ut res magis valeat quam percat; et verba Intentioni, non e contra, debent inservire. The theory of the maxim is, that the law should uphold, not defeat the intent (Broom's Legal Maxims, 414, p. 347). Whether the person who puts his name upon the note can be held as either maker or guarantor depends on the “actual intention” (Note to Cromwell v. Hewitt, 40 N. Y. 494).
    IV. The note sued upon in this action was made in the State of New Jersey, and the effect of the appellant having indorsed it is to be determined by the laws of that State. The law of New Jersey is, that the making of such an indorsement as is alleged in this case, creates no implied or commercial contract whatever, and no action can be maintained thereon (Crozier v. Chambers, 1 Spencer, 257; Chaddock v. Van Ness, 35 N. J. 518; Jaques v. McKnight, 8 Am. Law Journal, 
      344). It will be seen that the rule of law stated in Richards y. Waring (supra) is not the law of the State of New Jersey. This being the law of the State of New Jersey under which the appellant is to be held, the rule as settled in Hull v. Marion, 2 Sup. Ct. (T. & C.) 420; affi’d 59 N. Y. 652; Moore v. Cross, 19 N. Y. 227; Murphy v. Merchant, 14 How. Pr. 189; Coulter v. Richmond, 59 N. Y. 478 ; Woodruff v. Leonard, 1 Hun, 632; Phelps v. Vischer, 50 N. Y. 69; and Bacon v. Burnham, 37 Id. 616, apply to this case, and the complaint is bad in not setting out the facts required to be stated in those cases.
    
      C. Edgar Smith, for respondent.
    —I. It is well settled, at least in this State, that the indorser of a non-negotiable note does not assume the legal liability of an indorser. His liability is that of guarantor or comaker ; and the payee of the note can write over the name of the indorser the substance of the contract in the body of the note. The same liability attaches to such indorser as though the name was written under the maker’s in the body of the note (Story on Prom. Notes, § 473; Seabury v. Hungerford, 2 Hill, 84; Hough v. Gray, 19 Wend. 202). Words of guarantee in this case. Court says that indorsement in blank, indorser might repose on want of demand and notice (Griswold v. Slocum, 10 Bar. 402). Legal indorsement only on negotiable note (Richards v. Waring, 40 N. Y. 576; Cromwell v. Hewitt, Id. 491; Hale v. Newcomb, 7 Hill, 416; Dean v. Hail, 17 Wend. 214).
    II. The instrument is a promissory note, though it is non-negotiable., It, therefore, imports a consideration. No consideration need be pleaded. None need be proved, in the first instance. Want of consideration may be a defense ; proof of consideration would then be necessary. The complaint states that the instrument is a promissory note in writing. It states the fact of making and indorsing, of presentment and demand, and notice to P. Noelke. Notice was unnecessary to the latter, but its allegation is not a defect. It is a simple statement of a fact in the order of its occurrence, which may be immaterial (Prindle v. Caruthers, 15 N. Y. 425). A promissory note need not contain the words, “ value received.” The consideration is equally presumed without them as with them (1 Parsons on Notes, 193). The consideration need not be pleaded (Goshen Turnpike Co. v. Hurtin, 9 Johns. 217; Bank of Troy v. Hopping, 13 Wend. 557; Edw. on Prom. Notes, 169, et seq.).
    
    III. In all particulars the complaint is sufficient. It states all the facts necessary to be proved, unless issue is taken by answer. The production of the note and proof of signature would be sufficient on the trial if there was no denial of consideration. Nothing need be alleged not necessary to be proved, if not denied (Decker v. Mathews, 12 N. Y. 313).
    IV. The complaint does not state that the plaintiff is the holder and owner of the note, and it is well settled that this is not necessary (Keteltas v. Myers, 19 N. Y. 231).
   By the Court.—Freedman, J.

—The conflict of opinion prevailing among the courts of the different States, as to the nature of the contract implied by a blank indorsement of a promissory note before delivery to the payee, is quite extensive.

In the case of a negotiable note, it has been repeatedly held in this State, that a person making such an indorsement is presumed to have intended to become liable as second indorser, and that on the face of the paper, without explanation, he is to be regarded as second indorser, and as such not liable upon the note to the payee, who is supposed to be the first indórser j but that such presumption may be overcome by parol proof that the indorsement was made to give the maker credit with the payee (Coulter v. Richmond, 59 N. Y. 478; Smith v. Smith, 37 N. Y. Superior Ct. 203).

In the case of a non-negotiable note, the obligation assumed by such an indorsement must, of necessity, be either that of maker or that of guarantor, and the better opinion in this State seems to be that the contract should be construed as an absolute promise tó pay as a maker of the note (Richards v. Waring, 39 Barb. 42; affirmed 1 Keyes, 576).

In both cases, however, the maker is presumed to have made the note upon a sufficient consideration.

Thus, although bills and notes almost always contain the words “ valúe received,” and although it was formerly thought necessary to insert them, and that an instrument without them would' not be a bill of exchange, it has long been settled that they are immaterial, and a consideration is equally presumed to exist without them or with them (1 Parsons on Notes and Bills, 193, and cases there cited).

That the same presumption exists in regard to bills and notes without words of negotiability, has been distinctly held, in Downing v. Barkenstoes, 3 Caines, 137; Goshen Turnpike Co. v. Hurtin, 9 Johns. 217; Bank of Troy v. Topping, 13 Wen,d. 557).

The decisions in these cases rest upon the statute (1 R. L. 151; 1 Rev. St. 768), by which all notes in writing, made and signed by any person, and containing a promise to pay any sum of money therein mentioned, are made due and payable as therein expressed, and are to have the same effect, and are made negotiable in like manner, as inland bills of exchange, according to the custom M merchants, no matter whether the promise be to pay to the payee personally, or to his order, or to the order of the maker, or unto the bearer (§ l). The statute further provides that the payees . . . of every such note payable to them or their order, . . . may maintain actions for the sums of money therein mentioned against the makers . . . of the same in like manner, as in cases of inland bills of exchange, and not otherwise (§ 4).

It was therefore distinctly laid down in Goshen Turnpike Co. v. Hurtin, and Bank of Troy v. Topping, (supra), that the presumption stands good until the defendant destroys it, and hence that it is not requisite that a consideration should appear upon the face of the note, or be pleaded.

It is only in the case of instruments which either do not fall within the statute, or which contain in themselves something which destroys the presumption, that a different rule applies. Thus, in Prindle v. Caruthers (15 N. Y. 425), the instrument on which the complaint was founded was not a promissory note, because it was not payable at all events. If neither Henry Caruthers nor his wife had survived till the first day of April, succeeding the making of the instrument, nothing would ever have been payable upon it. It was held necessary, therefore, that the promise should appear from the complaint to have been made upon consideration. Inasmuch, however, as the complaint set forth the instrument in full, and the same purported to have been made for value received, the court came to the conclusion that a consideration had been sufficiently alleged. So in Spear v. Downing (12 Abb. Pr. 437), the instrument sued upon was not a promissory note, payable at all events, and as its language rather negatived than supported the presumption of a legal liability, the court held that, though the instrument was pleaded in full under section 162 of the Code, the absence of any allegation showing a consideration was a fatal defect. In Richardson v. Carpenter (2 Sweeny, 360, and 46 N. Y. 660), the discussion took place upon the proofs, and not upon the pleadings. The money was payable out of a particular fund, and therefore the instrument was not a draft within the law merchant. The remarks made in the course of that discussion by Monell, J., in this court, and by Grover, J., in the court of appeals, were to about the same effect as the decision in Spear v. Downing.

A promissory note, in order to fall within the statute, must consist of a written promise to say a certain sum of money, at a future time, unconditionally and at all events. It must not depend on any contingency, nor be payable out of any particular fund. The note in suit comes fully up to these requirements. It is a written promise to pay to the plaintiff the sum of $1,000 one year from the date thereof, absolutely and unconditionally.

The learned judge below was therefore correct in holding that, “ inasmuch as it appears from the complaint that one of the two defendants made the note in suit in favor, but not to the order, of the plaintiff, the payee therein named, that the other defendant indorsed it, and that it was thereupon delivered to the plaintiff, and inasmuch as such an indorsement before delivery imports the liability of a maker, these averments, taken together, must be deemed equivalent to an allegation that the two defendants made the promissory note, and that both are jointly liable as makers thereof. Although not negotiable, the instrument is a promissory note, and as such imports a consideration, though none is expressed. Want of consideration is matter of defense.”

The appellant insists, however, that the effect of his indorsement is to be determined according to the laws of Hew Jersey, where the note was made ; and that, upon this point, the rule of law stated in Richards v. Waring (supra), is not the law of that State. This question, it seems to me, is not involved in the present appeal, which presents simply a question of pleading that must be determined according to the course of practice prevailing in the courts of this State. In the absence of proof to the contrary, it will be presumed by the courts of this State, that the law of another State, in regard to a subject-matter before the court, in the same as the law in this State (Leavenworth v. Brockway, 2 Hill, 202; Cheney v. Arnold, 15 N. Y. 353; Robinson v. Dauchy, 3 Barb. 21, 29; Hoffman v Carow, 22 Wend. 324).

The order should be affirmed, with costs.

Curtis, Ch. J., concurred.