Case ID: ad_170/html/0185-01.html
Source: Caselaw Access Project
Author: {"author": "Ingraham, P. J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Gillette Clipping Machine Company, Respondent, v. William H. Elting, Defendant, Impleaded with John G. Wilson, Appellant.
    First Department,
    December 3, 1915.
    Pleading—bills and notes — suit to enjoin action on promissory note and to procure cancellation thereof with damages — when suit in equity does not lie.
    Suit in equity to enjoin an action brought by the present defendant on a promissory note made by the plaintiff and transferred after maturity to the defendant, and also to obtain a cancellation of said note together with others and to compel the payee of said notes to specifically perform an agreement by him to deliver the notes to the plaintiff and also to recover’ damages from the payee and his transferee. Complaint examined, and held, that a demurrer thereto by the defendant transferee should be sustained in that the facts alleged by the plaintiff constituted a defense to the action on the note and should have been set up as such in said action and furnished no basis for a suit in equity.
    The demurrer of the transferee should be sustained although the plaintiff may have grounds for a suit of specific performance as against the payee, for the note, being long overdue, cannot be transferred by the defendant so as to constitute his transferee a holder in due course.
    Laugkhlizt, J., dissented.
    Appeal by the defendant, John G. Wilson, from an order of the Supreme Court, made at the Bronx Special Term and entered in the office of the clerk of the county of Bronx on the 20th day of July, 1915, overruling his demurrer to the complaint.
    
      David Ross, for the appellant.
    
      John T. Booth, for the respondent.
   Ingraham, P. J.:

The action is brought against William H. Elting and John G. Wilson. The complaint alleges that oh the 16th of May, 1914, an action was commenced by the defendant Wilson against the plaintiff on a certain promissory note alleged to have been executed and delivered by the plaintiff to the defendant Elting, dated July 8, 1909, by which the plaintiff promised to pay on demand after date to the order of Elting, $5,000; that in said action said Wilson alleges that the note thereafter and before maturity was indorsed by the defendant Elting and delivered to the defendant Wilson for value; that the said note was not negotiated by Elting within a reasonable length of time after its issue on July 8, 1909, but was negotiated by him an unreasonable length of time after its issue. There is then alleged an agreement between Elting and the plaintiff which would be a good defense to the note as against Wilson unless he was a holder in good faith for value before maturity. It is then alleged that the defendant Wilson did not become the holder of the said $5,000 note before it was overdue and without notice that it had been previously dishonored; that he did not take it in good faith, and did not take it for value; that at the time that it was negotiated to him the defendant Wilson had notice of any and all infirmities in the said $5,000 note and of the defect in the title of the said Elting when he negotiated it; that at all the times hereinbefore mentioned the said defendant Wilson had notice, knowledge and information of all the facts alleged, and they were sufficient to put him upon his inquiry as to the making and delivery of the note before he received the same and of its payment and extinguishment, and Wilson did not at any time demand payment of the note before the 16th of May, 1914, when he commenced his action against this plaintiff on the said $5,000 note; that by reason of the action by Wilson against the plaintiff for the recovery of the said $5,000 plaintiff has been damaged in the sum of $10,000, and that the plaintiff will be irreparably damaged unless the defendants and each of them be restrained and enjoined from the prosecution of the action brought by Wilson; wherefore the plaintiff demands judgment that the $5,000 note made and delivered by this plaintiff to the defendant Elting and indorsed by him and delivered to the defendant Wilson be surrendered and delivered up. He then asked that Elting specifically perform an agreement between himself and the plaintiff; wants to recover -$10,000 against them both; that Wilson be restrained and venjoined from prosecuting any and all actions at law to enforce .the payment of said $5,000 note, and that Elting be restrained and enjoined from negotiating all other notes of this plaintiff ‘which have come into his possession or under his control. The question is whether this complaint states a cause of action against Wilson. Now it is not alleged that Wilson has endeavored to enforce any of the notes of the plaintiff except the note for $5,000, and it is apparent on its face that the facts alleged in the complaint as stating a cause of action constitute a perfect defense to the action on the note, which could be interposed in the action by Wilson to enforce it. When this action was commenced the note in question was long past due and the Statute of Limitations was about to run against it as to any new action upon it or any other notes of similar date held by Wilson. Plaintiff could have set up as a defense in the Wilson action any defense, legal or equitable, that he had, and the facts alleged in the complaint in this action would have been an adequate defense to the Wilson action. The note being so long past due, Wilson could not have transferred the note to a bona fide holder for-value, and no equitable relief by way of injunction or otherwise; would have been necessary to protect the plaintiff. It may be that the plaintiff would be entitled to maintain an action against Elting to require him to specifically perform his contract to deliver up the note in suit and other notes that he had in his possession. But Wilson made no contract with the plaintiff, was under no obligation to deliver up this note if he had received it. He was either in a position to enforce the note or he was not. He commenced a proper action to enforce it, and in that action all questions as to the liability of the plaintiff to Wilson could be settled without the necessity of the intervention of a court of equity. There was no justification for restraining the defendant Wilson from enforcing his cause of action if he has one against the plaintiff. Ho cases are cited by the respondent which justify such an action, and it does not seem to he sustained by any equitable principle.

The order appealed from must, therefore, be reversed, with ten dollars costs and disbursements, and the demurrer of the defendant Wilson to the complaint sustained, with ten dollars costs.

McLaughlin, Scott and Dowling, JJ., concurred; Laughlin, J., dissented.

Order reversed, with ten dollars costs and disbursements, and demurrer of defendant Wilson sustained, with ten dollars costs.