Case ID: misc_71/html/0261-01.html
Source: Caselaw Access Project
Author: {"author": "Green, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The German Exchange Bank, Plaintiff, v. Marcus Schnitzer, Defendant.
    (City Court of the City of New York, Trial Term,
    March, 1911.)
    Consideration — Right to inquire into consideration and evidence — In general.
    Evidence — Parol evidence — Collateral and independent agreements and instruments — Prior or contemporaneous agreements or instruments.
    In an action upon a promissory note, made hy defendant to his own order and indorsed to the plaintiff bank, which note was given for a debt to the bank which had been released by the maker’s discharge in bankruptcy, it is a good defense that the note was given with a conditional agreement that no suit should be brought thereon for the principal and that defendant was to pay only if he were able to do so.
    Action upon two promissory notes.
    Steiner & Petersen, for plaintiff.
    J. Fred Alsgood, for defendant.
   Green, J.

This is an action tried before the court without a jury, and at the close of the case both parties moved for a direction of a verdict, which motion is now before the court. The action was brought upon two promissory notes made by the defendant to the order of himself, indorsed by him and delivered to the plaintiff bank, which now sues thereon. The defendant admits the making of the notes in question, but defends upon the ground that he was duly discharged in bankruptcy from the debt in question; that after his discharge, in order to show his good faith to the bank, with which institution he had been doing business for many years, lie went to the president and agreed to give him the notes in question, with the understanding that he would pay the interest thereon as it came due, but with the further agreement that he was not to be sued on the notes if he was unable to meet them, but that he was to pay the principal only, if he were able to do so, and the payment to be made in his discretion. In other words, the defendant claims he gave the notes with the conditional agreement that no suit would be brought thereon for the- principal, ■ and that he was to pay only- if he were able to do so. The plaintiff did not rebut this evidence, and I am satisfied that defendant’s statement is true, so that the only question, is whether the condition upon which the notes were given is valid and binding in law. I have examined the voluminous brief of both counsel and the various points raised therein and have arrived at the conclusion that this case should be disposed of upon the broad ground set forth hereinbefore as the contention of defendant.

When this debt was discharged in bankruptcy defendant- was relieved in law of all obligation. resting upon him to pay the original debt, so that when he made the two notes in suit he had the right to couple with the liability ensuing thereon any agreement or condition which he saw fit to make. He made the condition to which plaintiffs officer, the president of the bank, assented, and the bank took the notes subject to that condition. The ease of Persons v. Hawkins, 41 App. Div. 171, seems to be decisive of this question, and in that case it was the maker who made the condition and he was relieved from liability. Of course the rule only applies as between the original parties or those having knowledge of the transaction. This principle has been followed in other cases. See Williams v. First Hat. Bank, 45 App. Div. 240; Utica City Nat. Bank v. Tallman, 63 id. 484. In view of the law applicable to the case at bar upon the point suggested it is unnecessary to pass upon the other questions- raised. I am of the opinion that the defense interposed is good in law and that defendant has sustained it by satisfactory evidence. I, therefore, direct judgment in favor of the defendant, and the same may be entered accordingly.

Judgment for defendant.