Case Name: Kohn v. Henderson
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1890-02-12
Citations: 8 N.Y.S. 726
Docket Number: 
Parties: Kohn v. Henderson.
Judges: 
Reporter: West's New York Supplement
Volume: 8
Pages: 726–727

Head Matter:
Kohn v. Henderson.
(Supreme Court, General Term, Second Department.
February 12, 1890.)
Contracts—Interpretation—Execution of Notes.
By agreement between the parties, plaintiff’s firm was to advance a specific amount to defendant for the construction of a railroad, in which both parties were to be jointly interested, and own one-half the charter in consequence of aid mutually rendered. Plaintiff’s firm was to make a further advance for the equipment of 20 miles of road, and, on failure to do so within a specified time, to forfeit all interest in the enterprise on repayment by defendant. Held, that the contract was intended to vest in plaintiff an interest in the undertaking, and that the notes which defendant executed for the two advances were not intended to be paid, but merely to evidence plaintiff’s interest.
Appeal from circuit court, Kings county.
Action by Julius Kohn, as assignee of the firm of J. A. Kohn & Co., against Malcolm Henderson on two promissory notes. The facts are sufficiently stated by Mr. Justice Bartlett, in directing a verdict for defendant, as follows: “I think this is a question of law, and that a verdict should be directed. I think in this case it is my duty to direct a verdict for the defendant. The facts are undisputed, and, considering them all fairly, they show that this plaintiff, or plaintiff’s firm, went into an enterprise for the building of a railroad in Texas; that they undertook to put their money into that enterprise through this defendant; that they took from him these promissory notes, not with any expectation of calling upon him to repay the money personally in case he actually applied it to the purposes which they had in view,—that is, the obtaining of the charter for this railroad, and the construction of the road as far as the amount furnished would accomplish those ends. That view is very strongly borne out by the second contract between the parties, which has been described on this trial as ‘Schedule B.’ That paper recognizes the fact that a corporation has been formed by the name of the ‘ Gulf & Pacific Bailway Company,’ for the purpose of constructing this railway; and recites that J. A. Kohn & Company have advanced $12,874 for the purpose of this railway, the amount of one of these notes, and that they have taken one of Mr. Henderson’s notes, and that it is agreed between the parties, in consequence of aid mutually rendered, that -both parties should be jointly interested and own one-half of the charter. If the agreement stopped there, it would be a conveyance to Henderson of a half interest, release him from any obligation to pay that sum, and make each party a half owner. But it does not end there. It states a further condition, to the effect that Kobn & Co. will raise or furnish enough capital to build and equip twenty miles of road; and, in case they do not do so in a specified time, upon repayment by Henderson the interest of said J. A. Kohn & Co. shall thereupon cease and determine. I think this whole agreement shaw's that both parties considered —certainly Kohn considered—that they had some interest in this railroad enterprise. That tends to support the view I take that they then regarded themselves as interested in the undertaking, and it showed that the note was practically a memorandum held by them of the amount put in by them into the enterprise of Henderson. The second note appears to represent funds which, according to Mr. Henderson, w'ere put in to get the building and equipment of this twenty miles of road referred to in the contract. If so, there w'as no obligation to repay it on Henderson’s part, because it was devoted to the purpose to which J. A. Kohn & Co. intended it should be devoted by this contract. It seems to me, under all the circumstances, that the defendant is entitled to a verdict, and I therefore direct the jury to-so find.” From the judgment entered in accordance with such opinion plaintiff now appeals.
Argued before Barnard, P. J., and Pratt and Dykman, JJ.
Rice & Bijur, (Nathan Bijur, of counsel,) for appellant. Moore & Moore, for respondent.

Opinion:
Dykhan, J.
This is an action on two promissory notes, and the defense is that they never were commercial paper, and were executed by the defendant merely as vouchers for money advanced by the plaintiff and his associates, to be disbursed by the defendant for the promotion of a railroad enterprise in which all the parties were interested, and that there never was any intention or expectation that the notes would be paid. The testimony produced on the trial, and the circumstances surrounding the transaction, support the theory of the defendant, and the trial judge directed a verdict in his favor. We concur in the views expressed by the trial judge in his assignment of his reasons for directing a verdict for the defendant, and we find no necessity for any extended remarks at this time. The judgment should be affirmed, with costs.