Case Name: GREENWICH BANK OF CITY OF NEW YORK v. OPPENHEIM
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-07-13
Citations: 118 N.Y.S. 297
Docket Number: 
Parties: GREENWICH BANK OF CITY OF NEW YORK v. OPPENHEIM.
Judges: 
Reporter: West's New York Supplement
Volume: 118
Pages: 297–302

Head Matter:
(133 App. Div. 586.)
GREENWICH BANK OF CITY OF NEW YORK v. OPPENHEIM.
(Supreme Court, Appellate Division, First Department.
July 13, 1909.)
1. Frauds, Statute of (§ 23 )—Promise to Answer for Debt of Another.
A contract to indorse a note of one, provided that another will discount it, is not an original, but a collateral, promise to answer for the debt of another, which must be in writing under the statute of frauds.
[Bd. Note.—For other cases, see Frauds, Statute of, Cent. Dig. § 18; Dec. Dig. § 23. ]
2. Frauds, Statute of (§ 103 )—Sufficiency of Memorandum.
A cablegram to a bank lending money on notes, as follows: “Will indorse ten thousand”—was not alone a sufficient memorandum within the statute of frauds to bind the sender as an indorser of the notes.
[Ed. Note.—For other cases, see Frauds, Statute of, Cent. Dig. § 199; Dec. Dig. § 103. ]
3. Frauds, Statute of (§ 118 )—Sufficiency of Writing.
A member of a firm, desiring to borrow money at a bank, wrote O. in Europe that the firm needed money, and asked him to agree to indorse the firm’s notes for $10,000, in addition to a $5,000 note which he had already indorsed, and which was shortly to become due, stating that all that was necessary to obtain the money was that O. should cable the bank that he would indorse to the amount of $15,000. O. cabled the bank: “Will indorse ten thousand.” Held, that as the letter did not purport to-be from the bank or written at its request, and the cablegram did not on its face refer to the letter nor purport to be an answer to it, nor accept any proposition contained in it, and was addressed directly to the bank, and not to the writer of the letter, the cablegram and letter taken together were not sufficient to constitute a contract in writing between the bank and O. to guaranty payment of the $10,000 lent the firm by the bank.
[Ed. Note.—For other cases, see Frauds, Statute of, Dec. Dig. §118. ]
4. Contracts (§ 24 )—Acceptance Varying from Offer.
Even if the letter and cablegram could be considered together as effecting a relation between the bank and O., they did not constitute a con tract, since, assuming that the bank knew of the letter, it requested O. to agree to indorse notes to the extent of $15,000, including the $5,000 note already indorsed, and asked that he cable the bank that he would indorse to the amount of $15,000, while O. failed to comply with the proposition contained therein, but agreed to indorse to the amount of $10,000, which ■was a counter proposition, and did not constitute a contract, in the absence of an acceptance thereof by the bank.
[Ed. Note.—For other cases, see Contracts, Cent. Dig. §§ 100-103; Dec. Dig. § 24. ]
5. Contracts (§ 27 )—Acceptance—Sufficiency.
There being no contract between O. and the bank by which O. was to indorse any notes or become liable for the firm’s debts except on the note that he had already indorsed, the discount by the bank of other of the firm notes without notice to O. was not an acceptance of O.’s proposition.
[Ed. Note.—For other cases, see Contracts, Dec. Dig. § 27. ]
Appeal from Special Term, New York County.
Action by the Greénwich Bank of the City of New York against Albert D. Oppenheim. Judgment for plaintiff, and defendant appeals.
Reversed, and new trial ordered.
Argued before INGRAHAM, CLARICE. HOUGHTON, Mc-LAUGHLIN, and SCOTT, JJ.
Benjamin N. Cardozo, for appellant.
Charles A. Decker, for respondent.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes

Opinion:
INGRAHAM, J.
The defendant's son was a member of the firm of H. J. Hearn & Co. engaged in the dry goods business. On April 30, 1907, the defendant had indorsed for the accommodation of the firm a note for $5,000, which the plaintiff had discounted. Subsequently the defendant went to Europe, and on the 14th day of June following H. J. Hearn wrote him a letter, explaining the financial difficulties of the firm and the necessity for larger working capital, and that the firm must have at least $10,000 immediately, and reminding the defendant that he had said before he left that he had seen the people at the bank (manifestly referring to the plaintiff), and had stated that they would take care of the firm, and that the bank had refused to discount the firm's paper without the defendant's indorsement, but that with such indorsement the firm could have $15,000, and that all that was necessary to obtain the money for the firm was for the defendant to cable the bank that he would indorse to the amount of $15,000, which was to include the $5,000 already discounted. This letter was received by the defendant at Berlin on the 24th day of June, and he cabled the bank: "Will indorse ten thousand." Thereupon and in reliance upon such cablegram, but without defendant's actual indorsement and without communicating with defendant in any way, the plaintiff on the 26th day of June discounted the firm's note for $5,000, and on the 15th day of July following discounted another note of the firm for $5,000. On July 30th the note dated April 30th, which the defendant had indorsed, became due, and, without protesting it, the plaintiff accepted in place thereof a new note without defendant's indorsement made by the firm alone. The note of June 26th became due on September 26th, and before defendant returned from Europe, and plaintiff gave notice by mail to the defendant that it had been presented for payment which had been refused, and that plaintiff looked to him as guarantor for payment. On the 2d day of October an involuntary petition in bankruptcy was filed against the firm of H. J. Hearn & Co., and they were thereafter adjudged bankrupt. The defendant refused to indorse either of the notes discounted on receipt of his telegram, and this action is brought for damages for breach of his alleged contract to indorse, being the amount of the notes less about 20 per cent, dividends received in the bankruptcy proceedings. The plaintiff recovered judgment, from which the defendant appeals.
It is conceded that a contract to indorse a note of one, provided another will discount it, is a promise to answer for the debt of another, and therefore within the provisions of the statute of frauds. It was held in Carville v. Crane, 5 Hill, 483, 40 Am. Dec. 364, that such a promise is not an original one, but collateral, and one to answer for the debt of another, and hence must be in writing, and that case has been followed in this state. The cablegram sent by defendant to the plaintiff standing alone is not a sufficient memorandum to satisfy the statute of frauds. The first question is whether the letter written by Hearn to the defendant and the defendant's cable to the bank can be read together so as to make a contract between the parties. The cablegram does not on its face refer to the letter of Hearn to the defendant or purport to be an answer to that letter. It is addressed directly to the plaintiff, and not to Hearn, the writer of the letter. The letter itself does not purport to be from the plaintiff or written at its request, and, to connect the letter and the cablegram together, parol testimony is required; so that parol testimony is essential to make a valid contract. The cablegram on its face accepted no proposition contained in the letter, and I cannot therefore see how a letter from a third party to the defendant, with a cablegram from the defendant to the plaintiff, which on their face have no reference to each other, can be taken to be a contract in writing to indorse Hearn's notes. But, assuming that they can be taken together, I do not think there was any contract that could be enforced. The Hearn letter requested the defendant to agree to indorse notes to the extent of $15,000, including the $5,000 for which he was then an indorser upon a note .which was shortly to become due. The defendant was asked in this letter to cable the plaintiff, "Will indorse to the amount of fifteen thousand dollars"; but the defendant failed to comply with that request. He did cable, "Will indorse ten thousand." There was no evidence that the plaintiff knew that the Hearn letter had been sent to the defendant, or that it had been made acquainted with its terms. But, if wre assume that the bank knew of the letter, it must have known that the plaintiff had refused to accept the proposition contained in it, but had made a counter proposition to indorse for $10,000. Whether the indorsement for $10,000 was to include the $5,000 note upon which the defendant was then liable as indorser is not stated. As the request to indorse for $15,000 was to include the note upon which he was already an indorser, it must be assumed that the defendant declined to be liable for more than $5,000 in addition to the $5,000 for which he was already liable. There was no acceptance of the original proposition, but an offer to indorse for a less sum, which, to make a contract between the plaintiff and the defendant, had to be accepted by the plaintiff. Neither in the letter nor in the cablegram was it stated what the defendant would indorse. The terms of the note or notes which he was to indorse are not stated, nor is the purpose of making the note stated. It seems to me clear that something more was required before there was any actual contract between the plaintiff and the defendant. The defendant, having refused to accept the proposition to indorse for $15,- • 000 including the $5,000 for which he was then liable, made an offer to indorse for $10,000. Before that contract could become binding upon him, an acceptance at least was required, so that he could know that the bank had accepted his offer, and would look to him to indorse the notes which it was about to discount. He may have been willing to make an indorsement for the firm if its total liability would be the $5,000 for which he was already liable with an additional $5,000, but not willing to become responsible if its indebtedness was for more than that amount. He was at least entitled to know that the bank accepted his proposition,- so that he could take necessary steps for his own protection. The discount by the bank of Hearn's notes without notice to the defendant was not an acceptance by the plaintiff of the defendant's proposition, as there was no contract between the plaintiff and the defendant by which the defendant was to indorse any notes or become liable for Hearn's indebtedness except on the note that he had' already indorsed. I do not think, therefore, that there was ever a valid contract between the plaintiff and the defendant by which the defendant agreed to indorse these notes, and for that reason there was no liability.
The judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.
McLAUGHLIN, CLARKE, and SCOTT, JJ., concur.