Case Name: TRADESMEN'S NAT. BANK v. CURTIS et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1899-03-17
Citations: 57 N.Y.S. 121
Docket Number: 
Parties: TRADESMEN’S NAT. BANK v. CURTIS et al.
Judges: 
Reporter: West's New York Supplement
Volume: 57
Pages: 121–125

Head Matter:
(38 App. Div. 240.)
TRADESMEN’S NAT. BANK v. CURTIS et al.
(Supreme Court, Appellate Division, First Department.
March 17, 1899.)
Drafts—Conditions—Discounting.
Evidence that, at an interview at the office of a coal company, at which was discussed the acceptance by defendants of a draft drawn by said company, there being present T., the president of the company, B., one of the company, and W., a director of the company, who was also cashier of plaintiff bank, which afterwards discounted the draft, W., on reluctance being expressed by B. to give the acceptance, said that it would be all right, that they would discount the paper, and T. said that, if coal to the amount of the draft was not delivered defendants, the acceptance would be taken up by the company or bank, shows that the acceptance was discounted, not only with knowledge by plaintiff that it was made on the conditional agreement, but also with the understanding of the cashier that plaintiff would not enforce the paper against defendants if the company did not deliver the coal, whereby such agreement would be binding on plaintiff.
Ingraham and McLaughlin, JJ., dissenting.
Appeal from trial term, New York county.
Action by the Tradesmen’s National Bank against Grove D. Curtis and another. From a judgment on a verdict for defendants, and from an order denying a new trial, plaintiff appeals.
Affirmed.
Argued before VAN BRUNT, P. J., and McLAUGHLIN, PATTERSON, O’BRIEN, and INGRAHAM, JJ.
Arthur J. Baldwin, for appellant.
Rufus L. Scott, for respondents.

Opinion:
PATTERSON, J.
The defendants are sued as the acceptors of two drafts drawn upon them by the Natalie Anthracite Coal Company. Those drafts were payable to the drawer's order, were accepted by the defendants, and were discounted by the plaintiff. The answer set up the affirmative defense that the acceptances were, by agreement with the drawer, conditioned upon the delivery by the drawer of coal to the full amount of both drafts; that such drafts were to be paid by the acceptors only after the delivery to them of such coal; that the coal never was delivered, and that, therefore, the acceptances were without consideration; that all of the facts mentioned, constituting the affirmative defense, were within the knowledge of the plaintiff; and that, having taken such acceptances with that knowledge, the plaintiff is not a bona fide holder, but took the drafts subject to the equities existing between the acceptors and the drawer. Upon the trial, testimony was given of the circumstances under which the drafts were drawn and accepted, and further evidence was introduced to show knowledge of the plaintiff's cashier of the conditions under which it is alleged the acceptances were given, and actual participation was shown of such cashier in the negotiations as the result of which the acceptances were made by the defendants. Upon conflicting testimony, the jury found a verdict in favor of the defendants, and from the judgment entered upon that verdict, and from an order denying a motion for a new trial, the plaintiff appeals.
It would be no defense to these acceptances that they were given upon an executory contract for the sale of merchandise, even if the plaintiff knew that an agreement existed between the makers and the acceptors that the drafts were not to be enforced until the merchandise was delivered, unless the acceptances were discounted with knowledge of the breach. Davis v. McCready, 17 N. Y. 230. But, under the proofs, that is not the rule of law applicable to this case. The evidence introduced by the defendants showed that the plaintiff's cashier was present at the time the defendants agreed to accept the drafts, and that the whole subject of the acceptances, and the conditional liability of the defendants thereupon, was discussed at an interview in which a Mr. Taylor, the president of the Natalie Goal Company, Mr. Blaisdell, one of the acceptors, and Mr. Wardrop, the plaintiff's cashier, took part. Blaisdell testified that there was produced at that interview a memorandum showing the state of an account between the Natalie Coal Company and the acceptors; that he was reluctant to give the acceptances; that Wardrop took the memorandum in his hand, and finally he (Wardrop) said it would be all right; that they would discount the paper,—the acceptance. The witness then testified that Mr. Taylor added, "If the coal is not delivered, the acceptances will be taken up." He was then asked, "By whom?" to which he answered, "By the Natalie Coal Company or the Tradesmen's National Bank." This testimony goes to the establishment of the fact that, in the very inception of these acceptances, it was in contemplation that they should be discounted by the Tradesmen's National Bank; and that the cashier of that bank was a party to the agreement by which the defendants gave their acceptances, not to be enforceable unless the Natalie Coal Company delivered coal to the full amount of such acceptances, and no coal was delivered.
It was for the jury to say whether they would believe that testimony, and, as they did believe it, their finding establishes that the acceptances were discounted, not only with full knowledge by the plaintiff that they were made on the conditional agreement, but also with the understanding of the plaintiff's cashier that the bank would not enforce the paper against the acceptors if the makers did not deliver the coal. The cashier was willing to take the paper on that condition, as the jury must have foúnd. The case, therefore, Sails within Bank v. Colwell, 57 Hun, 169, 10 N. Y. Supp. 864, Benton v. Martin, 52 N. Y. 570, and Higgins v. Ridgway, 153 N. Y. 132, 47 N. E. 32, which hold that ah instrument not under seal may be delivered upon conditions, the observance of which, as between the parties, is essential to its validity; that the operation of the instrument may be limited by the conditions upon which the delivery was made; that parol evidence of such conditions is not open to the objection of varying or contradicting a written contract; and that the rale applies to the enforcement of negotiable paper, not only as between the original parties, but as to others having notice.
The judgment and order appealed from should be affirmed, with costs. All concur, except INGRAHAM and McLATJGHLIN, JJ., dissenting.