Case Name: First National Bank of Saratoga Springs, Resp't, v. Edward J. Slattery et al., App'lts
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896-04-14
Citations: 74 N.Y. St. Rep. 791
Docket Number: 
Parties: First National Bank of Saratoga Springs, Resp't, v. Edward J. Slattery et al., App'lts.
Judges: 
Reporter: New York State Reporter
Volume: 74
Pages: 791–793

Head Matter:
First National Bank of Saratoga Springs, Resp't, v. Edward J. Slattery et al., App'lts.
(Supreme Court, Appellate Division, Third Dept.,
Filed April 14, 1896.)
1. Pleading—Motion to strike out.
The court has, in a proper case, power to strike out any affirmative defense, if it clearly appears that it is a false one.
'2. Same—Sham.
But the court cannot strike out a, counterclaim as sham.
3. Same.
The defendant is not at liberty to call facts a “defense” when he serves his answer, and a “counterclaim” when a subsequent emergency or convenience makes the chang’e desirable.
4. Same.
An answer, in an action on a note, which alleges that defendant sold and delivered to the plaintiff certain bonds for which plaintiff is still indebted to defendant, followed bv the statement that plaintiff has not accounted to defendant for their value, will be stricken out as sham.
5. Sale—Deposit.
A deposit of bonds as collateral security is not a sale of them.
<3. Pleading—Corporation—Denting corporate existence.
Where, in an action by a hank, the first paragraph of an answer denies on information and belief that the plaintiff is a banking association by the name set forth in the complaint, and the second paragraph avers, on information and belief, that there is no such corporation as the “First National Bank of Saratoga. Springs,” as. alleged in the complaint, neither of these averments is an affirmative allegation that the plaintiit .s not a corporation and raises no issue over that question.
Appeal from an order striking out a portion of the answer as sham, and directing judgment for plaintiff on the remaining part of the answer as frivolous.
Pratt & Logan (Lewis W. Pratt, of counsel), for appl’ts; Edgar T. Brackett (W. P. Butler, of counsel), for resp’t.

Opinion:
PARKER, P. J.
The Code (section 538) gives the court authority to strike out a sham defense. It may not strike out a counterclaim as sham, for that is not a "defense," within the meaning of that section. Collins v. Swan, 7 Rob. (N Y.) 94; Fettretch v. Mackay, 47 N. Y. 427. Nor can it strike out an answer which consists of a mere denial, for the reasons given in Thompson v. Railway Co., 45 N. Y. 468. But we have no doubt of its authority, in a proper case, to strike out any affirmative defense, if it clearly appears that it is a false one. Bank v. Spencer, 76 N. Y. 156; Robert Gere Bank v. Inman, 51 Hun, 97; 24 St. Rep. 160; Alb. Co. Bank v. Rider, 74 Hun, 349; 56 St. Rep. 391. The special term, therefore, had authority to strike out the defense contained in the fifth paragraph of the answer in this action, unless it is to be considered a "counterclaim." The pleader has not designated it as such. On the contrary, he has called it a "defense." There is a marked distinction recognized in the Code between a defense and a counterclaim. See sections 500 and 507; also, the definition of a "counterclaim" in section 501. See, also, Eettretch v. Mackay, above cited. And, when the pleader designates the facts which he sets forth as a "defense," the court will conclude that he so intended them. He will not be at liberty to call them a "defense" when he serves the answer, and a "counterclaim" when a subsequent emergency or convenience makes the change desirable. Morris v. Chamberlin, 14 N. Y. Supp. 702; Society v. Cuyler, 75 N. Y. 511; Acer v. Hotchkiss, 97 N. Y. 395-408.
The matter stricken out, therefore, must be treated as a defense, and, as such, we have no doubt but that it was a sham one. There are hardly facts enough stated in it to constitute a defense. There is an averment that defendant sold and delivered to plaintiff certain bonds, of the value of $15,000, for which it is still indebted to defendant; but this is followed by the statement that "plaintiff has not accounted to said defendant for the value of said bonds." Why should plaintiff account for their value if it had purchased the bonds? Such an averment is utterly inconsistent with the idea of a sale. There is no averment of a request, or of a price fixed, or of a promise by plaintiff to pay what the bonds were reasonably worth; no facts showing a sale, except what may be inferred from the use of the words "sold and delivered." Certainly, the pleader has not fairly and squarely set forth a contract of sale, and his suggestions of a liability on plaintiff's part to account to him for their value raises the serious question whether a sale was ever made.
It is suggested by the appellants points on this appeal that, "if the bonds were originally delivered to the plaintiff as collateral, such a transaction would constitute a sale and delivery;" and it is quite probable that the pleader had this same idea when he drew this part of his answer. Very clearly, it would be no defense to the action on the note that the plaintiff held bonds as security for its payment; and, just as clearly, a deposit of bonds as collateral security is not a sale of them. In opposition to this, the affidavit of plaintiff's cashier squarely and distinctly states that the bonds were never sold to the plaintiff; that'they were deposited with it as collateral security, for an indebtedness of which the note in suit was part; and that the averment, in the answer, of a sale and delivery of them, is absolutely and wholly false. This statement is in harmony with, and to some extent corroborated by, the averment in the answer that plaintiff has not accounted to defendant for the value of the bonds. The defendant does not specially deny this statement, nor attempt to explain the real transaction concerning the bonds. He makes a new affidavit, to the effect that the statements in his answer are true, and adds nothing more to it. Such a response is altogether unsatisfactory, and leaves no doubt as to the propriety of the action of the special term. Tim defense attempted to be set up was clearly sham and false, and Avas properly stricken out.
The first paragraph of the answer denies, on information and belief, that the plaintiff is a banking association by the name set forth in the complaint. The second paragraph avers, on information and belief, that there is no such corporation as the "First National Bank of Saratoga Springs," as alleged in the complaint. Neither of these is "an affirmative allegation that the plaintiff is not a corporation," and hence they raise no issue over that question. Code, § 1776; Association v. Read, 93 N. Y. 474.
The making and delivering of the note to plaintiff are admitted, and no other allegation in the ausAver raises any issue over any material fact Avhich plaintiff Avould have to prove to establish his claim against the defendant. All of the answer was frivolous, and judgment against defendant Avas properly ordered thereon.
The order of the special term Avas right, and should be affirmed with costs.
Order appealed from affirmed, with costs and disbursements.
All concur.