Court Opinion

ID: 3593020
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:41:08.49565+00
Date Added: 2024-06-11T09:35:49.221044
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 85 
The complaint is defective, in not stating to whom the promissory note mentioned in it was made payable. It is not merely the want of a sufficiently definite statement, the remedy for which is by motion under § 160 of the Code, but it is an attempt to set out the substance of a promissory note, omitting all notice of the payee, and not mentioning whether it had that essential feature or *Page 86 
not. If the complaint had been demurred to, we should have been obliged to give judgment for the defendant. It remains to be seen whether the defendant has not himself supplied this defect. He states that he and the other defendant, who has not answered, were indebted to the Canal Bank before its failure, in an amount exceeding the amount of the note referred to in the complaint; that the bank stopped payment, and its effects, including the demand against the defendants, passed into the hands of a receiver, duly appointed according to law; whereupon the defendants made the promissory note mentioned in the complaint, and caused it to be transferred and delivered to the said receiver, in payment of the prior indebtedness of the defendants to the bank before mentioned. By thus answering, I think the defendant has waived the defect in the complaint, consisting of the imperfect description of the note. He admits the paper to which the complaint has reference, to be a promissory note, capable of being transferred and delivered as an evidence of indebtedness, and objects only that the plaintiff has shown no title to it.
The answer is apparently founded upon the principle, that where a receiver would make title in pleading, to a chose in action, or other property which had belonged to the corporation which he represents, he must set out the facts showing his appointment. In such a case it will not answer merely to describe himself as receiver, or, even under the former system, to aver that he was duly appointed. (Gillet v. Fairchild, 4 Denio, 80.) He must set out the proceeding, so that the court may see that the appointment was legal. In such a case, the appointment of the receiver is a part of the plaintiff's title. It is like the granting of administration or of letters testamentary in a suit by executors or administrators; unless the fact is stated, the plaintiff does not show any right to sue. The judgment of the supreme court proceeds upon the ground, that the complaint is to be understood as setting out a cause of action in the plaintiff's individual right, on *Page 87 
account of there being no sufficient averment that he had been appointed receiver, the addition prefixed to the plaintiff's name in the title of the complaint being treated as descriptiopersonæ and the reply, it is said, sets up a title in the plaintiff as receiver of the Canal Bank, and admits that individually he had no cause of action. If this were so it would be a manifest departure, which, under the former rules of pleading, and probably under the present Code, would be a fatal defect. But I think this is a mistaken view of the case. The promissory note declared on, according to the answer, never belonged to the Canal Bank. It was given after the bank had failed and after its effects were vested in the receiver. It was therefore unnecessary for the plaintiff to set up a derivative title under the bank. The answer states that the defendants made the note and caused it to be transferred and delivered to the receiver. It must therefore have been such an instrument as was capable of being transferred; in other words, it must have been a negotiable promissory note. The averment shows that the receiver was the holder of the note; being such holder, he was under no necessity of setting out a title under the proceeding to appoint a receiver. He made title to it by the transfer of it to himself by the payee. The proceeding by which a receiver was appointed, and the transfer of the effects of the corporation under that proceeding, constituted no part of his title to the note. It follows that the reply was not a departure; it sustains instead of departing from the complaint. It shows that upon the facts stated in the answer, with the additional fact brought out in the reply, the plaintiff is, as he had stated in his complaint, the person who is the holder of the promissory note in question, not by force of his appointment of receiver, operating as an assignment of the choses in action of the banking corporation, but by the transfer of the note to him according to the statement of the answer. It may be that under the Code, it was necessary to describe himself as receiver; and *Page 88 
this he has done. The objection made by the defendant is that he should have shown the proceedings at large, to enable the court to judge whether he had really acquired title; but inasmuch as the form of the contract shows him to be the holder, it was unnecessary to go further. The pleadings are all in harmony with each other. The answer was entirely insufficient, for the want of an averment that the receiver, whose appointment it set forth, was another and different person from the plaintiff in the suit. The reply, by averring that the receiver mentioned in the answer and the plaintiff in the suit were identical, avoids the defence which the answer, if sufficient, would have interposed, and supports the complaint by showing that the plaintiff was well entitled to sue, in the manner he has done for the benefit of the trust, upon this promissory note.
The judgment of the supreme court should be reversed, and judgment should be rendered for the plaintiff on the demurrer; the record to be remitted, with directions to that court to proceed upon the issue of fact joined upon the general denial contained in that part of the defendant's answer which precedes the special defence set up therein.