Court Opinion

ID: 3577810
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:29:36.503648+00
Date Added: 2024-06-11T13:43:20.836349
License: Public Domain

This action was brought to recover the amount of four promissory notes, made by the defendant and payable to the order of the plaintiff. The answer herein admitted the making of the notes set forth in the complaint, and that they were due and unpaid. It then alleged, for a first defense, that, on November 15th, 1892, the defendant duly tendered to the plaintiff the sum of $37,500, the amount of the promissory notes, with interest and costs, upon condition that the plaintiff should surrender to the defendant certain securities deposited with him by the defendant as collateral to the notes; that the plaintiff declined to accept the tender, and refused to deliver the securities, and that the defendant was, and always has been, ready to pay the notes on the delivery of such securities.
For a second defense and by way of counterclaim, it was alleged in the answer that, at the time of the execution of the notes in question, the defendant deposited with the plaintiff, as security therefor, one hundred and twenty-five of the first mortgage bonds of the Hoffman House Corporation, of the actual and par value of $125,000, and thirty bonds of the United Lines Telegraph Company, of the actual and par value of $30,000; that such bonds were accepted and held by the *Page 585 
plaintiff, as collateral security for the payment of the notes and for no other purpose; that, on the 15th day of November, 1892, the defendant tendered to the plaintiff $37,500, the amount of the notes, with interest and costs, upon the express condition that the plaintiff should surrender to the defendant the one hundred and fifty-five bonds so held by him as collateral security; that the plaintiff declined the tender and refused to deliver over the bonds, and then and there converted the same to his own use; that the bonds were worth the sum of $155,000, and judgment was demanded for the amount thereof, less the amount of the notes, with interest and costs. The plaintiff replied by denying that the one hundred and fifty-five bonds were deposited with him solely as collateral security for the payment of the promissory notes described in the complaint, and alleged that the one hundred and twenty-five Hoffman House bonds had come into his possession prior to August 24th, 1891, on which day the parties entered into a written contract, dated on the 18th day of August, 1891, in which it was, among other things, agreed that, "sixthly, and as security for these guarantees, for a loan of about thirty-two thousand dollars and for any obligation of said Edward S. Stokes to said William E.D. Stokes, connected with said Read, and against any foreclosure of the said mortgage, said Edward S. Stokes has deposited with William E.D. Stokes bonds of said Hoffman House to the par value of $150,000."
At that time one hundred and twenty-five thousand dollars of the Hoffman House bonds had been deposited with William E.D. Stokes, leaving twenty-five thousand dollars par value of said bonds to be thereafter deposited.
In a former action between the same parties, W.E.D. Stokes demanded judgment that Edward S. Stokes specifically perform the contract of August 18th, 1891, by depositing with him twenty-five thousand dollars, par value of the Hoffman House Corporation bonds, in addition to that which had been theretofore deposited as collateral security for the obligations undertaken under the provisions of the contract, in which action it was found, as a fact, that, prior to the 18th of August, *Page 586 
1891, the defendant was indebted to the plaintiff upon four promissory notes, aggregating thirty-two thousand dollars, and that he was also indirectly liable to the plaintiff upon a note for $10,000, made by one Cassius H. Read and indorsed by the defendant, and on another note for $15,000, made by Cassius H. Read, and guaranteed by the defendant. The judgment roll in that action was introduced in evidence upon the trial of this action. At the close of the evidence the court directed a verdict in favor of the plaintiff for $39,445.68.
The allegations of the complaint having been admitted in the answer, the only issue tendered by the pleadings was as to whether the bonds were held as collateral security for any other purpose than the payment of the notes in suit. Upon this issue the defendant demanded, and was given, the affirmative. It is now said he was not bound to prove a negative. But there was no other issue, and on that he had demanded the affirmative. The duty then devolved upon him of establishing his defense or counterclaim. The tender having been made by him upon the condition that the plaintiff should surrender the bonds, the burden rested upon the defendant of showing that the bonds were held as collateral security for the payment of the notes in suit, and for no other purpose.
In the case of Lamb v. Camden  Amboy R.R.  T. Co. (46 N.Y. 271, 279) GROVER, J., in delivering the opinion of the court, said: "It sometimes occurs, in the progress of a trial, that a party holding the affirmative of the issue, and consequently bound to prove it, introduces evidence, which uncontradicted, proves the fact alleged by him. It has, in such cases, frequently been said, that the burden of proof was changed to the other side; but it was never intended thereby that the party bound to prove the fact was relieved from this; and that the other party, to entitle him to a verdict, was required to satisfy the jury that the fact was not as alleged by his adversary. In such cases, the party holding the affirmative is still bound to satisfy the jury, affirmatively, of the truth of the fact alleged by him, or he is not entitled to a verdict." (See, also, Heilman v. Lazarus, 90 N.Y. 672; Claflin *Page 587 
v. Meyer, 75 N.Y. 260, 263; Farmers' Loan and Trust Co. v.Siefke, 144 N.Y. 354, 359; Whitlatch v. Fidelity andCasualty Co., 149 N.Y. 45.)
The defendant took the stand in his own behalf and testified that "when the first three notes were given, I deposited with plaintiff, as collateral thereto, one hundred thousand dollars of the Hoffman House Corporation bonds and thirty thousand dollars of the United Lines Telegraph bonds." He also testified that when he gave the other note, or some time between May and August, he deposited with the plaintiff twenty-five thousand dollars of the Hoffman House bonds, in addition to those he had before deposited, so that the plaintiff had one hundred and twenty-five thousand dollars of the Hoffman House bonds and thirty thousand dollars of the United Lines Telegrah bonds as against these loans. It will here be observed that the defendant has neglected to state that the bonds were not deposited for other purposes as well as for the loans made.
The next bit of evidence introduced was the contract between the plaintiff and the defendant, dated the 18th day of August, 1891. The defendant was then asked the following question by his own counsel: "Were those one hundred and twenty-five thousand dollars worth of bonds deposited by you with the plaintiff as collateral for any other debt, or for any other purpose, than for those notes and whatever is stated in this agreement?" The witness answered: "I would like to premise my answer somewhat by explaining. Those bonds were deposited, as I previously stated, previous to the agreement of August 18th, 1891." His counsel then repeated the question and he answered: "I allowed them to remain with the plaintiff for that purpose, and for no other purpose." The purpose specified in the question was for the notes in suit and "whatever is stated in the agreement." Upon referring to the agreement we find that the bonds were held as security, not only for the payment of the notes, but for any obligation of Edward S. Stokes to W.E.D. Stokes, connected with Read and as against any foreclosure of the mortgage. As we have *Page 588 
already seen, the defendant was liable to the plaintiff upon two notes, made by Cassius H. Read, amounting to twenty-five thousand dollars, which had been indorsed or guaranteed by the defendant. This is all the evidence given upon the subject.
We think the defendant failed to show that the bonds were held by the plaintiff as collateral for the payment of the notes, andfor no other purpose, and that he consequently failed to establish his defense or counterclaim.
It was contended upon the argument that the determination of the former action should control the disposition of this case. In that case, as we have seen, specific performance of the contract was sought, which required Edward S. Stokes to deliver to William E.D. Stokes an additional $25,000 par value of the Hoffman House bonds as further collateral security for the obligations mentioned in the contract. In that case it appeared that one of the chief objects which the parties sought to accomplish was the purchase of the Read stock, so that the parties, William and Edward, could together be the owners of the whole stock of the Hoffman House Corporation, and as such owners could operate the Hoffman House as a hotel. After the contract had been executed it was found that the Read stock could not be purchased, and consequently the main purpose and consideration of the contract failed. It was under these circumstances that we refused to compel specific performance. (Stokes v. Stokes, 148 N.Y. 708. ) It is possible that, owing to the failure of the principal part of the consideration of the contract, it should be held to be abrogated as a whole, a question which we do not now determine; but if we should so treat the contract, it would not affect the question under consideration in this case, or relieve the defendant of the burden assumed by him when he attempted to prove his defense or counterclaim. The loans made upon the notes in suit and the obligations of the defendant to the plaintiff, incurred by indorsing the Read notes and the deposit of the Hoffman House bonds as collateral, all took place before the agreement was made. This the defendant *Page 589 
concedes in his testimony, and the only question with reference thereto is as to whether the bonds were deposited with the plaintiff as collateral security for the defendant's liability upon the Read notes, or as collateral to the notes in suit alone. In determining this question the affirmative was with the defendant. As we have seen, he has failed to show that the bonds were delivered to the plaintiff as collateral security for the payment of the notes in suit, and for no other purpose. The trial court, therefore, properly directed a verdict against him for the amount conceded to be due upon the notes.
The judgment should be affirmed, with costs.