Court Opinion

ID: 5186296
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:48:55.853485+00
Date Added: 2024-06-11T08:26:45.810207
License: Public Domain

Spring, J. (dissenting):
The statute permitting a confession of judgment requires, among other things, that the statement “must state concisely the facts out of which the debt arose; and must show that the sum confessed therefor is justly due, or to become due.” (Code Civ. Proc. § 1274.)
This statute confers a benefit upon the judgment creditor in that it gives him a preference over the other creditors whose claims are fully as equitable as his own, and for that reason it must be construed with a «reasonable degree of stringency.
The “facts out of which this debt arose” involve a transaction between some one and the bank whereby the bank became vested with the ownership of the note. The confession does not state by whom or when the note was negotiated. If it was delivered over *9to the plaintiff then something was done to invest the transaction with validity. Perhaps the maker may have transferred the note to the plaintiff in the confession. If so, what occurred? Was he paid something and how much? What was the transaction? That constitutes the gist of a valid confession, and no fact whatever is embodied in this one to support a claim against the indorser. If the indorser negotiated the note, was there any consideration for its indorsement or for the transfer, and what was his transaction with the bank at the time it received the note? Was any money whatever paid to the maker or indorser at the time of this transfer ? For aught that appears a culpable deal may be contained in it. The avails of the transfer may have been used to pay a debt of the wife of the maker or indorser at the bank, and the transaction may have occurred on the very day the confession was executed and for the purpose of covering up some iniquity. The other creditors are entitled to know precisely what took place, when the alleged liability arose, so that they may. begin their investigation with knowledge of the facts warranting the judgment from the view point of the parties to the confession. To discount is to abate in advance from the sum paid in a business transaction. “ Duly discounted,” “ duly indorsed,” “ duly negotiated,” “ justly due,” and kindred terms, are conclusions deducible from certain stated facts, and of themselves convey no precise meaning, and each covers a wide range in its compass. Whatever sum the bank deducted, to whomsoever the money for the transfer was paid, or for what purpose, would bring it within the elastic expression “ duly discounted.” However reprehensible the transaction, an indictment for perjury could not be based upon this confession.
In Wood v. Mitchell (117 N. Y. 439), where the confession was more closely within the Code requirements than the present one, the court say : “ The concise statement of facts out of which the indebtedness arose is required, so that any party interested may be able to investigate the matters and thus ascertain whether the confession of judgment was accurate, honest and bona fide. It may also be supposed that it -was the purpose of the Legislature that the statement of facts should be so definite that the affiant would be exposed to punishment for perjury in case of any misstatement.”
*10As was said in Flour City Nat. Bank v. Doty (41 Hun, 76, 79): The statute looks not to the evidence of the demand, but to the facts in which it originated; in other words, to the consideration which sustains the promise.
“ The law requires this to be concisely set forth in the statement which is to form a part of the record, and in this way only does the provision furnish any additional security to creditors against the fraudulent combination of the parties to the judgment.” (See Dunham v. Waterman et al., 17 N. Y. 9; Purdy v. Upton, 10 How. 494.)
The note in this case is a mere incident. The contract upon which the plaintiff relies is that of indorsement supplemented by its title to the note by the transfer. The only statement upon which the confession can rest is, that “ said note was duly discounted at said bank, after having been indorsed by me.”
That is too inadequate a statement of fact to pass muster. However defective the statement, the books of the bank might show an honest transaction, and a valuable consideration for the transfer to it; but that will not sustain the confession. Where the confession is based upon a promissory note, without any supporting fact, the slightest investigation may show the note represents just what it imports ; but the statement does not contain the essential facts, and it will not be upheld, although the transaction itself may be genuine and resting on a good consideration.
The order should be reversed, with costs.
McLennan, J., concurred.
Order affirmed, with ten dollars costs and disbursements.