Tradesmen's National Bank v. Curtis

Ingraham, J. (dissenting) :

I cannot concur in the affirmance of this judgment. The evidence in the case is uncontradicted that the bill sued on was accepted by"the defendants for the accommodation of the drawer, the Natalie Anthracite Coal Company.. It appeared that, at the time the bills in suit were drawn and accepted, the defendants and the corporation had entered into a contract by which the corporation was to deliver to the defendants anthracite coal at an agreed price, and these bills were accepted by the defendants for coal to be delivered under this contract, the corporation agreeing that, if the coal was not delivered, the acceptances would be renewed. One of the defendants, testifying as to the arrangements under which these particular drafts in suit were accepted, said that he-objected to accepting by asking,. “ Why is it necessary forme to give drafts to the Natalie Goal Company, when I oan buy coal, all I want, on 60 days’ time, without giving any paper?” To that the president of the corporation replied : “ This was an accommodation to them. That is what Tay*244lor told me at that time; it was a great accommodation to them.” The witness further testified that nothing was said about the acceptances being discounted, or what the corporation would do with them. He simply knew that the corporation had had acceptances of the same kind that had been given before and discounted. .Mr. Taylor, the president of the corporation, testified that at this meeting he had stated to the defendants, before the notes were given, that if the corporation did not deliver the coal before the bills fell due it would renew the bills; that all that was said was that if tlie coal was not delivered prior to thé notes falling due the notes would have to be renewed until the coal was delivered; that previous to these transactions the plaintiff had discounted other paper on the same terms for the defendants. It is not disputed by the defendants that these bills were accepted at the request and for the accommodation of the coal company with the expectation that they were to be discounted for the benefit of the coal.company. The testimony of the defendant, that the Natalie Coal Company or the Tradesmen’s National Bank was to take care of those bills if coal was not delivered, was evidently the conclusion of the witness and not an agreement of any one on behalf of the Tradesmen’s National Bank that plaintiff was to take care of the notes, for the witness further testified that he had no knowledge as to what disposition should be made of the bills after they were accepted, and merely assumed that they were to be discounted in the same way that other bills had been discounted by the corporation. It is not alleged that the bank made any agreement at this time either to discount the bills or to renew them after they were discounted. The meeting at which this conversation was held was at the office of the coal company, and was between the defendants and the coal company’s representative. The cashier of the plaintiff was present at that meeting, not as cashier of the bank, but as a director of the coal company. The bills were not then discounted by the bank, nor was there any agreement for such discount. There was here merely an understanding between the drawer of the bills and the acceptor, not that there ' should be a conditional delivery of the bills, or that the bills should not be existing obligations unless some act was done by some of the parties subsequent to the delivery, but that the defendants accepted the bills for the accommodation of the coal company, relying on its *245agreement that, if the coal to be delivered under - the contract between the parties was not delivered at the time the bills became due, the coal company would see that the bills were renewed. After these bills had been accepted by the- defendants, they were sent to the plaintiff with other paper for discpunt, the first of the bills being sent on March 20, 1897, with the following letter for the president of the coal company: I enclose in this letter for discount the following pieces of business paper: * * * Acceptance of Curtis & Blaisdell, Mar. 20, four months, $3,000.00; ” and the second was sent on April 12, 1897* in the following letter: “ Enclosed please find for discount: Acceptance of Curtis & Blaisdell, dated April 12, at three months, for $2,500.” Upon these statements, by the drawers of the bill, the bank discounted them in the ordinary course of business, paying the drawer (the corporation) the amount of the bills, less the discount. There was here no conditional delivery or acceptance of these bills by the defendants, but the acceptance of the bills by the defendants was for the accommodation of the drawer, and relying upon the agreement of the drawer that the bills should be renewed in case the drawer failed to deliver the coal before the- bills became due. It seems to me that the case comes within the principle established in the case of Grocers’ Bank v. Penfield (69 N. Y. 502, 504), where the court say : It is universally conceded that the holder of an accommodation note, without restriction as to the mode of using it, may transfer it either in payment or as collateral security for an antecedent debt, and the maker will have no defence. * * * The existing debt is a sufficient consideration for the transfer, and no new consideration need be shown. It is only where the note has been diverted from the purpose for which it was entrusted to the payee, or some other equity exists in favor of the maker, that it is necessary that the holder should have parted with value on the faith of the-note in order to cut off such equity of the maker.” And in Continental Nat. Bank v. Townsend (87 N. Y. 9) the same principle is applied. The principle applied in Garfield Nat. Bank v. Colwell (57 Hun, 169) and Higgins v. Ridgway (153 N. Y. 130, 133) is not applicable. Higgins v. Ridgway discusses the question. The court says: “ The question here arises whether the transaction, as testified to by the defendant,- constituted a conditional delivery of the note so as to fall within the principle *246of the foregoing cases, or whether the defendant’s testimony was an attempt to vary or contradict the written contract between the parties, and, consequently,, inadmissible. We think the import of the defendant’s evidence is that the delivery of the note in suit, as well as the note it was given to renew, .was conditional, and was for the accommodation and to serve some particular purpose of the bank. Therefore, as there was no consideration for the note, and as the bank could not be regarded as a bona fide holder, we are of the opinion that the plaintiff’s exceptions to the refusal of the court to direct a verdict for the plaintiff, and to the charge of the court, were invalid.” There is certainly not the slightest evidence in this case to show that there was any conditional delivery of these bills. to the plaintiff bank. It is not claimed that the bills were given for the accommodation of the plaintiff, or that it was a party to any agreement which would restrict the liability of the acceptor of the bills upon the acceptance. The contract of agreement for the renewal of the bills was made with the drawer and not with the bank. From the evidence of the defendants I think it clear that the attempt was to vary or contradict the written instrument and not to show a conditional delivery of the bills. It is not necessary to determine whether or not the bank had notice that there was an agreement between the maker and acceptor of the bills to renew if the coal was not delivered. The cashier of the bank, which is located in the State of Pennsylvania, was present at the" office- of the coal company, in the city of New York, on the business of the coal company, and as a director of that corporation. There is no evidence to show that he had any authority to make a contract for the discount of these bills away from the banking house, and when not, engaged in its business, or that he did assume to make such a contract. The letters to the bank inclosing the bills for discount show. that the bills were sent to the bank in the ordinary course of business, as business paper, to be discounted by the bank for the benefit of the drawer of the bill, the defendants expressly testifying that nothing was said at the time the bills were given as to what disposition the company should make of them. That notice, thus acquired by the cashier, away from the bank and not engaged in any business for the bank, but acting as the director of another corporation, was notice to the bank of the agreement by which, upon *247a-subsequent discount of the bills, it failed to become a Iona fide holder for value, may well be doubted. But assuming that the bank had notice of this agreement between the coal company and the defendants that the coal company had agreed to renew the bills if the coal was not delivered, it certainly would not prevent the bank from recovering on the acceptances by which the defendant had agreed to pay sums of money at a time fixed. These contracts by the defendants were in writing. They agreed to pay to the plaintiff a sum of money at a time fixed. This.agreement could not be invalidated by proof that there was a prior parol agreement by which the defendants were not to pay the sum that by the written contract they had agreed to pay. The plaintiff, by the discount of the bills, had become the owner of them, and unless this rule is to be entirely abrogated so that any one who makes a note or accepts a bill can avoid paying it by proof that although he, in writing, promised to pay, he at the same' time said he would not pay, the plaintiff is entitled to recover.

McLaughlin J., concurred.

Judgment and order affirmed, with costs.