Ludlow v. Woodward — 117 A.D. 525

Majority

p. 525

Samuel Ludlow, Jr., Respondent, v. Rignal D. Woodward, Appellant.

First Department,

February 8, 1907.

Headnote

Bills and notes—pleading — answer not stating defense.

When it is conceded that a promissory note made by the defendant was indorsed by the payee to a bank for value before maturity, and that the latter was holder in due'course, it is no answer to allege that the transferee of the bank is not a ltona fide owner and holder of the note, and that the note, after maturity and payment, was delivered by the hank for no value, and that the plaintiff is maintaining the action for the benefit of the original payee, and is not the real party in interest.

Such allegations are mere conclusions of law, and the answer does not comply with section 500 of the Code of Civil Procedure, which requires new matter constituting a defense or counterclaim to be stated in ordinary and concise language, without repetition. Allegations of conclusions of law do not fulfill this requirement.

The allegation that the note was transferred to the plaintiff “ after maturity and payment ” does not state facts showing payment.

Nor is the allegation that the transfer was without consideration a defense, for a . holder may transfer negotiable paper without consideration, and the transferee stands in the shoes of the transferrer-.

Patterson, P. J., and Houghton, J., dissented.

Appeal by the .defendant, Rignal D. Woodward, from -an inter- - locutory judgment of the Supreme Court in favor of the plaintiff, entered in ‘the office of the clerk of the county of Hew York on the 9th day of October, 1906, upon the decision of the court, rendered after a trial at the Hew York Special Term, sustaining the plaintiff’s demurrer to the first defense in the amended answer.

p. 526

W. E. Kisselburgh, Jr.,, for the appellant.

David T. Davis, for the respondent.

The defendant has, on two previous occasions, answered the plaintiff’s complaint, and the .plaintiff demurs to-this third effort to set up a defense to the cause of action- alleged in the c'omplaint. The action is brought on a promissory note made by the defendant to the order, of one McCuaig, which note-was indorsed to the Sovereign Bank of Canada for value before maturity. This much is conceded, and the bank thus became the owner in due course of business, and the note was unquestionably a valid obligation in the hands of the bank, regardless of equities between the maker and McCuaig. The answer alleges that the “ defendant is informed and believes that the said Samuel Ludlow, Jr., the plaintiff in the above-entitled action, is not a bo?ia fide owner and lioMfer of said note, the subject of this action; that the said note after maturity and payment was delivered to the plaintiff by the Sovereign Bank of Canada for no value, and that the said plaintiff is -maintaining this action for the benefit of said McCuaig, and is not the real party in interest.”

The allegation that the plaintiff “is nota bona fide owner and holder of said note,” is clearly a conclusion of law not admitted- by the demurrer, and the further allegation “ that the said plaintiff is maintaining this action for the ’benefit of said McCuaig, and is not the real party in interest,”" is subject to the same comment. (Twelfth Ward Bank v. Brooks, 63 App. Div. 220 .) The Code -of Civil Procedure requires (§ 500) that the answer must contain a “ statement of any new matter constituting a defense or counterclaim, in ordinary and concise language without repetition,” and the mere affirmative allegation of conclusions of law does not meet this requirement. And the very vague and indefinite allegation “ that the said note after maturity and payment was delivered to the plaintiff by the Sovereign Bank of Canada for no value,” is not stating new matter- constituting a defense -in that “ ordinary and concise language” which common fairness and good pleading demand. There is no allegation as to who made the payment, or that any one-in fact made a payment, and the fact that the note may have been

p. 527

transferred to.the plaintiff, without consideration, by the bank which had come into possession of the same in due course, is not a defense to this action, in the absence of some allegation that tlie plaintiff was a party to the alleged fraudulent inception of the note. The bank, as the owner and holder of the note in due course, as between the plaintiff and defendant, had a perfect'right' to transfer the same without consideration; the plaintiff merely stands in the. shoes of the Sovereign Bank of Canada, and the latter concededly came into possession of the note in' such a manner as to be relieved of the equities between the maker of the note and McCuaig.

The interlocutory judgment appealed from should be affirmed, with costs.

McLaughlin and Scott, JJ., concurred ; Patterson, P. J., and Houghton, J., dissented. •

Judgment affirmed, with costs. Order filed.

Cases cited

Twelfth Ward Bank v. Brooks 63 App. Div. 220 N.Y. App. Div. 1901-07-09 p. 526