Bank of the Metropolis v. McLeish

Headnote

Bank of Metropolis v. McLeish, 165 App. Div. 986 , affirmed.

Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered January 4, 1915, affirming a judgment in favor of plaintiff entered upon a verdict directed by the court. Plaintiff and defendant with two others entered into the following agreement:

“In consideration of your loaning E. A. Newell Co. from time to time, certain sums of money on the obliga

tions of the corporation, we hereby agree to subordinate any notes or claims which we may hold against the E. A. Newell Co. to any debts that may be owing to the Bank of the Metropolis, the intention of this obligation being that all debts owing to the Bank of the Metropolis shall be paid by said Company before anything is paid to us on account of our claim against said E. A. Newell Company.

“Dated, New York, December 20th, 1912.

“ J. H. EMERY,

“ JAMES R. REISER,

“ GEORGE McLEISH.”

The complaint alleged that thereafter, in April, 1913, the Newell Company transferred all its property to a trustee to liquidate, sell its assets and pay its debts. On such liquidation the assets were found insufficient to pay all the debts in full. Of the $15,000 due to the plaintiff at the time of the transfer to the trustee $11,000 only had been paid on account at the time of the commencement of this action, leaving still due and owing to the plaintiff the sum of $4,000 with interest. That on such liquidation the trustee paid to the defendant on his claim against the company upwards of $7,500, which sum, according to the agreement between plaintiff and the defendant, it was the duty of the defendant to apply, so far as necessary, to pay the balance due to the plaintiff. The answer is in substance a general denial. It set forth the agreement in question and alleged that the plaintiff did not advance any money to the said Newell Company at or after the time of the making of said agreement or pursuant thereto and that said agreement was without consideration and, therefore, void.