Northern Bank v. Fullerton

Headnote

' Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered March 7, 1916, affirming a judgment in favor of plaintiff entered upon the report of a ’ referee. • The

action is brought to recover the balance due on a promissory note of $8,000 made by defendant. The note is the usual form of collateral note used by banks, bearing date March 7, 1906, and payable on demand, with interest, at the rate of ■— per cent. Payment was demanded January 18, 1908, and on non-payment the stocks held as collateral were sold on notice to defendant and defendant was allowed credit on the principal of the note for the proceeds of the sale. The defense and counterclaims raised by the defendant and sought to be established at the trial were that although the note was by its terms made payable on demand, a valid agreement had been made to extend the time of payment of the note for an indefinite period of time, which was described to be until the Mechanics and Traders Bank, another institution holding notes of defendant, demanded payments of the notes which it held, or until said notes were paid, or until the panic of 1907 was at an end and conditions again became normal, and that as a part of said agreement defendant was to be permitted to control and direct the manner in which the collateral to the note held by plaintiff was to be handled. Because of this agreement, it was claimed the note was not due when suit was brought, and that the prior sale of the securities held as collateral constituted a conversion, for which defendant was entitled to damages.