Hussey v. Sutton

These two actions were tried together. In the first, the jury rendered a verdict in favor of the plaintiff, and the defendant moves for a new trial. In the second action, the court directed a nonsuit, and the plaintiff asks a new trial. Both actions grow out of the same transaction. The evidence shows that all of "the parties were stockholders in and directors of a corporation known as the Co-operative Motor Car Company, doing business in Buffalo; that the company was in need of funds to enable it to be represented at a certain automobile exhibition about to be held. The parties were called together, and the requirements of the company made known. Hussey, the plaintiff, agreed to raise and advance the necessary funds, provided the company would give him its promissory note for $3,000, which note was to be indorsed by the said Louis IT. Sutton, Edward C. Sutton, and one William H. Pennypacker, Jr. It was agreed by and between the parties that each of the indorsers, as between themselves, should be each liable for a proportionate amount of the note/ The note was made and indorsed accordingly. It is dated December 23, 1911, is signed by the company as maker, to the order of the plain

[1,2] Counsel for the defendants contends that, as the note in ques- . tion was payable “on demand,” it was the duty of the holder to have presented it for payment within a reasonable time, and that a delay of two years in demanding payment was, as matter of law, such an unreasonable delay on the part of the plaintiff as to preclude a recovery against the defendants as indorsers, and cites in support of the contention the cases of Commercial Nat. Bank v. Zimmerman, 185 N. Y. 210 , 77 N. E. 1020 ; German-American Bank v. Atwater, 165 N. Y. 36 , 58 N. E. 763 ; Herrick v. Woolverton, 41 N. Y. 590 , 1 Am. Rep. 461 . There can be no question that a demand within a reasonable time is required, and if it were not for the peculiar relations of the parties to the maker and to each other, there would be no question but that there was in this case unreasonable delay. But the plaintiff, the defendants, and Mr. Pennypacker were each and all stockholders and directors in the company making the note. They were all financially interested in its success, and to have pressed payment of the note at any time would have seriously embarrassed the company. It was a fair question whether the moneys for which the note in question was given were not advanced simply to put the company in funds to advance the parties’ own interests as stockholders. It was contended by the defendants that Mr. Hussey agreed that the note should be paid from the first sales made after the exhibition. The plaintiff denied any such understanding or agreement. The court charged that if any such agreement or understanding existed between the plaintiff and the defendants, and plaintiff failed to do as agreed,

We cannot overlook the fact that under the statute these defendants, being stockholders and directors of the maker of the note in question, were forbidden to take any action which would result in their obtaining a preference in the payment of their debt over other creditors. Consequently we think the court did not err in submitting to the jury the question of whether the note was presented for payment within a reasonable time. The jury found that issue in favor of the plaintiff.

[3] As to the defendant Louis H. Sutton, the court granted a non-suit on the ground that notice of protest was not properly served. The evidence showed that this defendant lived in the village of Akron, N. Y., but he testified that he had a place of business in the city of Buffalo, N. Y. The notary’s certificate of protest stated that the formal notice of protest was mailed to the defendant Louis H. Sutton, directed to him at “Buffalo, N. Y.” In his answer, the defendant denied the allegations of the complaint setting up presentation, nonpayment, and notice to the defendant, but did not serve, as provided by section 923 of the Code of Civil Procedure, an original affidavit that he had not received notice of protest. Consequently the plaintiff was not required to give common-law proof of presentation, nonpayment, and notice, but the notary’s certificate became “presumptive evidence of the facts certified,” as provided in said section. This certificate was introduced in evidence, and certified, among other tilings, to the making of notices addressed to Louis H. Sutton at Buffalo, N. Y., and to the other parties on the note—

“each of the above-mentioned places being the respective places of business or residence of the persons to whom the said notice was directed and the nearest post office thereto.”

The trial court held the notice “presumptive” only, and not conclusive,' and that, inasmuch as it appeared that Mr. Sutton was a resident of Akron, N. Y., and no notice was mailed to him there, the plaintiff had failed to show proper notice to Sutton; he having testified on the trial that he had received none. In this ruling, I think tire court erred, for the reason that section 179 of the Negotiable Instruments Law- (Consol. Laws, c. 38) provides that if the party to be charged lives in one place and has “his place of business in another, notice may be sent to either place.” Consequently notice mailed to Sutton at Buffalo seems to have met the requirements, and it was error in the court to have nonsuited on the ground of failure to give proper notice. This necessitates the granting of a new trial in the action against Louis H. Sutton.

The motion for a new trial by the defendant Edward C. Sutton is denied, and the motion for a new trial in the action against Louis H. Sutton is granted.

So ordered.