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Central Bank v. Thein

28 N.Y.S. 232 Court N.Y. Gen. Term Decision date 1894-04-12 English

Delivered by BRADLEY, J.

Contents

Majority

p. 232
(76 Hun, 571.)
CENTRAL BANK OF ROCHESTER v. THEIN et al.
(Supreme Court, General Term, Fifth Department.
April 12, 1894.)

Headnote

Pleading-Striking Out Answer as Sham.
An answer in an action on a promissory note which states that at the time the note became due the maker had sufficient funds on deposit with plaintiff, a bank, to pay the note, states an affirmative defense, and will not be stricken out as sham.
Appeal from special term, Monroe county.
Action by the Central Bank of Rochester against John G. Thein, August F. Suss, Joseph L. Schmitt, Michael Bauman, Louis Manz, and Henry B. Helling on a promissory note. From an order striking out the answer of defendants, and from the judgment thereupon entered in favor of plaintiff, defendants appeal. Reversed.
The plaintiff, ty its complaint, alleges that the Solidarity Co-operative Clothing Company made its promissory note of date December 23, 1892, whereby ,it promised to pay at the banking office of the plaintiff $2,000, to the order of the defendant Thein, three months after its date, and delivered it to the payee; that the note was indorsed by him and the other defendants, and before its maturity transferred to the plaintiff; that when it became due the note was duly presented at the place where payable, payment thereof demanded and refused, and due notice of such presentment, demand, and refusal and protest was given to the defendants. The defendants, by their answer, admitted the making and indorsement of the note as alleged in the complaint, and the transfer of it to the plaintiff. They further alleged that the company, the maker of the note, deposited moneys from time to time to its credit in the plaintiff bank, and that prior to and at the time the note became due there remained of the amount of the moneys so deposited $2,203.-59 in tiie possession of the plaintiff; and that on March 25, 1893, the maker of the note, by order, directed the plaintiff to pay and apply $2,000 of the amount so remaining with the plaintiff of the money so deposited upon and in payment of the note; and they “deny each and every allegation in said complaint contained not hereinbefore specifically admitted, modified, or explained.” The plaintiff’s motion was made upon the pleadings and an affidavit of the cashier of the plaintiff to the effect that the co-operative company did not have a balance to its credit with the plaintiff sufficient to pay the note, and it so appeared by a statement of the account set forth in the affidavit. One of the defendants, by his affidavit, stated that if the plaintiff had correctly kept the account with the co-operative company the balance, as stated in the answer, would have been represented by it. The affidavit also stated on information and belief that the plaintiff had erroneously reduced upon Its books the balance of the company by charging to its account the amount of checks forged by one Adler; and, further, that the answer was interposed in good faith, and not for the purpose of delay. The answer was stricken out as false.
Argued before DWIGHT, P. J., and LEWIS, HAIGHT, and BRADLEY, JJ.
p. 233
Forsyth & Bros., for appellants.
Hubbell & McGluire, for respondent.

The allegations of the answer are to the effect that the plaintiff had of the amount of the funds deposited by the maker of the note, at the time of its maturity, sufficient to pay it. If that were so, it was the duty of the plaintiff to charge up the amount of the note to-the maker, and thus satisfy it Aetna Nat. Bank. v. Fourth Nat. Bank, 46 N. Y. 82 -88; Indig v. Bank, 80 N. Y. 100 -106; Robarts v. Tucker, 16 Adol. & E. (N. S.) 560-578. And if the balance continued to be and was adequate to pay the note up to the time this action was commenced, that fact was then a defense available to the defendants as indorsers of the paper, assuming, as we must, that the maker was primarily liable, as between it and the defendants, to pay the note. The defendants, by their answer, therefore did set up matter which, if supported by evidence, might constitute a defense, and the note be treated as paid. Whether it was demurrable for want of allegations to the effect that the balance due the maker in its bank account with the plaintiff sufficient to satisfy the note at maturity was permitted, and did still remain there, it is unnecessary to inquire or determine for the purpose of the question here. The defendants’ answer was duly verified, and the affidavit in opposition to the motion was contradictory of that on the part of the plaintiff, and contained the statement that the answer was put in in good faith, and not for purposes of delay. In such case it is quite well settled that an answer containing matter of affirmative defense will not be stricken out as sham, but that the party alleging it is entitled to the opportunity of a trial, and to have the fact determined upon evidence in the usual manner. Webb v. Foster, 45 N. Y. Super. Ct. 311 ; Henderson v. Manning, 5 Civ. Proc. R. 221; Barney v. King (Sup.) 13 N. Y. Supp. 685 ; Rogers v. Vosburgh, 87 N. Y. 228 . There may be cases where an answer or defense may be stricken out as sham. This was within the contemplation of the Code (section 538). But, as- has been elsewhere said, it is applicable to matter set up in a pleading as mere pretense, in bad faith, and without color of fact. Farnsworth v. Halstead, 18 Civ. Proc. R. 227, 10 N. Y. Supp. 763 . And in Barney v. King it was held that it did not apply to matter of defense in a verified answer. The allegations of affirmative defense in the answer in the present case may be false, but that question is not triable by, or to be determined upon, conflicting affidavits, without infringing the defendants’ right to trial by jury. While the allegations in the answer tending to specifically deny the service and receipt of notice of presentment of the note and of demand and default in payment are not sufficient to put the due service of such notice in issue, the defendants do not expressly admit the service of it, nor do they admit the allegation of the complaint that the note was presented at the place where payable, and payment demanded and refused. This was an essential allegation as against the defendants. And the latter allegation at

p. 234
least seems to come within the denial made by the answer of the defendants. The issue presented by denial in an answer of material allegations in the complaint cannot be disposed of on motion to strike out the answer as false or sham. Wayland v. Tysen, 45 N. Y. 281 ; Bank v. Inman, 51 Hun, 97 , 5 N. Y. Supp. 457 . _ If these views are correct, the order should be reversed, the motion denied, and the judgment set aside. All concur.

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