Majority
p. 471(32 Misc. Rep. 623.) SHANNON v. HAWLEY. (Supreme Court, Trial Term, New York County. October 29, 1900.)
Headnote
Checks—Exchange—Considebation.In an action by plaintiff as assignee after maturity of two checks drawn and delivered to the payee by defendant in exchange for a check of a third person, which was afterwards dishonored, defendant pleaded want of consideration. Held that, since one promise is a legal consideration for another, the plaintiff was entitled to recover.
Action by John G. Shannon as assignee after maturity of twro checks drawn by Thomas R. Hawley, defendant, and given to payee in exchange for a check of a third party. The defendant pleaded that there was no consideration for the checks in suit, because the check received by him in exchange therefor was dishonored. Judgment for plaintiff.
Sumer well, Shoup & Vermilya, for plaintiff.
Byron Travor, for defendant.
It is elementary that one promise is a legal consideration for another. If a promissory note is made by A. to B. in exchange for a promissory note made by B. to A., each note is a valid consideration for the other, whether between the original parties, or in an action by an indorsee. It is in the nature of an ex
p. 472
change of property, each party getting title to the property received in exchange. Newman v. Frost, 52 N. Y. 422 ; Rice v. Grange, 131 N. Y. 149 , 30 N. E. 46 ; Bank v. Smith, 155 N. Y. 185 , 49 N. E. 680 ; Backus v. Spaulding, 116 Mass. 418 ; 4 Am. & Eng. Enc. Law (2d Ed.) 188; Edw. Bills, 322; Chit. Bills (10th Am. Ed.) 708; Daniel, Neg. Inst. § 187; Wooster v. Jenkins, 3 Denio, 187 ; Dowe v. Schutt, 2 Denio, 621 . If both notes are due, and each remains in the hands of its payee, the one may doubtless be set off against the other. But the two contracts, though mutual, are independent; and, if they are for the payment of money at different times, each must be performed according to its terms. Backus v. Spaulding, supra. In Wooster v. Jenkins, supra, the court said:
“It is urged that, as between the original parties, cross notes or acceptances should be regarded as accommodation, in contradistinction to business securities. But the rule is settled the other wa.y. Bach party may prove the debt against the other under a commission in bankruptcy. And, although one party sells the note or bill at a greater discount than 7 per centum, the purchaser will acquire a good title. It is true that, so long as the securities are in the hands of the original parties, they will balance each other. But it will be by way of set-off, and not on the ground that they are invalid."
See, also, Rice v. Grange, supra. No set-off is pleaded here.
The application of these rules to the present controversy entitles 'the plaintiff to judgment for $970, with interest.
Cases cited
- Newman v. Frost 52 N. Y. 422 p. 472
- Rice v. Grange 131 N. Y. 149 p. 472
- State Bank v. Smith 155 N. Y. 185 p. 472