judged a bankrupt. The plaintiff filed and proved his claim to the amount of $2,061.12, and stated that he held this note as security therefor. It appears that sufficient of Manheim’s creditors in number and in amount have signed a composition agreement to accept 25 cents on the dollar, and that the bankrupt has deposited with the clerk of the court the necessary funds to carry out the agreement. It appears that at the time the note was delivered to the plaintiff some of the notes for which it was given as security were due, and the plaintiff had threatened suit thereon; that upon condition of his receiving the security he agreed to extend the time of payment two or three days, and thereafter agreed to afford Manheim an opportunity of paying off the indebtedness at the rate of $3 every 10 days, or until he could discount the $1,500 note. The note was given pursuant to an agreement between the defendant and Manheim for the exchange of notes as follows:
“New York, March 20, 1903.
“Received this day from Mr. Julius Manheim as an accommodation for both parties undersigned, the following notes under the conditions hereafter named, viz.: Mr. Julius Manheim transfers herewith to Dr. E. John Kauffmann, President of the Commonwealth Hygienicpie Ice Co., in Boston, Mass., five notes at $2,500 each, total $12,500.00 dated this date at four months from date and to the order of E. John Kauffmann, under the condition that Dr. E. John Kauffmann discounts said notes, total $12,500.00 and pay to Mr. Julius Manheim, out of the proceeds of said notes the sum of forty per cent, of the proceeds of said notes, and the balance of sixty per cent, of this amount may be retained by Dr. E. John Kauffmann, for which amount he gives his own note to Mr. Julius Manheim. Each party will then have to take promptly, care of his own notes at maturity. This agreement is herewith made under the following further understanding that the aforesaid forty per cent, will have to be paid in cash by Dr. E. John Kauffmann to Julius Manheim, the latest within ten days.
“Both parties have herewith agreed to and signed to the above conditions.
“[Signed] E. John Kauffmann.
Argued before VAN BRUNT, P. J., and McLAUGHLIN, PATTERSON, INGRAHAM, and LAUGHLIN, JJ.Francis D. Poliak, for appellant.
David C. Myers, for respondent.
The respondent contends that Manheim could not have enforced the payment of the note, because he defaulted in the payment of his note given at the same time pursuant to the agreement for the mutual exchange of notes, and that the plaintiff, having taken the note as security for an antecedent debt, is not a bona fide holder, and the note in his hands is subject to any defense that exists against its collection by Manheim. We are of opinion that there was a good consideration for the note as between the original parties, that the execution of the notes constituted it an executed contract, that it was the duty of each to the other to pay his note at maturity, and that the defendant, while he might have a counterclaim for the nonpayment of Manheim’s note, could not defend against the nonpayment of his own on the theory of failure of consideration on account of Manheim’s default. Rice v. Grange, 131 N. Y. 149 , 30 N. E. 46 . Moreover, the note not having been diverted, but being unrestricted as to its use, would not be subject in plaintiff’s hands to the defense of want or failure of consideration, or that Manheim had subsequently failed to per