Crigler v. Bedell — 20 N.Y. St. Rep. 623

Majority

p. 623

Llewellyn N. Crigler et al., App’lts, v. Ezra M. Bedell et al., Resp’ts.

(Supreme Court, General Term, Fourth Department,

Filed January, 1889.)

Headnote

Bills and notes—Violation op agreement by which party was induced TO INDORSE NOTE GOOD DEFENSE TO AN ACTION UPON THE NOTE.

Where a party is induced to indorse a promissory note for another by an agreement for the sale of goods by the plaintiffs to the maker of the note, Held, that the refusal of the plaintiffs to carry out the terms of the agreement constitutes a good defense to the indorser in an action upon the note. '

Appeal from a judgment dismissing the plaintiffs’ complaint as to the defendant Bedell, entered in Onondaga county on the report of a referee.

George H. Sears, for app’lts; Frank Hopkins, for resp’ts.

This action was to recover on a promissory note made by the defendant Libbie S. Gates and indorsed by the defendants Fay L. Gates and Ezra M. Bedell. The referee held that the plaintiffs were entitled to a judgment against the defendants Libbie and Fay L. Gates for the amount of the note, interest, protest fees and costs; but he also held that they were not entitled to recover against the defendant Bedell, and directed a judgment in his favor dismissing the complaint as to him, with costs.

p. 624

The note upon which this action was brought was dated November 1, 1886. It was given to secure the payment of $100 seven months from date. When this note was given the firm of Gates & Crysler, or Gates & Co., of which firm the defendant Libbie S. Gates was a member, was indebted to the plaintiffs in about the sum of $800. On that day the plaintiffs’ general agent entered into an arrangement with the defendants whereby notes were to be given for the greater portion, if not for all, of such indebtedness, and procured the defendant Bedell to indorse several of the notes thus given, which in the aggregate amounted to about $500.

The note in suit was one of the notes so given and indorsed by the defendant Bedell. The agreement between the plaintiffs’ agent and the defendants was, that the defendant Bedell would indorse the notes of the defendant Libbie S. Gates to the amount stated, provided the plaintiffs would at once sell her goods on her individual credit to an amount equal to the amount of all the notes indorsed for her by Bedell. When these notes were made and indorsed, and as a part of the agreement between the parties, the plaintiffs’ agent made the following written contract with the defendants:

‘ ‘ Syracuse, November 1, 1886.

“In consideration of Ezra M. Bedell’s endorsement of •certain promissory notes of Libbie S. Gates, we agree to sell her goods on her individual credit at once, to the amount of all the notes endorsed by the said Bedell for the said Libbie S. Gates and this day given to us. This is done so as to give her a chance to work out of debt, and that the endorser incur no liability, unless this agreement is carried out, on the said notes.

“ CRIGLER & CRIGLER (per Peehl).”

Two questions are presented on this appeal:

First. As to the authority of the plaintiffs’ agent to make the agreement in question.

Second. As to the effect of snch agreement, and whether the refusal of the plaintiffs to perform it constituted a defense to the note in suit in favor of Bedell.

We deem it unnecessary to pass upon the question whether the plaintiffs’ agent had authority to make the contract set forth, as the evidence discloses the fact that the plaintiffs knew of such contract" before this action was commenced, and with such knowledge sought to enforce the note in suit. It is a well settled doctrine of the law of agency that a principal cannot enjoy the fruits of a bargain made by his agent without adopting all the instrumentalities employed by the agent in bringing it to a consumation.

p. 625

Kane v. Cortesy, 100 N. Y., 132 -139; Elwell v Chamberlin, 31 N. Y., 611 ; Bennett v. Judson, 21 N. Y , 238 , Rush v. Dilks, 43 Hun, 282 . If, therefore, the plaintiffs’ agent did not have original authority sufficient to bind the plaintiffs by such contract, still the plaintiffs must be held to have ratified it by keeping the notes and seeking to enforce them after they had full knowledge of it and of the instrumentalities by which the notes, and the defendant Bedell’s endorsement thereon, were obtained.

This leaves for consideration the question of the effect •of the plaintiffs’ contract and their refusal to perform it upon their right of recovery on this note. That the only consideration which induced the defendant, Bedell, to endorse the note in suit was the plaintiff’s contract, is found by the referee and sustained by the evidence. That its purpose was to secure for the maker of the note a credit that would enable her to continue her business and thus procure the means with which to pay these notes, is manifest from the contract itself.

The contract was that the defendant Bedell should incur no liability by endorsing such notes unless the plaintiffs should fulfill their contract to sell at once to the defendant, Libbie S. Gates, on her individual credit, goods to the amount of the notes thus endorsed. This the plaintiffs refused to do, and unless this contract was invalid it must follow that the defendant Bedell was not liable in this action. That this contract was valid, and that a violation of the plaintiffs’ agreement to furnish goods as provided for thereby constituted a valid defense to the note in suit we cannot doubt. Bookstaver v. Jayne, 60 N. Y., 146 ; Bessemer Steel Co. v. Buckley, 51 Supr. Ct. (J. & S.), 342; Beauford v. Patterson, 63 How., 81 .

We do not think it can properly be said that Bedell was not injured by the failure of the plaintiffs to perform their contract, and, therefore, that such defense should not be sustained, for, as we have seen, its purpose was to furnish goods to enable the maker to provide the means with which to pay such notes, and it is fair to assume that if such contract had been fulfilled the notes would have been paid by the maker. It, therefore, seems'quite clear that the defendant Bedell would, if required to pay this note, be injured by the plaintiffs’ failure to perform their agreement. Moreover, Bedell had a right to make just such a contract as to his endorsement, and his liability thereon as he saw fit, and to insist that it should be fulfilled He made a contract that the goods should be furnished oi he should incur no liability as endorser. This agreement was valid as between the parties, and he is entitled to have it enforced.

p. 626

We are of the opinion that the findings of the referee, so far as necessary to sustain the judgment appealed from; are justified by the evidence, and that the judgment appealed from was proper. As there are no questions as to the admission or rejection of evidence that require special examination, or that would justify an interference with the judgment herein, the judgment should be affirmed.

Judgment affirmed, with costs.

Kennedy. J., concurs, Follett, P. J., not voting.