Mandeville v. Newton — 28 N.Y. St. Rep. 850

Majority

p. 850

William H. Mandeville, App’lt, v. Darius A. Newton, Executor, Resp’t.^[1]

(Court of Appeals,

Filed January 14, 1890.)

Headnote

1. Bills and notes—Assignment.

Plaintiff, in pursuance of an arrangement with R. & Co. that he should have the benefit of collaterals held by M., over and beyond M.’s interest therein, to apply to a debt of R. & Co. to him, paid M. the balance of his claim and took an assignment of the notes and collaterals. There was no warranty by M. that the notes were valid, outstanding obligations. Sufficient had been collected on the collaterals to pay the notes. Held, that the transaction was not in any sense a purchase of the notes, except in so far as they, with the other claims transferred, represented the balance due to M. after application of what had been collected by him.

S. Same—Pleading.

The allegations of the complaint were not directly denied by the answer, but the latter set forth in detail the nature of the transaction and denied that M. made any other or different transfer than as stated. Held, that in the absence of objections to the evidence sustaining the allegations of the answer, the referee was justified in refusing to find in accordance with the alleged admissions of the answer.

Appeal from judgment of the supreme court, general term, fifth department, affirming judgment entered on the report of a referee.

J. H. Waring, for app’lt; Wm. ¿Spargur, for resp’t.

It is plain from the circumstances .developed upon the trial that the real intention of the transaction between the plaintiff and Marvin, the defendant’s testator, was to substitute the former to the position of the latter in respect to the debt owing by Rawson & Co. to Marvin, and the collaterals held by him as security therefor. It was not in any proper sense a purchase by the plaintiff of the notes held by Marvin, except in so

p. 851

far as they, with the other claims transferred to the plaintiff at the same time, represented the balance which, after the application of what had been collected by Marvin, would remain due to him on the claims transferred. Prior to the transfer by Marvin to the plaintiff, no application of the sums collected by Marvin on the collaterals in extinguishment of any specific items of the indebtedness owing by Eawson & Co. had been made. Sufficient had been collected to pay the notes, but, in the absence of any specific application of the collections thereon, they were not technically paid. The plaintiff, after the assignment to him of the claims of Marvin, with the collaterals, treated the notes as paid. Prior to the assignment the plaintiff had arranged with Eawson & Co., or the survivor of that firm, that he should have the benefit of the collaterals held by Marvin, over and beyond the interest therein which Marvin held, to apply upon the plaintiff’s own debt against the firm. It was to obtain this advantage that the plaintiff paid Marvin the balance of his claim and took the assignment. There was no express warranty by Marvin that the notes were valid, outstanding obligations, either against 'the makers or endorsers, and none can be implied under the circumstances. It is conceded that the sum paid by the plaintiff to Marvin was the exact sum due the latter from Eawson & Co. It may be true, as claimed by the counsel for the plaintiff, that on a purchase of notes appearing on their face to be valid and uncancelled obligations, which in fact had been paid, or the endorsers on which had been discharged to the knowledge of the vendor, a cause of action would arise in favor of a vendee who purchased without notice, against the vendor, based upon an implied warranty that the notes were valid, outstanding obligations. See Delaware Bank v. Jarvis, 20 N. Y., 226 ; Webb v. Odell, 49 id., 583; Ross v. Terry, 63 id., 613; Littauer v. Goldman, 72 id., 506.

The plaintiff insists that the complaint contains allegations not denied by the answer, showing that the transaction between the plaintiff and Marvin was a purchase of the notes by the plaintiff in the ordinary sense, in good faith, for a full consideration, when in fact they had been paid and the endorsers discharged to the knowledge of Marvin. These averments it is contended are to be regarded as conclusively established, and precluded the defendant from showing that the transanction was other or different from that alleged in the complaint. There is no direct denial in the answer of the allegations upon which the plaintiff relies. But it sets forth with some detail the nature of the transaction between Marvin and the plaintiff, and concludes by denying that Marvin “ made any other or different transfer of said notes than as herein stated.” The real transaction was the subject of investigation on the trial, and was litigated without any objection being raised that the evidence was inadmissible under the pleadings. The first time that the question was raised was when findings based on the pleadings, were proposed by the plaintiff. The referee was, we think, justified under the circumstances in refusing to find in accordance with the alleged admissions. This disposes of the main

p. 852

question in the case. The merits of the controversy were properly adjudged in the courts below, and the exceptions to evidence point out no reason for a reversal of the judgment.

The judgment should, therefore, be affirmed.

All concur.