Orr v. Saint Anthony's Roman Catholic Church — 38 N.Y. St. Rep. 351

Majority

p. 351

John C. Orr et al., Resp’ts, v. Saint Anthony’s Roman Catholic Church of Brooklyn, App’lt.

(Supreme Court, General Term, Second Department,

Filed May 11, 1891.)

Headnote

Bills and notes—Bona fide holder—Estoppel.

Plaintiffs furnished materials to a contractor which were used in building defendant’s church edifice, and upon demand of payment therefor it was agreed between them and defendant’s pastor that the accounts of the contractor should be settled and defendant’s negotiable securities given for any balance found due to the contractor. This was done and certain securities taken by plaintiffs, who gave credit therefor to the contractor and surrendered his note for that amount. Held, that plaintiffs were bona file holders of such securities; that defendant was estopped from attacking their consideration, and that an error in the accounting would be no defense against an action upon them.

Appeal from judgment in favor of plaintiffs, entered upon the •report of a referee.

Action upon twenty-eight negotiable instruments given by defendant to one P. E. Reed, acknowledging an indebtedness. to plaintiffs for money loaned, and endorsed by said Reed

O. H. Sanderson, for app’lt; Alfred B. Cruikshank, for resp’ts.

The complaint sets out twenty-eight negotiable instruments, and alleges that they were made by defendant and delivered to one Reed, who in turn transferred them to the plaintiffs.

The answer alleges that they were delivered to Reed in payment of a supposed debt, which did not in fact exist

Upon the trial it appeared that plaintiffs sold lumber to Reed, who used the same in building the church edifice of defendants.

After Reed had performed work and furnished material upon the church of the value of $40,000 and upwards, being largely indebted to plaintiffs, they applied to him for payment on account .And it was agreed between Reed, the plaintiffs, and the pastor of defendant, who had charge of its affairs, that the account between .Reed and the defendant should be audited by defendant’s accountant, and for the balance, if any, found due to Reed from the church, the negotiable securities of the defendant should be given.

In pursuance of this arrangement, Reed deposited his books with the defendant’s accountant Defendant’s books were examined, and with such aid as Reed and the pastor could give it was determined that a balance was due Reed from the church. For this balance the securities in suit were issued, and the plaintiff gave credit for them to Reed, and surrendered to him his promissory notes of equal amount theretofore held by them.

Upon these facts, we are of opinion that plaintiffs are bona fide 'holders for value; that defendant is estopped from attacldng "the sufficiency of the consideration therefor, and that an error in the accounting would be no defense against these plaintiffs in this action.

The referee remarks upon the meagreness of the proof as produced before him, and has some doubt as to whether it establishes

p. 352

the amount of the indebtedness due from the church to Reed. We do not think any doubt is permissible upon the subject The account was examined and the amount due determined when the matters were fresh in the minds of the parties.

Since that time there has been little, if any need to preserve the original entries of the transactions, and no reason why their memory should be perpetuated.

It may be suggested that the defense of ultra vires is not pleaded, and, therefore, cannot be raised. Nor is there any averment that Reed had any knowledge at the time of the settlement of any error in the amount then determined to be due.

Unless made with knowledge of their falsity and with intent to deceive, neither of which are alleged or proved, it is not easy to see what legal effect would follow here from a mistaken statement on his part

The proof shows that the trustees of the church were all present when the certificates were authorized, and it cannot be claimed that Mr. Lane acted in bad faith or went beyond his power in issuing them.

It follows that the judgment, must be affirmed, with costs.

Barnard, P. J., and Dykman, J., concur.