Chatham National Bank v. Shipman — 27 N.Y. Sup. Ct. 543

Majority

p. 543

THE CHATHAM NATIONAL BANK OF NEW YORK, Respondent, v. EDWARD D. SHIPMAN, Appellant.

Headnote

Answer — when it cannot be stricken out as frivolous.

This action was brought upon certain promissory notes made by the defendant to the order of one Dui-yee, for whom they were discounted by the plaintiff. The defendant answered, alleging that he executed the notes for the accommodation of Duryee and without any consideration, which fact was known to the plaintiff at the time when it discounted the. said notes; that at that time it received from Duryee, as collateral to and to secure the payment of the said notes, a mortgage, which was then in process of foreclosure; and it prayed that this action might be stayed during the pendency of the one to foreclose the mortgage, or that the defendant might be subrogated to the rights of the plaintiff in the foreclosure suit, and for other relief.

Selcl, that it was error to strike out the answer as frivolous.

Appeal from, a judgment in favor of tbe plaintiff, entered upon an order striking out tbe answer of tbe defendant as frivolous.

Tbe action was brought upon several promissory notes, made by tbe defendant to tbe order of one Duryee, for whom they were discounted by tbe plaintiff.

Tbe answer alleged that tbe notes were given for tbe accommodation of Duryee, and were without any consideration as between tbe defendant and him, and that these facts were known to tbe plaintiff at tbe time it discounted them ; that as collateral to, and to secure tbe payment of tbe said’ notes, Duryee gave to tbe plaintiff bis bond and mortgage upon certain real estate in tbe city of New York, and that the payment of tbe said notes was amply secured thereby ; that tbe plaintiff had commenced an action to foreclose tbe said mortgage, which was still pending and undetermined. It concluded as follows: “ Wherefore, tbe defendant invokes tbe equitable powers of this court, that tbe complaint herein be dismissed, with costs; otherwise that all proceedings' herein be stayed until tbe completion and termination of said action for tbe foreclosure of said mortgage, or in default thereof that tbe defendant be subrogated to tbe rights of tbe plaintiff in' said bond and mortgage to tbe extent of tbe amount demanded in the com

p. 544

plaint herein, and for such other relief as to the court may seem meet and proper.”

George A. McDermott, for the appellant.

II F. Anderson, for the respondent.

It is enough, in order to dispose of this case, to say that the answer was by no means clearly frivolous. The facts set up show that the mortgage, sought to be foreclosed in the action referred to, secures the principal debt for which these notes were alleged to have been mere security to the knowledge of the plaintiff.

It is at least questionable whether the appellant is not entitled, on establishing these facts, to the relief he asks for by his answer. But that is a question which should be determined by the trial, and not by a summary motion, on the ground that the answer is frivolous. It requires an argument stronger we think, than can be made, to show that the answer is frivolous; and of course in such a case the defendant is entitled to a formal trial of the issue, either of fact or of law. (Youngs v. Kent, 46 N. Y., 672 ; Strong v. Sproul, 53 N. Y., 499 .)

The form of the notes is not controlling, for the defendant alleges that the bank received them with full knowledge that they were mere collateral securities for the defendant’s indebtedness secured by the bond and mortgage. (2 B. S. [Edmund’s ed.], 199, §§ 153, 154.) •

The order striking out the answer as frivolous and the judgment entered thereon should be reversed, with costs.

Present — Davis, P. J., Beady and Baekett, JJ.

Order and judgment reversed, with costs.