Westcott v. Keeler — 17 N.Y. Super. Ct. 564

Majority

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Joseph H. Westcott, Plaintiff and Appellant, v. Walter Keeler, Respondent.

Headnote

1. Where the complaint states, and the uncontradicted evidence given at the trial tends to prove, that M.- (the plaintiff’s assignor) lent to the defendant money, -on the security of a note made by B., payable to his own order, and indorsed by him and by the defendant, and that on such note maturing, M. surrendered it to R. for a new note of the same amount, payable on demand, made and indorsed by R, and so surrendered it at the defendant's ■ request and on his promise to indorse such new note, and that the defendant refused to indorse such new note, or pay the money so lent to him, it is error to dismiss the plaintiff’s complaint, although the surrendered note has been destroyed.

2. On such a state of facts, the defendant is liable as borrower, and an action may be maintained against him as such; the note which he indorsed as security for the loan having been surrendered at his request to the maker of it.

3. Such a cause of action is assignable, and the assignment in this case transferred it.

4. Such evidence entitles the plaintiff to a peremptory charge that a verdict be given in his favor, or requires that the cause be submitted to a-jury, with instructions that if the defendant borrowed the money, and if the note left as security for the loan was surrendered at his request, the plaintiff is entitled to recover.

(Before Bosworth, Ch. J., and Hoffman and Moncrief, J. J.)

Heard, April 5;

decided, May 7, 1859.

This is an appeal by the plaintiff from a judgment dismissing his complaint, and also from an order -denying a motion for a hew trial.

The action was tried before Mr. Justice Pierrepoht, and a jury, on the 1st of November, 1858. The plaintiff sues as the assignee of a cause of action, which, as stated in the complaint, is in substance as follows:

On the 6th of September, 1854, one Schuyler H. Mattison loaned to the defendant$3,000, upon the note of one John W. Eumsey for that amount, payable on the 1st of October then next, drawn payable to Eumsey’s order, and indorsed by him and by .the defendant. The loan was made by Mattison to the defend

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ant on the collateral security of said note, and of a certificate for 100 shares of the stock of the Suffolk Bank.

At about the time said note fell due, the defendant went to Mattison and told him said Bank had failed, and asked him for an extension of the time for the payment of said note, and proposed to him to take a new note of Rumsey indorsed by the defendant, which Mattison agreed to do, and at defendant’s request went with the old note to Rumsey on the day it fell due; took from him a new note dated October 1,1854, for $3,000 drawn to his own order, payable on demand, by him indorsed and to be indorsed by the defendant, and left the old note with Rumsey, who destroyed it.

The defendant refused to indorse the new note, dr to pay the moneys so loaned to him. Rumsey, since the first note matured, has. paid various sums on account of the moneys so lent; the balance unpaid being $704.50, with interest from the 23d of December, 1856.

The answer, substantially, denies each allegation of the complaint ; alleges that the loan was made to Rumsey, and not to the defendant; that the defendant was the agent of Rumsey in procuring it, and was known to Mattison to be such agent; and that said loan was made upon an agreement reserving interest at the rate of eighteen per cent per annum.

On the trial, Schuyler H. Mattison was called as a witness on the part of the plaintiff, and testified, among other things, as follows: “ On September 6th, 1854, Walter Keeler came into my office and requested a loan of $3,000 until the 1st of October, and offered as security John W. Rumsey’s note for $3,000, due October 1, 1854; I said I didn’t wish to loan money to anybody; that I wanted my money in my business; finally he pressed the matter so hard that I consented to let bim have it if he would pay it promptly when due; I got up out of .my chair at my desk; Mr. Keeler sat down and indorsed the note made by Mr. Rumsey to his own order, and indorsed by him; he then handed me 100 shares of Suffolk Bank stock; I think it was 100 shares of $50 each; he said, take this too, and I replied, I don’t want it, I know nothing about the Bank or Mr. Rumsey, I loan the money on your own responsibility, as I have frequently done before; he insisted on my keeping the stock, and I did so; I re

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quested Mr. Bain, my clerk, to write an order on Bliven & Mead for $3,000, payable, I think, to bearer; I signed the order and handed it to Mr. Keeler; he went out of the office with it, and returned in about twenty minutes with a check to my 'order for the money drawn by Bliven & Mead, and I indorsed it and handed it to him; Keeler’s language when he came in, was, 1 Mattison, I want you to lend me $3,000 till the 1st of October, I will give you Ramsey’s note with my indorsement for $3,000;’ never had seen, or to my knowledge heard of Rumsey, and only knew Suffolk Bank by its locality; on the 1st of October I had put the note in my safe; not in Bank, and kept it in safe; Keeler called, and then said Bank had failed, or got into difficulty, and wanted time, and proposed to give new note for amount, payable on demand, which he said he would pay in a few days; I said, very well; then he said, ‘I am very busy; you are going past the Bank several times a day, I wish you would call on Mr. Rumsey and get a new note for the old note; bring it to me and I will indorse it;’ I told him I would; I immediately went up to Bank with the old note, and spoke to the gentlemen at the counter, and inquired for Mr. Rumsey; he said, ‘ I am the man;’ he asked me to step back to his private office, and I went; I handed him the old note, and told him Mr. Keeler had requested me to call for new note,; he said, ‘yes; Mr. Keeler has seen me on the subject;’ he made and handed me the new note.” Witness identified note, which was marked “ A.” It was as follows:

“ $3,000. New Yobk, Oct. 1st, 1854.

“ On demand, I promise to pay to the order of myself, three thousand dollars, at value received.

“J. W. Rumsey.”

It was indorsed “J. W. Rumsey,” and following receipts were indorsed on it. “Oct. 20,1854, rec’d on within note one thousand dollars, S. H.Mattison;” “Nov. 1st, rec’d on within one thousand dollars, S. H. Mattison;” “ 1855, Jan. 24th, rec’d on the within note one hundred, $100, S. H. Mattison.”

“ I went directly to Keeler’s office, and said, ‘ here is this note, I want you to put your name on it;’ he replied, ‘never mind, Mr. Rumsey will pay it in a few. days;’ said I, ‘he may, but that

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is not our agreement; you was to indorse it; 1 loaned you the moneyhe repeated the same answer two or three times, that Rumsey would pay it in a few days, and I left the office; I asked him probably one hundred times, also Rumsey, for the money for two years, till I sold it.” (Witness reads from back of note a receipt from Rumsey, Oct. 20, 1854, for $1,000; and on November 1, 1854, for $1,000; also sum paid by Rumsey January 24, 1855, $100.) Says “that he sued Rumsey on the note and got judgment, and after judgment Rumsey paid further, and left balance as claimed by summons, $704.50; I assigned this claim to plaintiff.” Assignment read, and dated March 9th, 1857, viz.:

“ Know all men by these presents, that I, Schuyler BL Mattison, * * of the first part, for and in consideration of the sum of five hundred dollars, to me in hand paid by Joseph H. Westcott, * * of the second part, have * sold, assigned, * * and by these presents do * sell, assign and set over unto the said party of the second part, all the indebtedness, cause of action, claim and demand whatsoever which I, the said party of the first part, now have against Walter Keeler, of said city, for borrowed money, and for a failure and refusal on his, the said Keeler’s- part, to indorse, according to promise, a promissory note of John W. Rumsey, dated October 1,' 1854, for $3,000, payable on demand, taken by the said party of the first part at the request of the said Keeler, in renewal of a note dated September 6, 1854, drawn by said Rumsey, and indorsed by said Keeler, and payable October 1st, 1854, for $3,000, on which said Keeler originally borrowed moneys, which said indebtedness, after several payments made by said Rumsey, did, on the 28d day of December. 1856, amount to seven hundred and four dollars and fifty cents, or about that sum, and bears interest from that date.” * * *

• Mattison’s order on Bliven & Mead for the $3,000, their check to Mattison’s order for that sum, indorsed by him, and subsequently by Rumsey, and the certificate for the 100 shares of Suffolk Bank stock, (which certificate stated Rumsey to be the proprietor of such stock,) with a blank power of attorney to transfer it, were produced on the cross-examination and read in evidence. John Gr. Bain, was. also examined on behalf of the

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plaintiff, and gave evidence in substance like that of Mr. Mattison. The plaintiff then rested and the defendant' moved to dismiss the complaint on the grounds,

“ First. That the original loan was made on the first note, and was merged in it.

“ Second. That the action was not brought, and could not be sustained, on the first note.

“ Third. That the agreement to indorse the second note was void within the statute of frauds.

“ Fourth. That if the action was brought for the deceit, it was not sustained by the pleadings or proof; and,

“ Fifth. That even if it was, such right of action could not be assigned, and did not pass to the plaintiff under the assignment.” The Judge granted the motion, and the plaintiff excepted to his decision.

The plaintiff moved at Special Term, on a case, for a new trial, and the motion was denied. From the order denying it, and from the judgment dismissing the complaint, the plaintiff appealed to the General Term.

James W. Gerard, for appellant (the plaintiff).

I. The plaintiff can recover, either:

1. On the original loan.

2. Or on the indorsement of the defendant on the note surrendered to the maker at his request.

3. On the promise to indorse a new note.

a. On 'the original loan, for securing which the original note was left as collateral security. Taking the note did not merge or destroy the contract of loan, for which the plaintiff can recover, merely accounting at the trial for the note taken as collateral security for the loan, which the plaintiff did. (Jackson v. Shaffer, 11 John., 513 ; Swartwout v. Payne, 19 id., 294; Hughes v. Wheeler, 8 Cow., 77 ; Davis v. Anable, 2 Hill, 339 ; Andrews v. Smith, 9 Wend., 53 ; Muldon v. Whitlock, 1 Cow., 290 ; Johnson v. Weed, 9 John., 310 ; 1 Kern., 368.)

5. The plaintiff could recover against the defendant' as indorser on the original note which was; given up to the maker at defendant’s request. The surrender or destruction of the note did not destroy the right of action. (Olcott v. Rathbone, 5 Wend., 490 ;

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Hughes v. Wheeler, 8 Cow., 77 ; Edwards on Promissory Notes, p. 633.)

c. Or on the promise to indorse the new note, the consideration of which promise was the original loan, or the surrender of the original note, on which the defendant was indorser, at the defendant’s request.

II. These causes of action, all and each of them, are on contract, and are assignable by the 111th section of the Code. Zabriskie v. Smith, (3 Kern., 332,) has nothing to do with this case.

III. The promise of the defendant to indorse the new note, is not within the statute of frauds. The statute of frauds has nothing to do with it. It is an original undertaking, founded on good legal consideration. (Meech v. Smith, 7 Wend., 318 .)

John E. Burrill, for the respondent (the defendant).

I. The original note was given to Mattison, the assignor 'of the plaintiff, and received by him in payment of the money loaned, and instead of an absolute liability to pay the loan, the defendant incurred, the conditional obligation of indorser of the note, and Mattison’s right of action rested exclusively upon the note. (Whitbeck v. Van Ness, 11 John. R., 409; Francia v. Del Banco, 2 Duer, 138 ; Booth v. Smith, 3 Wend., 66 .)

II. The plaintiff was not entitled to recover upon the original note.

1. The complaint does not contain any allegations authorizing a recovery upon the original note; nor is the action brought upon such note; nor did the plaintiff at the trial claim the right to recover upon it.

2. Even if Mattison could have maintained an action upon the original note, the plaintiff could not, because the assignment does not transfer to him any interest in the note, or any right of action upon it. •

3. Even were the complaint based upon the note, arid the assignment sufficient to transfer such right of action, the plaintiff was not, on the evidence, entitled to recover upon it.

HI. The plaintiff was not entitled to recover, upon the alleged agreement to indorse the second note. /

1. The complaint was not based upon any such right of recovery.

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2. The agreement was void within the statute of frauds. (Gallager v. Brunel, 6 Cow., 349 ; Carville v. Crane, 5 Hill, 483 .)

IV. The plaintiff was not entitled to recover on the ground of fraud or deceit on the part of defendant, in not indorsing the note.

1. Even if Keeler did promise to indorse the new note of Rumsey when it should be received, and Mattison gave up the old note to Rumsey, and took the new one, and Keeler then refused to indorse it—this did not establish any fraud upon the part of Keeler. (Gallager v. Brunel, 6 Cow., 349 ; Fisher v. N. Y. C. P., 18 Wend., 610 ; 1 Rawle, 311 ; Alston v. The Mechanics' Mut. Ins. Co., 4 Hill, 329 .)

2. Even had such conduct, on the part of Keeler, amounted to a fraud or deceit, so as to authorize Mattison to recover therefor, such right of action was not assignable. (Zabriskie v. Smith, 3 Kern., 322; Hyslop v. Randall, 4 Duer, 662 .)

The judgment should be affirmed.

The evidence seems to establish, with reasonable certainty, that Keeler, the defendant, applied to Mattison for a loan for himself of $3,000, proffering as security the note of Rumsey indorsed by himself, and Suffolk Bank stock as additional security. Mattison hesitated, stating he did not know the Bank or Rumsey. He afterwards consented. An order was drawn on Mattison’s banker, and Keeler sat down and indorsed the note, and gave it to Mattison.

The order was onBliven & Mead, the bankers, signed by Mattison, payable to bearer. They gave a check on the City Bank, payable to Mattison or order, for $3,000. He indorsed it. Keeler took Matfcison’s order to the banker’s, and brought back the check. Mattison delivered the indorsed check to Keeler, and it is produced in evidence, indorsed by Rumsey, not by Keeler.

Testimony was also given, tending to prove that the note was kept by Mattison in his own hands, and that about the time of its falling due, Keeler, the defendant, called, informed Mattison of the failure of the Bank, and requested time, proposing to give a new note for the amount, payable on demand; that defendant requested him, from some reasons of convenience, to call on Rumsey, get a new note for the old one, to bring it to him, the defendant, and he

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would indorse it. This was done, and the old note given to Rumsey; a new one obtained, and proffered to the defendant for indorsement, which he refused to make. Both the old and the new note were drawn by Rumsey, to his own order.

The assignment from Mattison to the plaintiff was produced in evidence, and transfers all the indebtedness, cause of action, claim and demand which he had against the said Walter Keeler for borrowed money, and for a failure and refusal on his part to indorse, according to promise, a promissory note of John Rumsey, dated October 1, 1854, for |3,000.”

The first note was dated September 6, 1854.

The evidence given in the cause would have warranted a jury in finding two facts: First. That the original loan was made to Keeler at his request, and as far as Mattison knew for Keeler’s own use and benefit, and upon the faith of Keeler’s indorsement of Rumsey’s note. Although the note was made by Rumsey, and the stock certificate was in' his name, the jury may have been warranted in considering that both were given to enable Keeler to raise money for himself. Second. That the old note was surrendered to Rumsey by Mattison, upon Keeler’s express promise to indorse a new one which Rumsey was to give. It is to be- noticed that the old note, as well as the new one, was by Rumsey, to his own order.

If the jury had been allowed to pass upon this evidence, and had found these facts, the case would have been presented of an original debt by Keeler to Mattison for money advanced by the latter directly to him, on his credit mainly, and secured by his indorsement; and of the surrender of the legal evidence of his liability by a trick and fraud, either devised at the time, or perpetrated by the refusal to give the promised renewal of this evidence.

If, as is contended, the original cause of action arising from the loan of money, was merged in the indorsement of the first note, ( 2 Duer, 138 ,) yet, when that indorsement was destroyed by the unwarranted act, or through the substituted agreement of the indorser and borrower, the party must be entitled to resort to the original right.

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The cases cited, of which Noel v. Murray, (3 Kern., 167,) is an example, are cases where the point has arisen, whether an admitted original liability has been relinquished by acceptance of .other security; and the question always is, was there. an agreement to receive the latter in payment ? Conceding that there was an agreement to'take the indorsement in place of the money demand, the point that there was a restoration of that demand by the withdrawal of the indorsement through deception, remains unaffected by any such case.

It is again insisted, that the agreement to indorse the second note was void, by the statute of frauds. Carville v. Crane, ( 5 Hill, 483 ,) and Gallager v. Brunel, ( 6 Cow., 349 ,) are cited. Those cases establish that a parol agreement to indorse the note of another for goods purchased by him, is not the ground of an action. There was no original debt between the parties to the promise.

Again, it is urged that the plaintiff, as assignee, is not entitled to recover. First, because the assignment did not pass any interest which could be the subject of an action; next, that if there was any such interest, it was not assignable.

The assignment transfers all the claim or demand of Mattison against Keeler for borrowing money, and for a failure on his part to indorse the note. The indebtedness of Keeler, and the cause of action, claim and demand of Mattison are transferred. The instrument is ample to assign whatever the assignor could claim.

The case of Zabriskie v. Smith, (3 Kern., 322,) was a case of a cause of action solely arising out of deceptive representations of the standing and credit of a purchaser of goods. The cause of action rested exclusively upon the deceit. There was nothing of an independent liability from contract expressed or implied, or on any other account, except this; it was held not to be an assignable claim.

But a right of action for the conversion of personal chattels is assignable, (2 Kern., 622;) and I apprehend that whenever a right is vested in one, growing out of a contract of any nature, it is assignable; and if the assertion of the original right involves the establishing of fraud or deceit connected with the action, the right to prove this follows the right to the original cause of action, and vests in the assignee with it.

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The counsel of the defendant raises one other point, .that there was nothing upon which to go to the jury; that there was no conflict of evidence, no witnesses being called by the defendant, and there were only legal questions raised.

He cites Barnes v. Devine, (2 Kern., 18,) and some other authorities have been referred to. " In the case of Barnes v. Devine, the unsuccessful party was the one who rested his case at the trial upon legal propositions alone, and omitted to request a submission to the jury. He was the mover there. In the present instance, the defendant’s counsel succeeded in getting a dismissal on legal grounds. The plaintiff has a right to say, that in this case a verdict should have been ordered in his favor, or the evidence should have been submitted to the jury, and the motion of the defendant denied.

We think there must be a new trial, with costs to abide the event.

Bosworth, Oh. J., and Moncrief, J., concurred.

Ordered accordingly.