Farmers' & Citizens' Bank v. Sherman — 19 N.Y. Super. Ct. 181

Majority

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The Farmers’ and Citizens’ Bank of Long Island, Plaintiffs and Appellants, v. Austin Sherman, Defendant and Respondent.

Headnote

1. Where, in an action against the maker of a note, the answer alleges that the note was paid and satisfied to the plaintiffs by a third person, for whose accommodation it was made; proof of any facts which amount to actual payment by such third person, is admissible.

2. If such an answer is deemed defective by reason of its not specifying the facts relied upon to establish payment, the plaintiffs’ remedy is a motion, to make it more definite and certain.

3. An agreement with the holder of a note by one for whose accommodation it was made, to pay it in a specified manner, when fully executed, inures to the benefit of the maker.

4. An agreement having been made by some of the directors of a bank, with a third person, its debtor, that the bank shall take specified property at designated prices in payment of the debt, an acceptance of such property by the Bank under such agreement, is an adoption by the Bank of the agreement as its contract, and will conclude it as effectually as if such agreement had been made originally by the Bank itself.

(Before Bosworth, Ch. J., and Robertson, J.)

Heard, February 14;

decided, February 25, 1860.

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This is an appeal by the plaintiffs from a judgment entered on a verdict rendered on a trial had before Mr. Justice Slosson and a jury, in May, 1859; and also from an order refusing a new trial.

The defendant is sued as the maker of a note for $1,980, dated July 5, 1854, payable to the order of Thompson, Stillman & Company, sixty days after its date.

The answer alleges that the note was made without consideration, and for the accommodation of Ralph Pomeroy, one of the payees; that the plaintiffs without defendant’s knowledge, by agreement with Pomeroy, after the note was due, extended the time for the payment thereof, “ and that the same was afterwards fully paid and satisfied by the said Ralph Pomeroy before the commencement of this suit.”

At the trial Ralph Pomeroy testified, that the note was an accommodation note, that it was borrowed for the accommodation of his firm, who gave their note in exchange for it.

The defendant, against the objection and exception of the plaintiffs, produced and read in evidence two agreements, one dated May 12, the other September 11, 1855.

The agreement of May 12, 1855, was, in terms, one between Ralph Pomeroy of the one part, and Laurens Reeve and Thomas J. Van Sant of the other part. It recites that the plaintiffs “hold certain securities now or formerly belonging to Ralph Pomeroy ” amounting to about $9,000, and claim that he is indebted to them about $13,000, exclusive of such securities; and théy agree with Pomeroy that the plaintiffs shall surrender him such securities, and that the plaintiffs will buy of him, to whom he agrees to sell, sufficient lumber of descriptions, and at prices therein named, to pay and cancel his indebtedness to the plaintiffs in full. The Bank to notify Pomeroy within two weeks of the quantity of any two or more of. said descriptions of lumber, so to be received, in payment, or in default thereof Pomeroy had the right to make such designation.

The lumber so designated to “ be delivered by said Pomeroy upon the line of the Potsdam & Watertown Railroad, at or near the junction of the railroad with the grade leading to Pomeroy’s mills as soon as conveniently may be, and at least as fast, as follows: $1,000 worth thereof in the month of July next; $3,000

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August , $3,000 September , $3,000 October , and the balance to make up such indebtedness, in the month of November next. Upon the delivery of the lumber so to be delivered in each month, the said Bank shall return to the said Pomeroy such paper to the amount of the value of the delivery in each month, as the said Pomeroy may require to be returned, out of the paper held by the said Bank against him—except the Sherman note now in judgment.”

The agreement of the 11th of September, 1855, was as follows, viz.:

“ Farmers’ and Citizens’ Bank,

Williamsburgh, September 11, 1855.

“ Ralph Pomeroy, Esq.,

“Dear Sir—Our Board have agreed to give you longer time to fulfill the contract made with you by Mr. T. J. Van Sant, Laurens Reeve and L. S. Richardson, on the part of this Bank, provided that you deliver us the $1,000 worth of lumber agreed by you with T. J. Van Sant this fall. You can send us as large a number of sugar shooks this fall as you are able—

price as per contract.

_ “ S. W. LOWERS, President.

“ O. M. BEACH, Cashier.”

Evidence was given, to the effect that Van Sant and Reeve were directors, Lowere president, and Beach Cashier, of the plaintiffs. Evidence was given upon the question of the amount of lumber delivered under these agreements, the time of such delivery and its value at the contract prices. It was proved that Pomeroy’s mills were at Potsdam and his “ woods in Franklin county.” The evidence of Pomeroy tended to show that lumber amounting in value to $8,800 had been delivered under these agreements and received by the plaintiffs, before the close of November, 1855. This evidence, as it was given, was all objected to as irrelevant and incompetent to prove any issue raised by the answer, and because the agreement of May 12,1855, was not proved to be the plaintiffs’ contract.

The plaintiffs offered evidence of the value of the lumber at Potsdam, which was received, and the defendant excepted. • - -

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" The defendant read in evidence a letter, dated July 14, 1856, directed to said Pomeroy* and signed “ O. M. Beach, Cashier,” which stated the lumber received by the 15th of November, 1855, to amount to, “say, $8,840.20,” and that he has charged to that account-certain notes (specified) amounting to ...... $8,925 58

“Cr. by lumber,................................. 8,840 20

$85 88

“To this, add” various items, including the note in suit, making a debit balance against Pomeroy of $5,422.63.

Pomeroy testified, that prior to the receipt of this letter, he had notified Mr. Beach, the plaintiffs’ cashier, that he wished to withdraw the note in suit, and that immediately on receipt of thatfietter; he wrote to him that he wished to withdraw the said note¡ Mr. Beach was examined as a witness by the plaintiffs, but .Was not interrogated in respect to these matters.

.■ A. letter from Pomeroy to the plaintiffs’ cashier, dated New York, June 22,-1857, requesting him, inter alia, to deliver to the defendant the note in suit, was read in evidence. The plaintiffs excepted to the decision, allowing it to be read. The defendant testified that this letter was delivered to him on the day of its date, and that he delivered to the cashier on the 27th of January,- 1858. This suit was commenced in November, 1857. The defendant testified against the objection and exception of the plaintiffs, that the bank designated Dr. Henry Hewitt to receive the lumber; that he inspected and received all the lumber delivered,- and that-he was not the defendant’s agent.

: -.-Whefi the testimony was closed, the plaintiffs moved to strike out. .all'the evidence relating to the agreement of May 12th, 1855; the. extension of it ; and the alleged execution of it. The motion was denied, and they excepted.

. • The plaintiffs then requested the Justice to charge the jury-r—

. 1st.. .That-none of the agreements, in evidence inured to the benefit of, or could -be taken advantage of by the defendant in this action: which request the said Justice denied, and he refused so to,charge; to which denial and refusal, the plaintiffs then and there duly excepted..

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2d. That the agreement of May 12th, 1855, had not been so proved as to show that the Bank is bound by it, and that the testimony respecting it should be disregarded by the jury: which last request the said Justice refused; and the plaintiffs duly excepted to such refusal.

3d. That the answer set up an unconditional payment by the defendant, and the defendant’s evidence tended to show an accord between the Bank and Pomeroy, and did not sustain the defense, and that the plaintiffs were entitled to recover on their evidence: which last request the said Justice refused; and the plaintiffs duly excepted to such refusal.

4th. That, if the agreements were binding on the Bank, and had been set up in the answer, the defendant was bound to show full performance of it in all respects; and that, if the jury believed that Pomeroy failed to perform it in any respect, the plaintiffs were entitled to recover, unless a sufficient excuse..were .shown: which last request the said Justice refused; and the plaintiffs duly excepted to such refusal.

5th. That, it being conceded that the agreement of May 12th, 1855, was not performed according to its terms, it became incumbent on the defendant to show that it was lawfully extended, and that all the conditions of the extension and all the terms of the agreement were afterwards fully complied with, to entitle the defendant to a verdict: which last request the said Justice refused; and the plaintiffs duly excepted to such refusal.

6th. That the defendant was bound to show, not only a full performance by Pomeroy, but an acceptance of such performance in satisfaction by the plaintiffs, in order to make the defense amount to a full payment; and the defendant having failed to do this, the plaintiffs were entitled to recover: which last request the said Justice refused; and the plaintiffs duly excepted to such refusal.

7th. That, if the jury believed that Pomeroy failed to comply with the conditions upon which the extension was given, either by not sending lumber of the value of $1,000, or by not sending sugar shooks, but box shooks of an inferior quality and value, the plaintiffs were .entitled to recover: which last request the said Justice refused; and the plaintiffs duly excepted to such refusal.

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8th. That, if the jury believed there was a failure to perform the agreement of May 12th, 1855, the plaintiffs were entitled to recover: which last request the said Justice refused; and the plaintiffs duly excepted to such refusal.

His Honor the Judge, after stating the nature and object of the action, and of the defense generally, charged the jury—

1st. That, for the purposes of this trial, the defendant might avail himself of the transactions between Pomeroy and the Bank to sustain his defense. To which charge, the plaintiffs then and there excepted.

2d. That the value of the lumber and stuff at the place of delivery, for the purposes of this trial, was to be taken as the value contemplated by the agreement. To which second item of said charge, the plaintiffs then and there duly excepted.

Sd. That, if the jury were satisfied that the condition in the extension paper was performed, and that the lumber therein mentioned was delivered and received by the Bank, and of the value therein mentioned, then Pomeroy had all of the Fall within which to deliver the lumber and stuff specified in the agreement of the 12th of May. To which third item of said charge, and each and every part thereof, the plaintiffs then and there duly excepted.

4th. That, under that agreement, Pomeroy had aright to withdraw securities to the amount in value of the lumber and stuff described in the contract delivered and received. To which fourth item of said charge, and each and every part of it, the plaintiffs then and there duly excepted.

5th. That, if the jury were satisfied that, at the time he gave the order on the Bank for this note, there was then an amount of lumber delivered to the Bank exceeding in value the amount of the note, and that none of the securities had then been withdrawn, the defendant would be entitled to a verdict; otherwise, the plaintiffs would be entitled to a verdict. To which fifth item of said charge, and each and every part of it, the plaintiffs then •and there duly excepted.

Whereupon, the jury found a verdict for the defendant.

The plaintiffs moved af Special Term for a new trial on a case, and on an affidavit of Cashier Beach to the effect “ that he was greatly surprised by such testimony (the testimony given to

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show the agreements and performance of them,) and the admission thereof under the pleadings in said action,” and “ that he believed that abundant evidence of the non-performance of said agreements on the part of Pomeroy, and of the non-acceptance of the alleged performance as a condition for the delivery of said note to Pomeroy,” could be produced on another trial. The motion was denied in October, 1859, and from that order and from the judgment entered on the verdict, this appeal is taken.

Some other items of evidence are stated in the opinion of the Court.

John M. Martin, for appellant.

Presented and argued written points, embracing the several exceptions taken at the trial.

Charles W. Sandford, for respondents.

This action was commenced on or about the 21st of Movember, 1857. It is brought against the defendant as the maker of a note dated July 5, 1854, for the sum of $1,980, payable sixty days after its date to the order of Thompson, Skillman & Company, and by them indorsed.

The defense set up in the answer is, that the note was made without consideration, to accommodate one Ralph Pomeroy, and that after it became due and payable, it was “fully paid and satisfied to the said plaintiffs by the said Ralph Pomeroy, before the commencement of this suit.”

The action was tried in May, 1859, before Mr. Justice Slossoh, and a jury. The defendant obtained a verdict in his favor, and from the judgment entered on it, and from an order denying a motion for a new trial, the plaintiffs appealed to the General Term.

The plaintiffs insist that the evidence admitted to- show payment was erroneously admitted, because the answer did not contain any allegations as to the particular facts thus proved and relied upon as amounting to a payment; and that an answer of the general form of the one interposed in this suit, will only permit evidence of a cash payment.

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Van Gieson v. Van Gieson, ( 12 Barb., 520 , and which, was affirmed by the Court of Appeals, 16 N. Y. R., 304,) does not favor this view.

If the particulars of the transaction between Pomeroy and the plaintiffs were not sufficiently disclosed by the answer, the plaintiffs’ remedy was a motion under section 160 of the Code. They could not accept the plea and go to trial upon it, and there interpose the objection for the first time, that it was not sufficiently descriptive of the particulars relied upon as constituting payment. (Seeley v. Engell, 3 Kern., 548, [II.])

If the note was made for the accommodation of Pomeroy, or of the firm of Thompson, Skillman & Company, of which he was a member, and if the Bank held this note and others as collateral security merely, for debts owing to it by Pomeroy; and if there was an executed agreement between him and the plaintiffs by which they agreed to take lumber at prices designated in payment of his indebtedness and of the collaterals held by them, and that Pomeroy might specify the collaterals to which the payments should apply, and if he designated this note as one to be deemed paid after sufficient lumber had been delivered and accepted to satisfy it; then from the time of such designation the note is in fact paid not only as between Pomeroy and the plaintiffs, but as between the defendant and the plaintiffs.

Although Pomeroy, while he testified that this note was made for the .accommodation of himself or of his firm, also testified that the firm’s note was given in exchange for it, yet, throughout the trial, it seems to be assumed, as a fact proved, that the note was an accommodation note. Ho objection was taken to the admission of any evidence offered, nor was any request to charge based on the pretense that the noté was not an accommodation note. I think, therefore, that in examining the exceptions taken, we should consider that there is no question that such is the character of the note.

There can be no question that the only claim of the bank upon the notes it had received from Pomeroy or his firm, (including the one in suit,) was as. security for his and their debts.

There was no controversy that all the lumber delivered by Pomeroy under the agreement of the 12th of May, 1855, and the agreement of the 11th of September, 1855, was received by

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the bank under those agreements, and that the bank sold it and received the proceeds. The cashier testified to these facts. Nor can there be any doubt that, at the contract prices, the lumber delivered and received amounted to $8,840.25. It was proved without an attempt at contradiction that, soon after the 14th of July, 1856, and after this amount of lumber had been delivered, and “ immediately on receipt of the letter of 14th of July, 1856,” by Pomeroy, that he notified the cashier of his wish to withdraw the note in suit. Pomeroy, therefore, did not acquiesce in the appropriation of the $8,840.25, which the bank, by the paper of July 14th, 1856, indicated a purpose to make, but on the contrary notified it, without delay, that this note must be given up. It was his right to make this requirement.

This view of the admissibility of the evidence under the pleadings, and of the meaning of the contracts adopted by the bank, even if not originally made by its authority, is an answer to all the exceptions taken to the admission or rejection of evidence.

As the bank took, and was to take the lumber at Potsdam, at a stipulated price; it was immaterial what was its net value in New York, or what was its actual value at Potsdam, or whether S. Austin sold it after it was delivered.

That Hewitt was the agent of the bank, was proved by its cashier, and although he testified that Hewitt was the agent of both parties, it was competent for the defendant to prove that Hewitt was not Pomeroy’s agent.

We think the evidence given presented a case not calling for the submission to the jury of any other questions of fact, than those embraced in the charge of the Judge, if it called for the submission of any question. The agreement between Pomeroy and the bank was made on the 12th of May, 1855, and the time for performing it was extended by the agreement of the 11th of September, 1855.

The communication from the cashier to Pomeroy of the 14th of July, 1856, represents that Hewitt (the bank’s agent) sent to the bank a statement dated November 15th, 1855, of lumber then delivered amounting to $8,840.25.

This communication concedes payment to that amount, and makes no suggestion that the $1,000 worth of lumber called for

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by the extension agreement of the 11th of September, 1855, was not so delivered as to comply fully with that agreement.

As the original agreement only called for the delivery of $1,000 worth in July, 1855, and of $3,000 worth in August, 1855, and as the extension agreement of September 11, 1855, was given because Pomeroy could not perform the original contract according to its terms, and inasmuch as by the 15th of ¡November, 1855, $8,840.25 worth of lumber was delivered; the fact is clearly demonstrated that more than $1,000 worth was delivered between the 11th of September and the 15th of ¡November, 1855. The conditions of the agreement of the 11th of September, 1855, having been complied with, and the $8,840.25 worth of lumber having been delivered and accepted under the agreement of May 12,1855, as thus extended, it needed only the fact that Pomeroy should require the note in suit to be returned to him, to entitle the defendant to have it deemed paid; treating it as a note made for the accommodation of Pomeroy.

It being proved without contradiction that Pomeroy “immediately, on receipt of the letter of the 14th of July, 1856,” gave notice to the Cashier that he “wished to withdraw the note in suit; ” the defendant was entitled to an instruction that the request thus communicated and the receipt of the lumber, the delivery of which was acknowledged by that letter, entitled the defendant to a verdict, if none of the other securities had been withdrawn. There was no pretense that any others had been 'then withdrawn.

The fifth instruction, instead of being unjustly prejudicial to the plaintiffs, was more favorable than they had a right to claim, as it left the jury at liberty to find for the plaintiffs if other securities had been withdrawn when the order on the Bank was given, (June 22, 1857,) though they may not have been withdrawn when the verbal notice was given on or about July, 1856, unless this part of the charge can be construed as referring to the verbal and not to the written order to give up this note.

If the views stated are correct, neither of the first three nor the last request to charge was properly made.

There was nothing in the evidence to justify an instruction in accordance with the fourth request. It was so clearly proved that $1,000 worth of lumber was delivered in the fall of 1855,

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subsequent to the 11th of September, that a verdict to the contrary would be manifestly against evidence. This view is an answer to the exception to charge as fifthly and seventhly requested.

If by the sixth request it was intended to insist that even if -the $1,000 worth of lumber was delivered within the time required by the agreement of the 11th of September, and if the amount of lumber delivered to and accepted by the Bank under the two agreements, exceeded in value the amount of the note in suit, the plaintiffs were entitled .to a verdict, although this note was an accommodation note and Pomeroy had required before this suit was brought that it should be returned to him; then an instruction was asked to which the plaintiffs were not entitled.

There could be no question on the evidence that the Bank received the lumber under the two agreements, and as performance of them to the extent of the price they agreed to pay for it. And there is no pretense that.they intimated, prior to bringing this suit, that they ceased to regard it as an open and subsisting contract.

Although, according to the evidence the Bank made an unprofitable contract with Pomeroy, yet the defendant’s equities are as strong as those of the Bank, and upon the written testimony and unconflicting evidence, and the fact determined by the jury, we think a defense to the note was established, and that no error was committed to the prejudice of the plaintiffs which entitles them to a new trial.

The judgment should be affirmed. Ordered accordingly.