President, Directors & Co. v. Egerton — 23 N.Y. Super. Ct. 669

Majority

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The President, Directors and Company of the Agawam Bank, Plaintiffs and Respondents, v. John Egerton, (who was impleaded with W. H. Williams et al.,) Defendant and Appellant.

Headnote

1. In an action by the indorsees of a promissory note, suing as a corporation, against the maker, an answer which admits the making and dishonor of the note, and notice of non-payment to the indorsers, and merely denies the corporate character of the plaintiffs, the partnership of the indorsers, and the plaintiffs’ title to the note, may be struck out as sham, on affidavits containing testimony on those points which would be sufficient to establish the facts upon a trial; especially where the defendant, in support of his answer, does not deny the allegations of such affidavits, but merely denies that he has any knowledge or information sufficient to form a belief as to their truth.

2. An answer setting up that the note sued on was made for the accommodation of the payee, and upon the understanding that the indorsee had delivered certain property to the payee, and that, as defendant is informed and believes, it never was delivered, and the consideration of the note totally failed, is not sufficient to show a case of misappropriation which will prevent the answer from being stricken out as sham, on proof by affidavit that such note was discounted by the plaintiffs in good faith and without notice that it was an accommodation note.

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

Heard, February 7;

decided February 21, 1863.

This action was brought against John Egerton and W. H. Williams,-Arnold, and John and Henry Brown, (the last two names being used to designate unknown defendants, partners of the firm of Williams, Arnold & Co.,) and Thomas W. Wasson, Levi C. Hgnson, George C. Fish, and Josiah Bumstead, upon three promissory notes, of which John Egerton was maker and the other defendants were indorsers. The notes were dated October 19,

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October 22, and October 25, 1861, each at three months, for $4,500 each, drawn to the order of T. W. Wasson & Co., and indorsed in blank by T. W. Wasson & 'Co., and Williams, Arnold & Co.

The complaint set out the incorporation of the plaintiffs, the partnership of T. W. Wasson & Co., and Williams, Arnold & Co., the making, indorsement and delivery of the notes, the non-payment, protest and notice, and that plaintiffs were the legal owners and holders at maturity.

Judgment was recovered' against T. W. Wasson & Co., and against Williams, Arnold & Co., by striking out their answer as sham, and entering judgment against them as for want of an answer.

The answer of John Egerton, served March 22,1861, set up want of knowledge or information sufficient to form a belief, as to the incorporation of plaintiffs, the partnership of T. W. Wasson & Co., and of Williams, Arnold & Co., and as to whether the plaintiffs were the legal owners and holders.

It then set up as a further defense, “ that the said note was given by him as an accommodation note to the defendant Williams, on an understanding that Wasson & . Co. had delivered certain railroad cars in the city of Brooklyn, to said Williams, for the account of the Coney Island and Brooklyn Eailroad Company; that, as deponent is informed and believes, the cars never were delivered, and the consideration of said note totally failed; and that he has no knowledge or information sufficient to enable him to form a belief as to whether the said note came to the hands of the plaintiff, for value, before maturity.”

The same allegations and denials were repeated with reference to each of the three notes.” 9

A motion was made on December 11th, 1862, before Mr. Justice Eobertsob", on affidavits and a copy of the charter of the bank, to strike out the answer of John Egerton as sham and false, which was granted, and this appeal was taken from the order entered thereon.

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Cummins, Alexander & Green, for defendants, appellants.

I. On a motion to strike out an answer as sham and false, the. Court should receive no less proof of the allegations of the complaint put in issue by the answer, than would be required upon the trial of the issue.

II. When material facts alleged in the complaint are put in issue by the answer, the defendant is entitled to a Jury trial, and to a.cross-examination of the witnesses produced by the plaintiff.

1. The Constitution of this State guarantees a trial by Jury ill all cases where it was in use before 1846, and this case is one of those in which a Jury trial was used before 1846. (Const. N. Y. of 1846, Art. 1, § 2; Const, of U. S., 6th amendment; Livingston v. Mayor, &c., of New York, 8 Wend., 100 ; 3 Bac. Abr., tit. Juries, p. 231.)

2. The "defendant, Egerton, is entitled to cross-examine the witnesses who seek to show that the plaintiff has conformed to the requirements of its incorporating acts, as well as those witnesses who are offered to prove the co-partnerships alleged in the complaint. (Wirgman v. Hicks, 6 Abb. Pr., 17 .)

III. The answer of defendant Egerton shows that there has been a misappropriation of the notes sued upon. (Brown v. Taber, 5 Wend., 566 ; Commercial Bank v. Norton, 1 Hill, 501 ; Prall v. Hinchman, 6 Duer, 357 .)

IY. The new matter in the answer having rendered the allegation of the complaint, that the plaintiff received the notes for value, a material one, and such allegation being denied, on information and belief, (it being a matter that is supposed to be beyond the knowledge of the defendant, 7 Abb. Pr., 17 ,) the Court should not have struck the answer out as sham. (Davis v. Potter, 4 How. Pr., 155 ; Mier v. Cartledge, 8 Barb., 75 .)

Y. The defendant, Egerton, having made a full affidavit of merits, and an additional affidavit, reaffirming the statements in his answer, on the hearing of the motion appealed from, the Court should not have stricken out the answer as sham; and as the defendant, in that affidavit,

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denied the allegations in the moving affidavits, so far as he could have any personal knowledge of .the facts, the Court should have left the cause to be tried by a Jury. The truth or falsity of the allegations, and the punishment for false swearing, if there has been any, rests with another tribunal than that which granted the order appealed from. (The Farmers' & Mechanics' Bank v. Smith, 15 How. Pr., 329 ; People v. McCumber, 18 N. Y. R., 325.)

John L. Cadwalader, for plaintiffs, respondents. .

I. Since the case of People v. McCumber, a sham or false answer, although verified, may be stricken out on motion, when the plaintiff takes the burden of proof. (People v. McCumber, 18 N. Y. R., 315; Manufacturers' Bank v. Hitchcock, 14 How. Pr., 406 ; Elizabethport Manufacturing Co. v. Campbell, 13 Abb. Pr., 86 , Bailey v. Lane, Id., 354; Mussina v. Stillman, Id., 93; Smith v. Mead, 14 Id., 262; Corbett v. Eno, 13 Id., 65; S. C., 22 How. Pr., 8 ; Butterfield v. Macomber, 22 Id., 150 .

II. The only denials are from want of knowledge to form a belief, and all are proved conclusively by the affidavits to be false and sham.

III. The allegation that the notes were accommodation notes, can be no defense, as the plaintiffs are shown.&ona fide owners before maturity.

All the allegations of the complaint which are controverted by the answer, are proved to be true, by persons competent to know whether such facts are true or not, and duly authenticated copies of the acts of incorporation are also produced. The defendant, in his opposing affidavit, does not state that he believes or has any reason to believe, that the moving affidavits are untrue in any particular. He still deposes that he has no knowledge or information sufficient to enable him to form a belief whether these controverted allegations “ are true or false.” This refers in part to the fact of the plaintiff’s incorporation, and the evidence of

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that, produced on the motion, is sufficient to prove the fact on the trial. Thomas Wasson, one of the firm of T. W. Wasson & Co., swears that the plaintiffs discounted the notes for his firm, before their maturity. The cashier of the bank swears to the same fact, and that the bank paid the face of the notes to T. W. Wasson & Co., on the security thereof. Within the case of The People v. McCumber, (18 N. Y. R., 315,) all those parts of the answer which merely controvert allegations of the complaint, are sham. The answer admits the making of the notes, due demand of payment, notice thereof to the indorsers, and of the fail- . ure of the maker to pay.

The only other parts of the answer, are those which purport to be 61 a further answer” to each of the three causes of action, stated in the complaint; each of these is in the same form, Being parts of the answer setting up new matter, they severally admit all the allegations of the complaint which they do not controvert.

The separate defense to the first cause of action may therefore be examined, and if that is sham, then are the “ further answers ” to the 2d and 3d causes of action.

It controverts no allegation of the complaint, except that “ the note came to the hands of the plaintiffs for value, before maturity.” It is proved by the oaths of two persons that it did, and the defendant says he is unable to form a belief whether this is true or false.

The new matter is, that the note was made to accommodate W. H. Williams, “ and upon the understanding that Wasson & Co. had delivered certain railroad cars in the City of Brooklyn, %to said Williams, for the account of the Coney Island & Brooklyn Bailroad Company; that, as deponent is informed and believes, the cars were never delivered, and the consideration of said note totally fails.”

Proof that he was informed the cars were never delivered, and believed such to be the fact, is not very material. That would not affect the plaintiffs’ right to recover.

He does not allege that the notes were made to be used in paying for any such cars, or that it was so represented

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to him, when he made them. The answer, therefore, does not show a case of misappropriation, admitting all of its statements to be true. He says he made them “ upon the understanding ” that certain cars had been so delivered. He does not say, in the answer, that Williams so represented, or that he said a word on that subject. There is, therefore, nothing in that answer, admitting its allegations to be true, which tends to show that the" note was not made for the general accommodation of Williams.

And whether it was or not, Wasson swears that it was discounted for his firm, by the plaintiffs, before its maturity, and the plaintiffs’ cashier swears that the plaintiffs advanced to Wasson’s firm the face of the note, on the security of it, Bona fide, without any notice that it was an accommodation note. The defendant does not swear that he has any reason to suppose that he can prove anything tending to show that any of these sworn statements are untrue.

I think the order appealed from is correct, and that it should be affirmed.