Armstrong v. Scott

• Citation: 36 F. 63
• Parties: ARMSTRONG v. SCOTT et al.
• Decision Date: 03 September 1888
• Court: U.S. District Court — Southern District of Ohio

36 F. 63

ARMSTRONG v. SCOTT et al.

United States Circuit Court, S.D. Ohio, Western Division.

September 3, 1888

E. W Kittredge and W. B. Burnet, for plaintiff.

Paxton & Warrington, for defendants.

SAGE J.

The plaintiff's action is upon a promissory note for $10,000 made by the defendant Scott, and discounted by the Fidelity National Bank for account of the indorser, the defendant the Farmers' & Mechanics' State Bank. The note came to the possession of the plaintiff before its maturity. The amended answer of Scott is that, at the request of his co-defendant, he being its cashier, he signed the note as maker without consideration, and solely to enable his co-defendant to have it discounted, all which was at the time known to the Fidelity National Bank. In other words, Scott was an accommodation maker, and that fact was at the time known to the Fidelity National Bank. This is no defense. The answer also sets up that the Fidelity Bank took the note under an agreement that it was the obligation of the defendant bank, and that the Fidelity Bank would look to said bank only for payment. But it appears from the answer that this agreement is evidenced by correspondence between the Fidelity Bank and the defendant bank, prior to the signing of the note, which is fatal to the Plea, as is also the fact that the agreement is in conflict with the note. The amended answer of the defendant bank sets up the facts pleaded by its co-defendant Scott, who, it alleges, signed the note as maker, 'without consideration, and merely for the purpose of complying with a custom of the Fidelity National Bank requiring two names upon paper discounted. ' These allegations establish, as against the demurrer, that the defendant bank is the principal debtor, and that Scott, although the maker, is only a surety. The answer further sets up that the proceeds of the discount of the note were placed by the Fidelity Bank to the credit of the defendant bank, subject to check or draft, 'and to pay and meet said note when the same became due;' that the defendant bank drew upon said proceeds for $1,009.23, leaving a balance of $8,809.94, which has not been drawn against, and that at the maturity of the note defendant tendered to the plaintiff the sum of $1,190.06, the balance due on the note, after deducting said sum of $8,809.94, which 'was permitted to remain with said Fidelity National Bank to meet a like amount to become due upon said note. ' The tender was refused, and the defendant now brings into court said balance for the plaintiff, and prays that the $8,809.94 may be allowed by way of set-off against the note. The plaintiff demurs to each of these answers for insufficiency.

The question suggested upon the argument of the demurrer, whether the defendant bank, being the indorser, is entitled to plead the set-off, is disposed of by the finding already made, that the defendant bank is in fact the principal debtor. It is contended for the defendant bank that the receiver took the note subject to all equities. That is true...