Mount Vernon Trust Co. v. Bergoff

• Decision Date: 24 November 1936
• Court: New York Court of Appeals Court of Appeals

272 N.Y. 192

5 N.E.2d 196

Court of Appeals of New York,MOUNT VERNON TRUST CO.

v.BERGOFF.

Nov. 24, 1936.

Action by The Mount Vernon Trust Company against Clara Bergoff. From a judgment of the Appellate Division, Second Department (247 App.Div. 737, 285 N.Y.S. 417), which affirmed a judgment of the Trial Term for the defendant, the plaintiff appeals.

Reversed and judgment directed for plaintiff. Appeal from Supreme Court, Appellate Division, Second department.

Clinton T. Taylor and James D. Hopkins, both of White Plains, for appellant.

Arthur C. Blatz and Samuel Rochlin, both of Mount Vernon, for respondent.

LEHMAN, Judge.

In October, 1932, Rose Bergoff, the mother of the defendant, owed the plaintiff bank the sum of $34,644.23 upon a promissory note which was fully secured by collateral deposited with the bank. At that time the defendant owned a bond and mortgage executed by Oakwood Gardens, Inc., on which the sum of $30,000 was due, with accrued interest amounting to $1,505. The mortgage was guaranteed by an additional bond executed by Milton Hall, an executive vicepresident of the plaintiff bank, and two other persons. The defendant's father, acting on her behalf and also on behalf of his wife, Rose Bergoff, had many conversations with the president of the plaintiff bank and with Hall in regard to the payment of the defendant's bond and mortgage. The testimony in regard to what was said then about Hall's guaranty is vague, but perhaps, as the respondent claims, it is sufficient to show that Hall said that in signing the guaranty he had been acting for the bank and that, upon the demand of the defendant's father, the bank thereupon agreed to accept assignments of the bond and mortgage, together with the separate bond guaranteeing payment thereof, and credit the amount of $31,505 then due as part payment of the note of the defendant's mother, Rose Bergoff. Accordingly, these instruments were assigned to the plaintiff bank, and Rose Bergoff then executed a new note for $3,139.23, the difference between the amount due on her original note, and the sum of $31,505 credited thereon, and the original note and the original collateral securing it were then returned by the bank.

Then the defendant at the request of the bank executed and delivered the instrument upon which this action is based. At the same time she received back from the bank a letter in which the bank through its president wrote: ‘It is understood that the collateral note of $30,000 * * * this day executed by you and purchased by The Mount Vernon Trust Company is to be held by the Mount Vernon Trust Company only as additional evidence of the debt of Oakwood Gardens Inc. to The Mount Vernon Trust Company and collection of said note is not to be enforced as against you, anything contained in said note to the contrary notwithstanding, and further that the collection of said note will have to be made by the undersigned out of the collateral this day assigned as security therefor.’ At the close of the evidence both sides moved for the direction of a verdict and the trial judge directed a verdict in favor of the defendant. The Appellate Division affirmed the judgment, holding that the defendant's note was made without consideration and upon a condition precedent which prevented it from taking effect. It relied for authority largelyupon the case of Higgins v. Ridgway, 153 N.Y. 130, 132,47 N.E. 32.

It may be conceded that what was said and, perhaps, even what was decided in that case tends to support the decision of the courts below. There a clerk, employed by a firm of which a director of a bank was the senior member, executed a note for $15,000 to the order of the bank upon the promise or...