Reserve Plan, Inc. v. Schleider

• Decision Date: 25 October 1955
• Citation: 145 N.Y.S.2d 122,208 Misc. 805
• Parties: RESERVE PLAN, Inc., Plaintiff, v. William SCHLEIDER, Defendant.
• Court: New York City Municipal Court

Page 122

145 N.Y.S.2d 122

208 Misc. 805

RESERVE PLAN, Inc., Plaintiff, v. William SCHLEIDER, Defendant.

Municipal Court of the City of New York, Borough of Bronx,

Second District.

Oct. 25, 1955.

Maurice Falk, New York City, for plaintiff.

William Schleider, in pro. per.

BENNETT, Justice.

This motion for summary judgment is denied. The defendant appeared in person and argued in opposition to the motion. It appears that the action was brought to recover the unpaid balance of an alleged promissory note. The plaintiff contends that it is a holder for value in due course and that as such the defenses of general denial, breach of warranty and breach of agreement are not available against it. The instrument on which the action is predicated was executed by the defendant on May 5, 1954 and was given to secure payment for dental work to be performed by the payee. These payments were to be made in monthly installments of $20 each beginning June 5, 1954 for a total sum of $480. Two days after the execution of said instrument the same was negotiated to the plaintiff.

The defendant contends that the payee did not perform his agreement and that he still is in serious need of dental care which the payee has neglected and refused to furnish him; that he was not informed that the instrument he signed was a negotiable document but only a contract for instalment payments.

The question arises as to whether the agreement is in fact a negotiable instrument. If it is then the defenses asserted would not be available against this plaintiff. However, if the instrument does not conform to the requirements of the Negotiable Instruments Law of the State of New York, such defenses may be asserted against the present holder.

Section 20 of the said Negotiable Instruments Law provides in subdivision 2 thereof as follows: 'Must contain an unconditional promise or order to pay a sum certain in money', in setting forth the elements of a promissory note.

Examination of the instrument in suit discloses that the same contains this proviso, 'In case of death of maker all payments not due at date of death are cancelled'. Can it then be said that the form of the instrument sets forth an unconditional promise to pay a sum certain? It appears to this Court that such essential element is definitely lacking. See McClelland v. Norfolk Southern Railroad Co., 110 N.Y. 469, at page 475, 18 N.E. 237, at page 240, 1 L.R.A. 299, wherein it was held as follows:

'If, however, these coupons contained notice to the holders of any facts or circumstances showing that the time of their payment was subject to a contingency over which the holder had no control, and which might postpone their payment indefinitely, then they could not be said to be bona fide holders thereof, as the negotiability of the paper would be thereby destroyed. It is undoubtedly the general rule that the bonds of railroad, manufacturing, municipal, and other like corporations, payable to bearer, issued for the purpose of securing loans of money, are in this country deemed negotiable, and coupons thereto attached partake of the same character. 1 Ror. R. R. 250; Evertson v. [National] Bank [of Newport], 66 N.Y. 14; Thomson v. Lee County, 3 Wall. 327 ; [Board of] Commissioners [of Knox County] v. Aspinwall, 21 How. 539 . But when such instruments contain special stipulations, and their payment is subject to contingencies not within the control of their holders, they are, by established rules, deprived of the character of negotiable instruments, and become exposed to any defense existing thereto as between the original parties to the instrument. It is essential by such rules that such paper should...