Tradesmen's Nat. Bank v. Curtis

• Decision Date: 14 May 1901
• Citation: 167 N.Y. 194,60 N.E. 429
• Parties: TRADESMEN'S NAT. BANK v. CURTIS et al.
• Court: New York Court of Appeals Court of Appeals

167 N.Y. 194

60 N.E. 429

TRADESMEN'S NAT. BANK

v.CURTIS et al.

Court of Appeals of New York.

May 14, 1901.

Appeal from supreme court, appellate division, First department.

Action by the Tradesmen's National Bank against Grove D. Curtis and others. From a judgment of the appellate division (57 N. Y. Supp. 121) affirming a judgment in favor of defendants, plaintiff appeals. Reversed.

Arthur J. Baldwin, for appellant.

Rufus L. Scott, for respondents.

PARKER, C. J.

The Natalie Anthracite Coal Company, desiring to secure good paper for discount and at the same time sell some coal, sought out the defendants, composing the firm of Curtis & Blaisdell, and, through its Mr. Taylor, entered into arrangements with them by which it promised to deliver different grades of coal, at prices agreed upon, within the period of four months. Thereupon a draft was drawn by the Natalie Anthracite Coal Company upon the defendants for $3,000, payable four months after date, and indorsed by the Natalie Anthracite Coal Company; and across its face the defendants wrote an acceptance thereof, payable at the Nineteenth Ward Bank. This suit involves, also, another draft, for $2,500, in the same form, and executed under similar circumstances. On the day the defendants indorsed their acceptances upon the drafts the Natalie Anthracite Coal Company mailed them in a letter, with various other commercial papers, to the plaintiff, requesting it to discount the same and remit the money therefor, which it did. The drafts not being paid at maturity, they were duly protested, and notice thereof given to these defendants, who refused to pay, and this suit was brought. The defendants, in their answer thereto, among other matters, alleged, in substance and effect, that the drafts were accepted ‘by these defendants on the agreement and condition that coal to the full amount of said drafts should be delivered to these defendants by the said Natalie Anthracite Coal Company before the maturity of said drafts, and the same were payable by these defendants only after the delivery of such coal’; that the coal has not been delivered, and that such acceptances are without any consideration whatever; and that the plaintiff received the drafts so accepted with a full knowledge of the conditions upon which said acceptances were made. In so far as the answer contained a statement of the facts, it was supported by the evidence adduced upon the trial. Its conclusion, that because the makers of the drafts failed to deliver the coal as they had promised left the drafts without any consideration whatever to support the acceptances, was, of course, erroneous; for the promise of the Natalie Anthracite Coal Company to deliver the coal within four months was a sufficient consideration to support the promise of the defendants to pay for the coal at the end of four months, which promise was made in the form of acceptances of the drafts payable in that time.

The learned judge who wrote the dissenting opinion at the appellate division insists that the evidence failed to establish the allegations of fact contained in the answer, in that defendants failed to prove that the plaintiff had knowledge of the facts and circumstances attending the acceptance of the drafts by the defendants; his position being that, while knowledge of those facts was brought home to the cashier of the plaintiff, he was not at the time of receiving such information acting in behalf of the plaintiff, but was acting as a director of the Natalie Anthracite Coal Company. We find it unnecessary, however, to consider that question in the disposition of the case that we propose to make, and shall assume in the further discussion (without deciding) that the knowledge which the cashier acquired while acting as a director of the Natalie Anthracite Coal Company was the knowledge of the plaintiff. Therefore we shall consider the defendants as having proved the facts alleged in their answer. Those facts, however, not only do not constitute a defense, but, on the contrary, when considered with the other established facts, they constitute the plaintiff a holder of the drafts in due course. The drafts are complete and regular upon their face. The plaintiff became the holder of them before they were overdue. They had not at that time been dishonored. The plaintiff in good faith paid value for them, and, as the drafts were not due, there was no breach of the delivery contracts of the character understood by the plaintiff at the time of the discount by the bank. The Natalie Anthracite Coal Company therefore had good title to valid and enforceable drafts, which it turned over to the plaintiff for value; and the mere fact that it had knowledge that the consideration for the acceptances of the drafts was a promise to deliver coal, instead of an actual delivery of coal, in no wise affects its right to enforce its obligation against the defendants, so long as a discount was made by it before a breach of the agreement of the Natalie Anthracite Coal Company to make delivery of coal within the time specified. The learned judge who wrote for the appellate division laid down the correct rect rule of law upon this subject when he said: ‘It would be no defense to these acceptances that they were given upon an executory contract for the sale of merchandise, even if the plaintiff knew that an agreement existed between the makers and the accepttors that the drafts were not to be enforced until the merchandise was delivered, unless the acceptances were discounted with knowledge of the breach. Davis v. McCready, 17 N. Y. 230, 72 Am. Dec. 461.’ It was his view that the...