Transbel Inv. Co. v. Venetos

• Decision Date: 29 November 1938
• Citation: 18 N.E.2d 129,279 N.Y. 207
• Parties: TRANSBEL INV. CO., Inc., v. VENETOS.
• Court: New York Court of Appeals Court of Appeals

279 N.Y. 207

18 N.E.2d 129

TRANSBEL INV. CO., Inc.,

v.VENETOS.

Court of Appeals of New York.

Nov. 29, 1938.

Action on a note by Transbel Investment Company, Inc., against Jean G. Venetos. From a judgment of the Appellate Division, Second Department, 254 App.Div. 590, 3 N.Y.S.2d 189, which reversed a judgment of the Special Term and dismissed the complaint, plaintiff appeals.

Judgment of Appellate Division reversed and order of Special Term affirmed. Appeal from Supreme Court, Appellate Division, Second Department.

Manfred Nathan and Harold N. Schwinger, both of New York City, for appellant.

Saul Bergman and Joseph Rosenzweig, both of New York City, for respondent.

CRANE, Chief Judge.

The complaint in this action was dismissed on motion made under rule 107 of the Rules of Civil Practice, subdivision 6, on the ground that the cause of action did not accrue within the time limited by law for the commencement thereof. The complaint is brought upon a promissory note which, if it be under seal, comes within the twenty-year Statute of Limitations. The question presented on the motion was whether the note was a sealed instrument merely because it had opposite the maker's name the word ‘Seal,’ and, if not, whether a question of fact was presented calling for a trial, whereon the plaintiff would have the burden of proving that the note was intentionally sealed.

On the 10th day of March, 1925, A. J. Richey and his wife, Dorothy D. Richey, of Dade county, Florida, entered into a contract to sell real property in Florida to the present defendant, Jean G. Venetos. The contract called for installment payments secured by promissory note. The contract was concededly under seal. The complaint alleges the contract, and that the amount of the purchase price was past due and owing; that the Richeys tendered to the defendant a good and sufficient deed conveying good and marketable title, and demanded payment of the note sued upon; and that the defendant refused to pay or accept the deed. The note in question was signed and executed in Brooklyn, New York, March 10, 1925, for $12,183.50, payable at the Corn Exchange Bank, Flatbush Avenue Branch, in Brooklyn. It is Signed ‘J. G. Venetos (Seal).’ The word ‘seal’ is printed on the paper, so that we may assume that it was there at the time Venetos signed the note. A. J. Richey, the payee of the note, transferred his interest therein to the plaintiff. According to the authorities in this State, this promissory note is not a sealed instrument in the absence of any explanation as to how or under what circumstances it was made, or any statements or facts showing an intention on the part of the maker to adopt the seal or to create a sealed instrument.

Matter of Pirie, 198 N.Y. 209, 91 N.E. 587,19 Ann.Cas. 672, related to an ordinary form of promissory note bearing the name of the maker and, after the signature, a seal. There was nothing in the body of the note or the signing of it which indicated that it was intended to be a sealed instrument. This court said: ‘Ordinarily a seal affixed to a paper in the form of a promissory note changes it into a sealed instrument, which, under the statute of limitations, may run for 20 years; but the mere attaching of a seal after the signature does not raise a presumption that the note is a sealed instrument, unless there be a recognition of the seal in the body of the instrument, by some such phrase as ‘Witness my hand and seal’ or ‘Signed and sealed.’ The reason for this is that the mere attaching of a seal after a signature, without any recognition of it in the body of the note or in connection with the signing, in the absence of evidence showing the time when, and the person by whom, the seal was affixed, would open the door to frauds and forgeries, and enable evil-disposed persons to prevent the running of the six-year statute of limitations, by merely attaching at the end of the note a seal. Under such circumstances a seal is regarded merely as surplusage, and the character of the note is not changed.' Page 215, 91 N.E. page 589.

This rule of the Pirie Case has been followed by the courts of this State and in other States, and recognized as the rule of New York in the text books. We again referred to it in Empire Trust Co. v. Heinze, 242 N.Y. 475, 479, 152 N.E. 266, which related to an instrument described as having been signed and sealed, but which in fact lacked a seal. We said, referring to section 44 of the General Construction Law (Consol.Laws, ch. 22), which defined the nature of a seal [page 267]: ‘Intention, therefore, cannot make a seal where this provision has not been complied with. * * * The reverse of this proposition does not hold true. The seal annexed to an ordinary obligation like a promissory note does not necessarily make it a sealed instrument, in the absence of any indication that such was the intention.’ Citing Matter of Pirie, supra.

Again, in Cochran v. Taylor, 273 N.Y. 172, 178, 7 N.E.2d 89, 90, we noted that in the body of the instruments the parties had recited that they attached their seals ‘thereby establishing their intention concerning the sealing of the instrument,’ citing the Pirie Case. The authority of the Pirie Case has been recognized in Brooklyn Public Library v. City of New York, 222 App.Div. 422, 226 N.Y.S. 491, affirmed 250 N.Y. 495, 166 N.E. 179;Drexler-Rochester Properties, Inc. v. Paris, 236 App.Div. 409, 259 N.Y.S. 601, where, at page 410, 259 N.Y.S. at page 602, the court said: ‘The use of the letters L. S. appearing after the signature of a party to an instrument not required by law to be under seal is not alone sufficient to constitute the instrument subscribed a sealed instrument.’

In Caputo v. Di Loretto, 110 Conn. 413, 148 A. 367, a promissory note was signed by the defendant on a line at the end of which in brackets was the word ‘seal.’ It was held that the instrument was not a contract under seal, and that the six-year Statute of Limitations applied. The court said [page 368]: ‘To constitute such an instrument a contract under seal, there must therefore be some recognition of the fact on the face of the instrument, other than the mere addition of such word or letters. * * * The fact that the maker of the instrument himself wrote the word ‘Seal,’ or the letters ‘L. S.,’ after his signature at the time that he executed it, or that the instrument was one whose validity was dependent upon its being under seal, might indicate his intention.' The Pirie Case, 198 N.Y. 209, 91 N.E. 587,19 Ann.Cas. 672, was cited as an authority. See, also, Williams v. Turner, 208 N.C. 202, 179 S.E. 806, and to the same effect, Matter of Stamford Road Construction Co., D.C., 5 F.Supp. 650, 651, which cites not only Matter of Pirie, 198 N.Y. 209, 91 N.E. 587,19 Ann.Cas. 672, but Weeks v. Esler, 143 N.Y. 374, 38 N.E. 377, which preceded the Pirie Case as an authority upon the same point; 1 Williston on Contracts, § 209, p. 419; 25 Am. & Eng.Encyclopaedia of Law, 2d Ed., p. 76; Breitling v. Marx, 123 Ala. 222, 26 So. 203;Buckingham v. Orr, 6 Colo. 587;Chambers v. Kingsberry, 68 Ga. 828;Bradley Salt Co. v. Norfolk Importing & Exporting Co., 95 Va. 461, 28 S.E. 567; 19 Ann.Cas. 678.

The statement in the Pirie Case, that there must be recognition in the instrument of the seal, was nothing new to the law, as it is found in Newbold's Ex'rs v. Lamb, as early as 1819, 5 N.J.L. 449. See, also, Brannan's Negotiable Instruments Law, 6th Ed., p. 191; 34 Yale Law Journal, p. 786; 4 N.Y.Law Review, 432; American Law Institute, Restatement of the Law of Contracts, N.Y.Annotations, vol. 1, § 100.

The statement in the headnote of Barnard v. Gantz, 140 N.Y. 249, 250,¹ is misleading because under the letters ‘L. S.’ was the phrase, ‘Sealed and delivered in the presence of John Weber,’ and beneath this an acknowledgment.

The law, therefore, of this State is well established and has been followed and recognized, as before stated, in other courts. A promissory note bearing a signature, after which come the printed letters ‘L. S.’ is not in and of itself sufficient to constitute a specialty, a sealed instrument. There must be in the instrument some acknowledgment or recognition of the seal or else there must be proof that it was the intention of the parties to make it a sealed instrument. This proof may refer to words spoken or to circumstances of execution leading to the inference that the parties intended to use the seal.

The Pirie Case recognized that such proof might be forthcoming by citing Smith v. Henning, 10 W.Va. 596, 631, which stated: ‘To constitute a sealed instrument, there must be a seal or scroll affixed, and some recognition of it in the instrument, or some evidence of it aliunde; but it can never be maintained that such evidence, whether by the proof of witnesses or acknowledgment of the party, will not supply the place of such recognition.’

The affidavit of the defendant on the motion to dismiss the complaint stated that when the note was signed there was nothing said nor was there anything discussed, nor was there any intention that the note be considered a sealed instrument within the purview of the statute. The plaintiff met this by the affidavit of A. J. Richey, the payee. He denies that it was never the intention to seal the note but, on the contrary, asserts that the defendant did intend to affix his seal, and that the note was given in connection with the real estate transaction; that the note was given as part of a consideration for an instrument under seal, ‘and that it was understood between the parties to the contract and to the note that both were to be sealed instruments.’

We think these allegations are sufficient to create a question of fact regarding the nature of this instrument. Standing alone and by itself, unexplained, it is not a sealed instrument, but in view of these denials and allegations, the plaintiff may prove that it was the intention of the parties to make it a sealed...