Tradesmen's National Bank v. Curtis

Patterson, J. : The defendants are sued as the acceptors of two drafts drawn upon .them by the Natalie Anthracite Coal Company. Those drafts were jiayable to the drawer’s order, were accepted by the defendants and were discounted by the plaintiff. The answer set up the affirmative defense that the acceptances were, by agreement with the drawer, ■conditioned upon the delivery by. the drawer of coal to the full .amount of both drafts; that such drafts were to be paid by the Receptors only after the delivery to them of such coal; that the coal never was delivered, and that, therefore, the acceptances were with•out consideration; that all of the facts mentioned constituting the .affirmative defense were within the knowledge of the plaintiff, and ■that having taken such acceptances with that knowledge, the plaintiff is not. a bona fide holder, but took tbe drafts subject to the •equities existing between the acceptors and the drawer. Upon the trial testimony was given of the circumstances under which the drafts were drawn and' accepted, and further evidence was introduced to show knowledge by the plaintiff’s cashier of the conditions [242] under which it is alleged the acceptances were given, and actual participation was shown of such cashier in the negotiations as the result of which the acceptances were made by the defendants. Upon conflicting testimony the jury found a verdict in favor of the defen d- . ants, and from the judgment entered upon that verdict and from an order denying a motion for a new trial the plaintiff appeals. 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 acceptors 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.) But under the proofs that is not the rule of law applicable to this case. The evidence introduced by the defendants showed that the plaintiff’s cashier was present at the time the defendants agreed to accept the drafts, and that the whole subject of the acceptances and the conditional liability of the defendants thereupon was discussed at an interview in which a Mr. Taylor, the president of the Natalie Coal Company, Mr. Blaisdell, one of the acceptors, and Mr. War-drop, the plaintiff’s cashier, took part. Blaisdell testified that there was produced at that interview a memorandum showing the state of an account between the Natalie Coal Company and the acceptors; that he was reluctant to give the acceptances; that Wardrop took the memorandum in his hand, and, finally, he (Wardrop) said it would be all right, that they would discount the paper, the acceptance. The .witness then testified that Mr. Taylor added, if the coal is not delivered the acceptances will be taken up. He was then asked : By whom ? ” to which he answered, “ By the Natalie Coal Company or the Tradesmen’s National Bank.” This testimony goes to the establishment- of the fact that, in the very inception of these acceptances, it was in contemplation that they should be discounted by the Tradesmen’s National Bank, and that the cashier of that bank was a party to the agreement, by which the defendants gave their acceptances, not to be enforcible unless the Natalie Coal Company delivered cbal to the full amount of such acceptances, and no coal was delivered. It was for the jury to say whether they would believe that testimony, and as they did believe it, their finding establishes that the [243] acceptances were discounted, not only with full knowledge by the plaintiff that they were made on the conditional agreement, but also with the understanding of. the plaintiff’s cashier that the bank would not enforce the paper against the acceptors if the makers did not deliver the coal. The cashier was willing to take the paper on that condition, as the jury must have found. The case, therefore, falls within Garfield Nat. Bank v. Colwell (57 Hun, 169), Benton v. Martin (52 N. Y. 570), and Higgins v. Ridgway (153 id. 130, 132), which hold that an instrument not under seal may be delivered upon conditions, the observance of which as between the parties is essential to its validity ; that the operation of the instrument may be limited by the conditions upon which the delivery was made; that parol evidence of such conditions is not open to the objection of varying or contradicting a written, contract, and that the rule applies to the enforcement of negotiable paper, not only as between the original parties, but as to others having notice. The judgment and order appealed from should be affirmed, with costs. Van Brunt, P. J., and O’Brien, J., concurred; Ingraham and McLaughlin, JJ., dissented.