American Brass & Copper Co. v. Pine

Page, J.: The action was • to recover on six promissory notes for $100 each, made by the defendant Mendel M. Pine, in his trade name, to the order of the plaintiff, and indorsed by the other four defendants. There is practically no dispute as to the facts in the case. [474] For a great many years the defendants Sidney M. Israel and David S. Pine had been continuously trading with the plaintiff, and had received a certain line of credit. Israel and Pine during this period had operated under trade names, or as owners of the stock of a corporation. In 1913 the Century Gas and Electric Fixture Company, which was owned and controlled by Israel and Pine, was adjudicated a bankrupt, but never received its discharge in bankruptcy. This corporation owed the plaintiff $7,000. In August, 1914, the defendant Sidney M. Israel, who, with the defendant David S. Pine was then acting as agent for the defendant Mendel M. Pine, doing business under the trade name of the Crown Chandelier Company, applied to the plaintiff for credit Plaintiff’s president informed him that he considered Israel and David S. Pine morally liable for the debt of the Century Gas and Electric Fixture Company, and that he would be willing to extend the same line of credit to the new enterprise that he had to the said corporation, provided they would pay the debt of the corporation. After some discussion as to the manner of payment it was agreed that payments of $100 should be made monthly. Plaintiff’s president required notes, indorsed by all the defendants, so that they could close the old account by crediting the same with these bills payable on the ledger. To this Israel agreed, and seventy-three notes for $100 each, payable in monthly intervals, signed in the name of the Crown Chandelier Company by Sidney M. Israel, attorney, and indorsed by the four defendants other than Mendel M. Pine, were delivered to the plaintiff. Pursuant to this arrangement the defendant Mendel M. Pine was enabled to and did secure goods from the plaintiff on credit from October 20, 1914, to August 30, 1916, at which time four promissory notes for $404.40 each, which had been given by the Crown Chandelier Company for merchandise purchased from the plaintiff and a check of that company for $413.28 having been protested for non-payment, the plaintiff refused to extend further credit. The defendants thereupon refused to pay the notes for $100 per month thereafter falling due. At the trial the first cause of action was withdrawn. The learned justice dismissed the complaint on the ground that there [475] was no consideration shown for the notes, inasmuch as the amount and terms of credit to be extended were not specified. The agreement was entirely parol. The parties to the negotiation had been dealing with each other for years and a definite credit had been established and was well understood by both parties. For this reason it was unnecessary that the details thereof should have been repeated at the time of the making of the contract. That this was true is demonstrated by the fact that they dealt with each other pursuant to the terms thereof for twenty-two months, until the defendants failed to pay notes that had been given for merchandise purchased. During this period there is no evidence of dissatisfaction on the part of the defendants with the credit established. The learned counsel for the respondents contends that if, after the giving of the notes in suit, the plaintiff had refused to extend credit, the agreement could not have been enforced; hence there was a lack of mutuality in the obligation. To the extent that equity would not decree specific performance of the contract, this is true. The reason for that, however, would be because the defendants would have an adequate remedy at law either in defense to an action upon the notes or for damages. It would be entirely competent for the defendants to show what credit had theretofore been extended, and thus make the obligations of the party clear. The plaintiff did not clearly prove that these notes were accepted in payment of the pre-existing debt of the Century Gas and Electric Fixture Company, and that company released from its obligation. There is testimony from which it appears that such might have been the case. If this was the fact, that in itself would be a sufficient consideration for the notes. The judgment should be reversed and a new trial granted, with costs to the appellant to abide the event. Clarke, P. J., Smith and Shearn, JJ., concurred; Dowling, J., dissented.