West v. American Exchange Bank

By the Court, James C. Smith, J. Upon the facts found by the court at special term, the defendants can not be regarded [178] as purchasers or holders for value, of the note described in the complaint, or of its proceeds, according to the rule prevailing in this state, so as to exclude the claims of the plaintiff, who is the real owner. The facts that the defendants held the note as collateral security for the payment of any balance of account that might be owing by the Medina Bank; that the Medina Bank was largely indebted to the defendants before the note in question was received by the latter; and that the defendants credited said debtor, in account, with the amount of the proceeds of the note, when-collected, do not, of themselves, constitute a valuable consideration within the rule referred to, notwithstanding the defendants so credited said proceeds in good faith, in the ordinary course of business, and withont notice of the plaintiff’s title. (Stalker v. McDonald, 6 Hill, 93.) The only other fact, found by the court, upon which the defendants rely, is, that shortly after the proceeds of the note were credited in account, the defendants paid drafts drawn upon them by the Medina Bank amounting to several thousand dollars, and that said bank is still indebted to the defendants therefor, and is insolvent. -But it is not found that the defendants paid said drafts upon the credit of faith of the note in question, or of its proceeds. Without this, the subsequent advances are insufficient to sustain the defendants’ claim. (McBride v. The Farmers’ Bank, 26 N. Y. Rep. 450.) The defendants insist, however, that by the advances ref'ered to they paid the claim which the Medina Bank had against them for the amount collected on the note; but here again, the difficulty is that the court has not so found. The defendants also contend that the plaintiff can not maintain this action, for the reason that their bank was the agent of the Medina Bank in respect to the collection of the note, and owed no duty to the plaintiff. But the pleadings admit the reverse of this to he the fact. The complaint expressly alleges that “ the plaintiff employed the defendant to collect the note; which the defendant undertook to do [179] and this allegation is not denied by the answer. The most that can be claimed by the defendants is that the answer contains a version of the transaction which is in some respects inconsistent with the allegation in the complaint; bat that does not amount to a denial. (Wood v. Whiting, 21 Barb. 190.) It has been said that an allegation which, if uncontroverted, is to be taken as true, should be direct and positive; one which at most merely implies a fact or justifies an inference that such is or will be claimed to be the fact should not be construed as a material allegation. (Per Bosworth, J. Oechs v. Cook, 3 Duer, 161.) The correctness of these observations when applied to an. affirmative allegation, or an allegation of new matter, can not be questioned. The like remarks are equally applicable to an allegation in an answer by which it is attempted to deny a material allegation in a complaint, or, in other words, “to join issue.” A denial may be general or specific, at the option of the pleader, but in either case it must be direct and unequivocal. If it merely implies that the allegation is controverted, or justifies an inference that such is or will be claimed to be its effect, it will not be construed as a denial. Tested by this rule, the answer before us does not deny the allegation referred to, contained in the complaint, and that allegation being uncontroverted is to be taken as true, for the purpose of the action. This being the requirement of the statute, (Code, § 168,) the fact thus admitted by the pleadings can not be contradicted or varied by evidence ; and as the judgment of the court below is contrary to such fact, it is erroneous. [Monroe General Term, March 6, 1865, The judgment should be reversed, and a new trial ordered, with costs to abide the event. Ordered accordingly. E. Darwin Smith, J. 0, Smith and. Johnson, Justices.)