Chapman v. Ogden

These actions were originally brought as one action upon two promissory notes made by John R. Ogden and indorsed by the other defendants. John R. Ogden answered separately and John R. Ogden, Jr., answered on behalf of the other defendants Ogden. The plaintiff’s counsel having contended that each defendant should have verified the answer, the action was severed as to the defendants Josephine E. Ogden and Charlotte. S. Ogden, and they were declared to be in default. This default was opened and they were subsequently allowed to answer; whereupon each defendant filed a separate answer, and all the appellants filed affidavits denying the receipt of notice of protest. The issues in both actions presenting precisely the same question, the cases were tried together and the same testimony and proceedings were made applicable to each by stipulation.

The evidence showed that in 1890 and 1891 the firm of Morehead & Ogden was engaged in the brokerage business in the city of New York, and was composed of Franklin 0. Morehead and John R. Ogden. The firm was indebted to the plaintiff for moneys deposited by her with the firm in the sum of §2,271.20 ; and in addition she had a claim against them for $2,358.35 for the conversion of two bonds belonging to her which she had left with them. Demand being made upon said firm for a return of the bonds and for payment of the open account, it was finally arranged that the plaintiff should accept in full settlement of her claim against Morehead & Ogden the two notes mentioned in the complaint; one for $2,271.20, the amount of the open account, arid the other for $2,358.35, the value of the bonds; said notes to be payable on demand, to draw interest from date, and to be indorsed by Josephine E. Ogden, John R. Ogden, Jr., and Charlotte S. Ogden. The said notes were delivered and accepted in full settlement of the claims of the plaintiff against Morehead & Ogden. Accompanying the notes was an agreement under seal of Josephine E. Ogden, by which she admitted having indorsed the notes freely and voluntarily and for a valuable consideration; and by which she undertook and agreed to pay *357the note, waiving any defenses, legal or equitable, for any cause that she might have to any action against her for the recovery of both or either of said notes or any amount unpaid thereof. The notes and agreement were dated August 28, 1891. Subsequently the defendants Josephine E. Ogden, John E. Ogden, Jr., and Charlotte S. Ogden executed an instrument bearing date the 30th of October, 1891, whereby, among other things, in consideration of the plaintiff not bringing suit before the 1st of November, 1891, and for other valuable considerations, they admitted that said notes were duly and in due time presented for payment but were not paid, and that said notes were in due time protested, and each of them admitted the receipt of due and timely notice of non-payment of said notes and ■of the protest of said notes for non-payment. Then followed a reiteration of the statement as to indorsement for value and the waiver of all defenses, legal or equitable. This paper, however, was not delivered until the 4th of November, 1891. The plaintiff also offered evidence of protest by the notary, who swore to the mailing ■of the notice of protest, but upon cross-examination it would appear that he knew nothing about it and had no present recollection as to whether he mailed the notices or not.

Upon this state of facts the defendants’ counsel asked to go to the jury upon all the issues, but a verdict was directed in favor of the plaintiff, and from the judgment thereupon entered this appeal is taken.

It is undoubtedly true, as claimed by the counsel for the appellants, that this controversy being between the original parties to the instruments, any defenses which the indorsers might have to the notes would be available, and it seems to be claimed upon the part of the appellants that, because the indorsers received no consideration, therefore, no liability exists upon the contract of indorsement, notwithstanding that the notes may have been indorsed for the accommodation of the maker and appropriated by the maker to the very purpose for which they were intended, namely, the payment of his indebtedness. In this we think the learned counsel is in error. It is difficult to see what accommodation there would be in an instrument unless it could be used by the person for whom the same was made. In the case at bar the firm of Morehead & Ogden were indebted to the plaintiff upon a contractual indebtedness and also *358upon an indebtedness arising in tort. The plaintiff agreed to accept these indorsed notes in payment of both of these claims, and at the request of the maker of the notes the indorsements were made, the notes delivered and the indebtedness canceled.

It is undoubtedly true that there is no evidence in the case that the payee of the note agreed to forbear for any length of time the collection of her debt from the firm of Morehead & Ogden. But the evidence is beyond dispute that by talcing these notes she released the firm from remedies which she had against them for the collection of her claim, and the indebtedness of Morehead & Ogden became merely that of surety, where they had been principals, and was simply of a contractual nature, whereas a portion of it had before been of a different character, for the enforcement of which she had remedies which, by the acceptance of the notes, she relinquished. It is true, as claimed by the counsel for the appellants, that, until notes come into the hands of a bona fide holder for value, the defense of want of consideration is a good defense and available to the indorser against the plaintiff who parted with nothing on the strength of the indorsement. But it seems to us that the facts above stated are lost sight of — namely, that the plaintiff upon the receipt of these notes did give up rights and was a holder for a' valuable consideration. (Phœnix Insurance Co. v. Church, 81 N. Y. 218; Fleischmann v. Stern, 90 id. 115; Mayer v. Heidelbach, 123 id. 332, and Matter of Utica Nat. Brewing Co., 154 id. 272.) Upon this branch of the case we do not think that the instrument of October thirtieth had any probative force. It was not delivered until after the time of forbearance mentioned therein had elapsed, and, consequently, there could have been no forbearance resulting from the execution of that paper.

It is urged that in any event the defendants were entitled to go to the jury upon the question whether the notices of protest had been mailed. This would .have been so had the plaintiff’s case depended upon the testimony of the notary. But an unqualified and uncontradicted admission of all the defendants that they received notice of protest was contained in the instrument of October thirtieth, and although that paper may have no value as an agreement, the admissions contained therein, which have not been qualified or contradicted by any evidence, must be taken into consideration in deter*359mining the issue to which they relate. In this paper the defendant indorsers admit the recei]3t of notice of protest. They have nowhere denied this fact upon the trial; eonsecpiently, the proper mailing of the notice of protest was proved independent of the testimony of the notary.

Upon the whole case we are of opinion that the judgments should he affirmed, with costs.

Patterson, O’Brien, Ingraham and McLaughlin, JJ., concurred.

Judgment affirmed, with costs.