Federal National Bank v. Cross Creek & Pittsburg Coal Co.

Supreme Court of Pennsylvania January 6, 1908

Federal National Bank v. Cross Creek & Pittsburg Coal Co., 220 Pa. 39 (Pa. 1908)

68 A. 1018; 1908 Pa. LEXIS 723

Brown, Elkin, Fell, Mestrezat, Potter, Stewart

Opinion of the Court

Opinion by

Mr. Justice Stewart,

If the affidavit of defense in this case is somewhat lacking in precision and exactness, quite as much can be said of the *41plaintiff’s statement. The action was on two promissory notes, on each of which defendant’s name appears as fourth indorser and in no other connection. Plaintiff in its statement avers that it discounted these notes in the ordinary and regular course of its business before maturity, and that the proceeds “ were duly had and received by the parties to said notes.” But what parties ? The notes on their faces are what are ordinarily denominated business paper, and presumably they would be the property of the holder, the defendant company. If discounted in the regular course of business the proceeds would belong, not to the parties to the notes, but to the holder or last indorser. The statement that the bank paid the proceeds to the parties to the notes, at least weakens, if it does not overcome, the presumption that the bank is a holder in due course. The affidavit of defense makes 'specific denial that the defendant received any benefit or advantage from the discounting of the notes, and avers that defendant’s name appears on the notes by way of accommodation indorsement simply, and that by the unauthorized act of the manager of the company. In view of the indefiniteness of plaintiff’s statement as to whom defendant paid the proceeds,-and the fact that plaintiff must be held to know that an agent of a corporation has no implied authority to bind the corporation by an accommodation indorsement, we think the facts set up in the affidavit were sufficient to prevent judgment. It was adjudged insufficient on the ground that defendant did not in terms deny that the plaintiff was a holder in due course. While it does not expressly deny this, it sets out facts and circumstances which are so wholly inconsistent with it as to constitute a virtual and substantial contradiction. Because of the indefiniteness in the statement of claim which we have pointed out, the case is not one which calls for rejection of the affidavit for want of that precision which in ordinary cases the plaintiff has a right to expect and require.

Judgment reversed and a procedendo awarded.

Reference

Full Case Name: Federal National Bank v. Cross Creek & Pittsburg Coal Company
Cited By: 2 cases
Status: Published
Syllabus: Affidavit of defense — Promissory notes — Discount—Banks and banking —Practice, C. P. The agent of a corporation has no implied authority to bind the corporation by an accommodation indorsement. Where, in an action by a bank against a corporation on promissory notes on which the defendant’s name appeared as fourth indorser and in no other connection, the statement of claim avers that the notes were discounted by the plaintiff before maturity, and that the proceeds went to the parties to the notes, an affidavit of defense is sufficient to prevent judgment, which avers that the defendant’s name on the notes was only by way of accommodation indorsement, that the indorsement was the unauthorized act of defendant’s manager, and that the defendant never received any benefit or advantage from the discounting of the notes.