The Nassau Bank, Appellant, v. Joseph Campbell et al., as Executors of William Campbell, Deceased, Respondents

The Nassau Bank, Appellant, v. Joseph Campbell et al., as Executors of William Campbell, Deceased, Respondents. The Nassau Bank v. Campbell (74 Hnn, 616), reversed. (Argued June 13, 1895; decided October 8, 1895.) Appeal from judgment of the General Term of the Supreme Court in the first judicial department, entered upon an order made December 15,1893, which affirmed a judgment in favor of defendants, dismissing plaintiff’s complaint, entered upon a non-suit directed by the court on trial at Circuit. The following is the opinion: “This action was brought to recover the amount of two promissory notes, dated April 12, 1886, one for §5,000.00 and the other for §4,810.00, drawn by Pliyfe & Campbell to the order of William Campbell, payable on demand, with interest, and indorsed by the defendants’ testator. The five thousand dollar note contained the following clause at the end thereof: £ Having deposited with this note as collateral security, with authority to sell the same at public* or private sale on the non-performance of this promise without notice, five Fifth Avenue Plaza bonds for one thousand dollars each with accrued interest on the same from October 1st, 1884.’ The other note contained the same clause, with the exception that four bonds only were mentioned instead of five. “ The trial court and the General Term appear to have reached the conclusion that the plaintiff failed to establish a cause of action for the reason that the defendants’ testator, as indorser, had the right to depend largely upon the value of the securities pledged for the payment of the notes, and that the subsequent postponing of the bonds pledged as security to the payment of other bonds diminished their value and operated to relieve the surety. (Nassau JBcmlc v. Campbell, 63 Hun, 229.) “We have carefully read and re-read the evidence, and have failed to find any such question presented. The evidence is exceedingly meagre and the meaning of the witness is not in every instance made clear, but the facts disclosed, as we understand them, are substantially as follows: Phyfe & Campbell were owners of what is known as the Plaza Hotel property, and, at the time of the making of the notes in question, were engaged in the construction of that building. They had already mortgaged the property to the Hew York Life Insurance Company for the sum of §660,000.00, and again by second mortgage, running to Charles A. Peabody, Jr., as trustee, for $200,000.00, upon which bonds had been issued, secured by the mortgage. Twenty-two of these bonds had been issued to one Jacob F. Wyckoff, some of which, if not all, had by him been pledged to the plaintiff as security for a loan made to him. Phyfe & Campbell were desirous of procuring another loan upon the property, and the Hew York Life Insurance Company had offered to make a further loan of §200,000.00, provided the bondholders of the second mortgage would consent to have their bonds postponed and made a subsequent lien to the new loan. Most of the bondholders had consented, but Wyckoff having pledged his bonds to the Hassau Bank for money loaned, was unable to procure them to have them indorsed or stamped as postponed and made a subsequent lien to the new loan. To accomplish this it was arranged that Phyfe & Campbell should make the notes in suit and procure the indorsement thereof of William Campbell; that such notes should be delivered to Wyckoff, who should take them to the bank and procure the surrender of the bonds held by it as collateral for his loan. The notes were accordingly executed, taken to William Campbell, who indorsed them, and then they were delivered to Wyckoff. What he did with the notes does not clearly appear. Two days later we find him at the office of the attorney for the insurance company stating that he could not get the bonds out of the bank without paying nine thousand dollars, and that for that sum he would get the bonds and have them stamped. It does not appear whether any one agreed to pay him that sum or not, but that he then said he was going to the Hassau Bank to get the bonds and thereafter returned with nine, thousand dollar bonds, which he delivered up in lieu of the notes, and at that time he received a check from Mr. Peabody for the notes. Whether Peabody purchased the notes on his own account or whether he advanced the money for Phyfe & Campbell does not appear. The notes upon the trial were produced by the-plaintiff. At the time the notes were indorsed and delivered to Wyckoff there were no bonds or other securities attached to or accompanying them. It does not appear that any bonds had ever been deposited in any place as collateral security for their payment. They describe five and four £ Fifth Avenue Plaza bonds for one", thousand dollars each,’ making nine in all. There were two hundred like bonds that had been issued. The General Term appears to have been of the impression that the bonds held by the plaintiff _ were the ones that were intended to be pledged as security for the payment of the notes, but they say there were fifteen of these bonds and they were held by the bank as collateral for' the payment of Wyckoff’s notes. They were his bonds, pledged by him, and not bonds owned by or under the control and management of Phyfe & Campbell, so that they could be pledged by them for the payment of their debts. It will thus be seen that the evidence fails to establish the defense alluded to. “ It is further urged that the notes had been paid. The only evidence upon that subject is the response made by Mr. Phyfe in answer to the question as to whether any demand was made on him £ after the payment of the notes in the lifetime of William Campbell.’ His answer was ‘ that there uras not except on the date of the stamping of the bonds. They demanded payment then and we paid them.’ By referring back to the time alluded to we find that Peabody delivered his check to Wyckoff for the notes. This evidence has already been referred to and attention called to the fact that the nature of that transaction is not disclosed. Under the circumstances the court could not hold as matter of law that the notes had been paid. The most that could be claimed for the evidence was that it presented a question of fact for the jury. “ Ho other question is presented that requires consideration here. “ The judgment should be reversed and a new trial ordered, with costs to abide the event.” A. P. Whitehead for appellant. William II. Arnoux for respondents. [MAJORITY — Haight, J.,] Haight, J., reads for reversal and new trial, costs to abide event. All concur.