Steele Du Bosque, Respondent, v. George H. Munroe and Carroll M. Robertson, Appellants

Steele Du Bosque, Respondent, v. George H. Munroe and Carroll M. Robertson, Appellants. First Department, July 9, 1915. Bills and notes — defenses available to original payee —lack of consideration — pleading — consideration. Whether or no an instrument in the form of a promissory note is nonnegotiable by reason of the fact that the promise to pay is not unconditional but is contingent upon an election by the holder, the defense of •lack of consideration is available where the original payee is still the holder. Where such instrument contains the words “for value received ” and is pleaded in Tubo verba, it is equivalent to an allegation of consideration; but this may be controverted by the maker. Appeal by the defendants, George H. Munroe and another, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 6 th day of October, 1914, granting plaintiff’s motion for judgment on the pleadings, after the service of an amended answer, and also from the judgment entered in said clerk’s office on the 19th day of October, 1914, pursuant to said order. Mortimer Boyle, for the appellants. John R. Halsey, for the respondent. [MAJORITY — Scott, J.:] Scott, J.: The plaintiff moved for judgment on the pleadings, consisting of a complaint and answer. His motion was granted, the court thereby holding, in effect, that the answer stated no defense. The action was upon an instrument described as a promissory note, signed by defendants and reading as follows: “Dec. 1st, 1913. “$10,000. “ Six (6) Months after date “We promise to pay to Steele Du Bosque or order Ten Thousand Dollars, for Value received, — per cent per annum, having deposited with Steele Du Bosque as collateral security $10,000 par value Preferred Stock, and $7,000 par value Common Stock of the North American Films Corporation. “ This note is given with the understanding that it is at the option of Steele Du Bosque, at the expiration of five (S) months from this date,- either to return us this note cancelled and retain the securities attached, or notify us in writing that he wishes this note paid' at maturity, and return us the securities attached, upon payment of note.” The complaint goes on to state that at the expiration of five months the plaintiff notified defendants that he desired payment of the note and would return the security on payment, but that defendants have refused'to pay. Although the instrument sued upon is a promissory note it is claimed by appellants that it is not a negotiable one since the promise to pay is not unconditional but contingent upon the holder electing to require payment. (Neg. Inst. Law [Consol. Laws, chap. 38; Laws of 1909, chap. 43], §§ 20, 23.) But whether negotiable or not is unimportant, for it is still held by, as the complaint alleges, the original payee and it is, therefore, open to the defendant makers to defend against it on the ground of lack of consideration. The recitation in the body of the instrument is that it was “for value received.” The instrument being pleaded in Jicec verba, is equivalent to an allegation of consideration (Owens v. Blackburn, No. 1, 161 App. Div. 821), but may be controverted by the makers. By the answer the defendants do undertake to controvert the allegation that the instrument was given “ for value received ” by distinctly denying that allegation. They also allege, in their separate defense, that “ there never was any valuable or other legal consideration for the making and delivery of the note.” It is difficult to see how the defendants could have denied consideration more categorically than they have done. Consideration or the lack of it being an issuable fact, and distinctly put in issue by the answer, the plaintiff’s motion for judgment on the pleadings should not have been granted. The judgment and order appealed from are reversed, with costs. Ingraham, P. J., Clarke, Dowling and Hotchkiss, JJ., concurred. Judgment and order reversed, with costs, and motion denied.