
    City Savings Bank, Resp’t, v. Henry E. Stevens, Jr., et al., App’lts.
    
      (New York Superior Court, General Term,
    
    
      Filed July 2, 1891.)
    
    1. Accord and satisfaction—What does not constitute.
    Plaintiff, by discount, in the usual course of business, became the holder of the note in suit, before maturity, and without notice that it was accommodation paper. In an action against the makers it appeared that the plaintiff held judgments amounting to $27,589, including the note in suit, against the payee, and had agreed that they should be discharged on payment of $20,691, and that plaintiff should hold all bills receivable in its possession, belonging to the payee, and endeavor to collect the same from the makers and credit the proceeds on the $20,691. That $5,000 had been received from the receivers of the payee’s property, and credited under the agreement. Held, that the transaction did not constitute an accord and satisfaction of the plaintiff’s demand against the makers, nor impair his remedies against them, they not- having pleaded the receipt by plaintiff of the $5,000, nor claimed any pro rata benefit from it.
    Appeal from judgment in favor of plain tiff, entered upon the decision of McAdam, J., at a trial term, a jury having been duly waived.
    The plaintiff, a corporation doing business at Chattanooga, Tennessee, sues the defendants as makers óf a promissory note, dated August 15, 1889, wherein they promised to pay, four months after said date, to the order of the North Alabama Lumber &, Manufacturing Company, $1,463.91. The payees endorsed and transferred the note to the plaintiff. The defense is two-fold, first, that there was no consideration for the note; and next that it was discharged by an executed agreement made between the payees and the plaintiff, the terms of which are hereafter stated.
    The opinion of McAdam, J., delivered at the trial term, was as follows:
    “ The plaintiff, by discount, in the usual course of business, became the bona fide holder of the note before maturity, without notice that it was accommodation paper, and had the right to deal with the payees thereof as if it had been made for a full consideration. Hoge v. Lansing, 35 N. Y., 136; Central Bk. v. Hammett, 50 id., at p. 160; Union Bk. v. Crine, 33 Fed. Rep., 809. Upon this hypothesis the agreement made between the payees and the plaintiff does not affect the right of the latter to prosecute the-makers. The agreement (which is pleaded as an accord and satisfaction) recites that in a certain attachment suit pending in the Federal court at Huntsville, Alabama, wherein the plaintiff herein is plaintiff and the North Alabama Lumber & Manufacturing Company is defendant, there shall be a judgment entered for $17,191.78 damages (including the note in suit), that the judgment shall not be now enforced, but that three jiersons named as assignees in an assignment made by the Lumber Company shall act as receivers, with power to sell the attached property. That, said persons shall also act as receivers in respect to a $3,500 judgment between the same parties in the chancery court of Marion county, Tennessee. That, although there is actually due to the plaintiff $27,589.04, that amount is to be considered discharged as.
    
      soon as the judgments aggregating $20,691.78 are paid. It is also agreed that the plaintiff shall hold whatever hills receivable it has in its possession and endeavor to collect the same from the parties by whom they were made, crediting the proceeds on the $20,69178, aforesaid. The plaintiff has thus far received $5,000, and has the right under the agreement to continue to enforce whatever obligations it holds until the entire $20,691.78 is realized. The transaction stated does not constitute an accord and satisfaction of the plaintiff’s demand, nor does it any way pre-. judice the defendants, and consequently does not impair the plaintiff’s remedies. The doctrine of suretyship sometimes applied to the makers of accommodation notes, transferred by the payees to third persons, is inapplicable here, because the plaintiff, the holder of the instrument, had no knowledge of any facts creating the relation of principal and surety, and acted, as it lawfully might, on the assumption that the note was business paper, and that the parties to it held that relation to each other which the form of the contract disclosed (vide authorities before cited). The defendants did not plead the receipt by the plaintiff from the trustees of the $5,000 on account, nor claim any pro rata benefit from it, nor do they claim “payment” (in the technical sense) of the obligation sued upon, either in whole or in part, for the term “ payment,” in its legal import, “ means the satisfaction of a debt by money, not by an exchange or compromise, or an accord and satisfaction.” Manice v. R. R. Co., 3 Duer, 441; Morley v. Culverwell, 7 Mees. & W., 171. The defendants are not, therefore, in a position to invoke the application of the equitable doctrine, Orleans Bank v. Moore, 112 N. Y., 543; 21 N. Y. State Rep., 609, that, where a creditor receives money on account of his debtor, he may be compelled to apply it ratably to all claims against the debtor, as well as to those upon which other persons are liable. Upon the pleadings and proofs the plaintiff is entitled to judgment for $1,567.23, the amount claimed, and interest.
    
      Kelly & MacRae, for app’lts ; George W. Van Slyck, for resp’t.
   Per Curiam.

—Judgment affirmed, with costs, on the opinion of the court below.  