
    City Savings Bank v. Stevens et al.
    
    
      (Superior Court of New York City, General Term.
    
    July 2, 1891.)
    Acooed and Satisfaction—'What Constitutes.
    In an action against the makers of a negotiable note for $1,463, which plaintiff bank had discounted for the payee before maturity and without notice that it was accommodation paper, it appeared that plaintiff had agreed with the payee that on the payment of $20,691 by the payee to plaintiff j udgments recovered by plaintiff against such payee, aggregating $27,589, including the note in suit, should be discharged, and that plaintiff should hold all the 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. Afterwards plaintiff received from the receivers of the payee’s property $5,000 under the agreement. Held, that such transaction did not constitute an accord and satisfaction of plaintiff’s demand against defendants, (the makers of the note,) but plaintiff was entitled to enforce all the obligations held by it until the $20,691 should be paid, defendants not having pleaded the receipt by plaintiff of the $5,000, or claimed any pro rata benefit from it.
    Appeal from jury term.
    Action by the City Savings Bank against Henry E. Stevens, Jr., and others. Plaintiff, a corporation doing business at Chattanooga, Tenn., sues defendants as makers of 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 payee indorsed and transferred the note to 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 payee and plaintiff. The opinion of the court below was delivered by McAdam, J., at a jury term, a trial by jury having been waived, 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 payee thereof as if it had been made for a full consideration. Hoge v. Lansing, 35 N. Y. 136; Bank v. Hammett, 50 N. Y. 160; Bank v. Crine, 33 Fed. Rep. 809. Upon this hypothesis the agreement made between the payee 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, Ala., 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 persons 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, Tenn.; 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 bills 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 $20,691.78 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 in any way prejudice 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. Railroad Co., 3 Duer, 441; Morley v. Culterwell, 7 Mees. & W. 174. The defendants are not, therefore, in a position to invoke the application of the equitable doctrine' (Bank v. Moore, 112 N. Y. 543, 20 N. E. Rep. 357) 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.” Defendants appeal.
    Argued before Freedman, Dugro, and Gildersleeve, JJ.
    
      Kelly & MacRae, for appellants. George W. Van Slyck, for respondent.
   Per Curiam.

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