
    BRUCE v. KELLY.
    
      City Court of Brooklyn; General Term,
    January, 1877.
    Promissory Sotes.—General Release.—Tender.—Valuable Consideration.
    The parties to litigation agreed on a settlement by which defendants-were to pay a sum in installments by notes payable at future dates, and when certain specified notes should have been paid, plaintiffs ■ were to discontinue one action, and to give defendants general-releases, which releases, however, were not to become operative - until all of the notes should be paid, and thereupon plaintiff should-, discontinue the other action.
    
      Held, that plaintiff’s failure to give the releases, after the specified notes had been paid, was a defense in an action on one of the • remaining notes.
    Tender of the release at the trial is not enough; nor can the court give judgment on the release being executed and exhibited after trial.
    The holder of commercial paper, who has received it for any antecedent debt, either as a security for payment or as a nominal payment, without parting with any security, property, or other thing, of legal value, or giving any new consideration, is not a holder for any valuable consideration.
    Appeal by defendant from a judgment.
    . John M. Bruce sued Joseph Kelly on a promissory* note. It appeared that defendant and others had been defendants in two former actions in the supreme and New York superior courts respectively, and that pending those actions the parties thereto entered into a compromise embodied in the following agreement:
    [Title of cause.] “Memorandum of an agreement of settlement of the various matters and claims involved in the above action. [Defendant’s Exhibit 2.]
    “It is hereby agreed by and between the above plaintiffs and defendants, that the defendants will deliver up to the plaintiffs possession of the house [designating it], and consent that certain deeds heretofore executed, reconveying the title to said premises to the plaintiffs, shall be at once delivered to the plaintiffs, and will procure to be delivered to the plaintiffs a satisfaction-piece of a certain mortgage for $5,000 now on said premises, and pay to the plaintiffs the sum of six thousand dollars, as follows: Five hundred dollars this date, Fifteen hundred dollars by a note payable in ten days, One thousand dollars by a note payable on the first day of November, 1875, One thousand dollars by a note payable in four months, and One thousand dollars by a note payable in five months, One thousand dollars by a note payable in six months ; said last three notes to bear interest from date. And it is further agreed that when the sum of three thousand dollars is paid as aforesaid, then said suit in the superior court to be at -once discontinued and the decree t04.be modified, so as to cover only possession and title to the premises, and each of the plaintiffs shall also at that time execute and deliver to the defendants a release under seal, duly acknowledged, releasing each and every one of the defendants in both of said actions from all claim and demand of every kind and nature, for or on account or by reason of the various matters, acts, and transactions set forth and alleged in the complaint in said action, or in either of them, which releases, however, shall not become operative in favor of the defendants until all of said notes are paid, when said releases shall become valid and binding, and when all of said notes are paid, then said action in the supreme court shall be discontinued without costs to either party, and that no suit is to be brought on the undertaking given by the plaintiffs in the supreme court suit, or against the plaintiffs for damages in the premises.”
    Four thousand dollars were paid pursuant to the agreement, and the superior court suit was discontinued.
    Defendant, Kelly, gave the notes. James J. A. Bruce, who was one of the plaintiffs in the former actions, as trustee for another plaintiff, transferred the note in suit, which was for the fifth $1,000, before maturity, to John M. Bruce, the present plaintiff, on account of an indebtedness which James owed John. Kelley called on the plaintiff at or immediately after the maturity of the note, and said he had no objections to paying it when the releases were given, and plaintiff told him he had no releases to give : one of the parties had died, and they could not give a release. Defendant refused to pay the note because the releases were not given.
    The court directed that a verdict be rendered for plaintiff, but that judgment should not be entered till the release should be exhibited to the court; and such release was accordingly executed and acknowledged, but the record did not show that it was exhibited to the court. Judgment was thereupon entered for plaintiff. Defendant appealed.
    
      William H. Hollis (Joseph Aspinwall), for appellant
    Cited Benton v. Martin, 52 N. Y. 570 ; Bookstaver v. Jayne, 60 Id. 146; Sawyer v. Chambers, 44 Barb. 42; Petry v. Christy, 19 Johns. 53 ; Wienholt v. Spitta, 3 Campb. 376; Lasher v. Williamson, 55 N. Y. 619).
    
      
      Edward M. Shepard, for respondent:
    
      Cited Parsons Notes & Bills, 2nd ed. 196, 200, 203, 211, 221; Russell v. Cook, 3 Hill, 504; Spiller v. Westlake, 2 Barn. & Adol. 155; Trask v. Vinson, 20 Pick. 105; Freligh v. Platt, 5 Cow. 494 ; Swift v. Tyson, 16 Pet. 1; Day v. Saunders, 1 Abb. Ct. App. Dec. 495; Youngs v. Lee, 12 N. Y. 551; Williams v. Little, 11 N. H. 66.
   Reynolds, J.

The agreement designated in the ease as defendant’s Exhibit No. 2, and the five notes therein provided for (of which the note in suit is one), were all executed together, or, at all events, were part of one scheme, and constituted one entire contract. The notes were executed by Kelly on behalf of himself and his co-defendants in the actions named in said agreement, and were accepted by the plaintiffs in said actions as the notes called for by said agreement. It was provided that when $3,000 should be paid, as' specified in the paper, Exhibit No. 2, the plaintiffs in those.actions should execute and deliver to the defendants a certain release. In fact, $4,000 were paid, to wit: the sum of $500 in cash on the execution of the agreement, and the first three notes ; but the plaintiffs never delivered to the defendants the release called for by the .contract. The defendants had proceeded, by successive steps, in the execution of the contract on their part, till it became the duty of the plaintiffs on their side to do certain things, among which was the execution and delivery, or tender, of the release.' This they failed to do, and thus broke the contract. While they are thus in default they can not call upon the ' defendants to go on with the further execution of the contract on their part. The parties agreed that the delivery of the release should precede the payment of the last $3,000. The agreement was perfectly legal, and as the parties have chosen to make it, we can'not change it, nor modify the obligations that grow out of it. The defendant never undertook to'pay the. $1,000 covered by the note in suit (the fourth of the series), till the defendants in the former suits were put in possession of the release. The condition which the court attempted to impose upon the entry of judgment, did not meet the difficulty.

Whether the release was ever exhibited to the court, or delivered to defendant, does not appear, and it is immaterial in this case whether it was or not. It is sufficient to say, that the defendant had not become liable, accbrding to the terms of the contract, when the action was commenced.

It remains only to be considered whether the plaintiff became a bona fide holder of the note for value, so as to cut off the defense. According to the plaintiff’s testimony, the notes were passed to bim by James J. A. Bruce as part payment on account of moneys previously loaned. No security was given up, nor did the plaintiff surrender any right of action against his debtor. It does not appear how James Bruóe acquired title, individually, to the note; but, conceding that he had such title, and could transfer the note to this plaintiff, he was one of the plaintiffs in the actions above named, as trustee, and was a party to the contract of which the note formed a part, and therefore held it subject to the defense above pointed out, and as the plaintiff did not part with value, he took the note subject to the defense which affected it before the transfer to him.

The rule which seems to be supported by the consent of authorities, is thus stated by Abbott, in his new Digest: “The holder of commercial paper, who has received it for any antecedent debt, either as a security for payment, or as a nominal payment, without parting with any security, property, or other thing of legal value, or giving any new consideration, is not a holder for any valuable consideration.”

In Turner v. Treadway (53 N. Y. 650), the court of appeals held, that where a note was passed in payment of a precedent debt, before maturity, the person so receiving it “was not a bona fide holder within the uniform decisions from Coddington v. Bay (20 Johns. 637) and Weaver v. Barden (49 N. Y. 286), and that the note was therefore subject, in his hands, to any legal or equitable defense which existed against it in the hands of the payee.”

It follows, from these views, that a verdict should have been directed for the defendant, instead of the plaintiff.

Judgment reversed, and new trial granted, with costs of appeal to the appellant to abide the event.

McCue, J., concurred.  