
    Frederick J. Apple, Respondent, v. The National Automatic Weighing Machine Company, Appellant.
    (Supreme Court, Appellate Term, First Department,
    April, 1912.)
    Negotiable instruments — bonds and coupons — bona fide holders — what constitutes a bona fide holder — coupons as subject to condition in bond.
    Appeal — judgments and orders appealable — from the Municipal Court of city of New York to Appellate Term of Supreme Court — decisions relating to pleadings.
    An interest coupon not being negotiable, the complaint in an action thereon must allege the issuance and delivery of the bond and the lapse of time or other circumstance which would render the interest due.
    An allegation that the coupon came lawfully into the possession of plaintiff is not a sufficient allegation of title thereto.
    A defendant in the Municipal Court of the city of New York may appeal 'from the judgment entered upon overruling its demurrer though not availing itself of leave granted to serve an answer.
    Appeal by defendant from a judgment in favor of plaintiff, entered in the Municipal Court of the city of Rew York, borough of the Bronx, second district, after trial by a judge without a jury.
    
      Thomas IT. Gilroy, Jr., for appellant. '
    Goodale & Hanson, for respondent.
   Bijur, J.

Only questions of law are raised on this appeal. The action was brought to recover on a number of coupons of which one,.for example, reads as follows:

“17 .
$30. ' On the-first day of Dec. 1911
The NATIONAL
Automatic Weighing Machine Company will pay to the hearer, at its fiscal agency in the City of New •York or in the City of London
THIRTY DOLLARS in gold coin, free from all taxes, being six (6) months’ interest then due on its first mortgage coupon bond No. 677.
L. H. Gardner, Treasurer

The complaint set out merely the execution and delivery by defendant of these coupons prior to the date thereof, that the same “ came lawfully into possession of plaintiff,” and that no part of the sum has been paid.

Defendant rests on its demurrer to the complaint as. not setting forth facts sufficient to constitute a cause of action.

In McClelland v. Norfolk Southern R. R. Co., 110 N. Y. 469, an action was brought on coupons almost identical in tenor. It was there held that coupons were not negotiable. The court said (at p. 474) : “ The reference in the coupons to the mortgage and bonds, and in the bonds to the terms and conditions of the mortgage, clearly, we think, charges the holders of both coupons and bonds with notice of the provisions contained in each of s-uch intruments.” With this in mind it was clear that plaintiff was hound to allege the issuance and delivery of the bonds, and the lapse of time or other circumstance which would render the six months’ interest due.

I think also that the allegation that, the coupons came lawfully into possession of the plaintiff is not a sufficient allegation of title.

The plaintiff-respondent urges that the appeal should bo dismissed on the following ground: That, after the defendant-appellant’s demurrer had been overruled, leave was given to serve an answer, of which leave it did not avail. Thereafter judgment was entered in favor of the plaintiff, and this judgment respondent characterizes as one entered upon a default, from which the defaulting party is not entitled to appeal. In .support of his position, respondent cites the case of Weiner v. Yale Knitting Mills, 138 App. Div. 533, a decision of the Appellate Division of the Second Department. It seems to me, however, that we must be guided by the case of Furniss v. Furniss, 133 N. Y. Supp. 46. See also National Park Bank v. Billings, 144 App. Div. 536, a decision recently .rendered in this department, covering, it is true, practice in the Supreme Court; but I can find no valid distinction, in respect of this matter, applicable to the Municipal Court.

Guy, J., concurs.

Lehman, J. (concurring).

I think that- under the authority of Evertson v. National Bank of Newport, 66 N. Y. 14, the. coupons of a negotiable bond must also be held to be negotiable. The fact that they are declared to be for interest upon bonds specified by their numbers, does not destroy their negotiability when separated from the bond, or impair the title of one purchasing from another without production of the bond.” Evertson v. National Bank of Newport, supra, 18. This case is cited without qualification in McClelland v. Norfolk Southern Railroad Co., 110 N. Y. 469, but that case points out that the negotiable character of such coupons depends upon the negotiable character of the bond referred to in such coupons. It follows, therefore, that the complaint should allege the issuance and delivery of the bonds and their .general character.

Judgment reversed and new trial ordered, with costs to appellant to abide event.  