
    The Binghamton Trust Company, Respondent, v. Edward K. Clark, Appellant.
    
      Trust company — its power to discount-a promissory note— counterclaim against the payee not maintainable against a transferee before ma,turity — conclusion of law.
    
    It is not a defense to an action brought upon a promissory note by a trust company, incorporated under chapter 546 of the Laws of 1887, that the trust company when.it took the note was engaged in doing a general banking business, and that the taking of the note was a part of the transaction of such business; that the trust company when taking the note was discounting commercial paper, and that the taking of the note was a part of a general business of discounting such paper, and, as alleged, in violation of the statutes of the State of New York, and that, hence, the note was void .in the hands of the trust company. Under the provisions of the Banking Law (§ 156 of chap. 689 of the Laws of 1893, as amended by § 3 of chap. 696 of the Laws of 1893) a trust company has power to take a transfer of a promissory note and to recover thereon against the maker thereof.'
    ’Where such a note has been transferred to the trust company before maturity the maker cannot interpose a counterclaim existing in his favor against the original payee of the note.
    
      An averment in an answer in an action upon a promissory note “ that said plaintiff took the said note, subject to the said offset or counterclaim,” is an averment of a conclusion of law and not a statement of fact, and, therefore, is not admitted by a demurrer to the answer.
    Appeal by the defendant. Edward K. Clark, from an interlocutory judgment of the Supreme Court in favor of the. plaintiff, entered in the office of the clerk of the county of Broome on the 28th day of July, 1897, upon the decision of the court rendered ■ after a trial at the Tioga Special Term sustaining the plaintiff’s demurrer to tiré defendant’s answer.
    
      Roger P. Clark and E. K. Glarh, for the appellant.
    
      W. J. Welsh, for the respondent. ■
   Putnam, J.:

I advise an affirmance of the judgment entered in this ease. There is no denial in the answer of any of the allegations of the complaint. It, therefore, is admitted that the plaintiff was duly organized and incorporated under and in accordance with tlie provisions of chapter 546 of the Laws of 1887; that on the 2d day of April, 1896, the defendant, for a good and valuable consideration, made, executed and delivered to C. A. Whitney & Co. the promissory note set out. in the complaint; that thereafter, and before the said note became due, for a good and valuable consideration, the same was duly indorsed and transferred to the plaintiff, who thereupon became the owner and holder thereof; that no part of said note has been paid, and that the sum of $180, with interest thereon from the 2d day of June, 1896, remains due thereon, together with the costs of protest.

In the first defense the defendant, not denying either of the allegations of the complaint, avers that-the plaintiff, when it took said note, ivas engaged in doing a general banking business, and the "taking of said note was a part of the transaction of such business; that the plaintiff, when taking said note, was discounting commercial paper, and the taking of said note was a part of a general business of discounting such paper, and in violation of the statutes of the State of New York, and that, hence, the note was void in the hands of the plaintiff.

Chapter 546 of the Laws of 1887 was repealed by the Banking Law (Chap. 689, Laws of 1892). I think that, under the provisions of section 156 of the latter act, the plaintiff clearly had power to take and hold the note in question. Under the allegations in the complaint, not denied by the answer, it must be deemed that the note had a legal inception before it was transferred to the plaintiff. Under the provisions of section 156 of the Banking Law, as amended by section 3, chapter 696, Laws of 1893, the plaintiff had power “to receive deposits of trust moneys, securities and other personal property from any person or corporation, and to loan money on real or personal securities (subd. 2). * * * To purchase, invest in and sell stocks, bills of exchange, bonds and mortgages and other securities (subd. 9). * * * To exercise the powers conferred on individual banks and bankers by section fifty-five of this act, subject to the restrictions contained in said section ” (subd. 11); and section 159 of the Banking Law confers power upon a trust company to invest moneys received by it “ in such real or personal securities as it may deem proper.”

I see no reason to doubt, therefore, the power of the plaintiff to take a transfer of the note set out in the complaint, and to recover thereon against the maker thereof.

The second defense, not denying the due incorporation of the plaintiff, the making of the note set out in the complaint for a valuable consideration and its transfer to the plaintiff for a valuable consideration before it became due, attempts to set up a counterclaim as a partial defense to the action. It is well settled that the maker of a note transferred to a third party before it becomes due, cannot interpose a counterclaim against the original payee of the note. (Dodge v. Ockerhausen, 22 N. Y. Supp. 25; Williams v. Brown, 2 Keyes, 486; Code Civ. Proc. § 502, subd. 2.) The allegation in tire answer, “ that said plaintiff took the said note subject to the said offset of counterclaim,” is an averment of a conclusion óf law and not a statement of fact, and, therefore, not admitted by the demurrer. (See Bonnell v. Griswold, 68 N. Y. 298.)

All concurred.

Judgment affirmed, with costs, with usual leave to defendant to amend upon payment of costs.  