
    The Pratt & Whitney Company, Respondent, v. The American Pneumatic Tool Company, Appellant.
    
      Promissory note—what conditions attached to it may he shown hy parol evidence — pleading a counterclaim.
    
    In an action upon a promissory note conditions which, are attached to the delivery of the note and go to the existence of the contract may be shown by parol evidence, but not conditions which concede the existence of the contract and seek to vary its terms.
    Facts pleaded only as a defense are not available as a counterclaim.
    
      Appeal by the defendant, The American Pneumatic Tool Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 13th day of October, 1899, upon the verdict of a jury rendered by direction of the court, and also from an order bearing date the 11th day of October, 1899, and entered in said clerk’s office, denying the defendant’s motion for a new trial made upon the minutes.
    
      James M. Fiske, for the appellant.
    
      Thorndike Saunders, for the respondent.
   McLaughlin, J.:

This action was brought to recover the amount of a promissory note, a copy of which was set out in the complaint. The answer admitted the execution and delivery of the note and its non-payment, and* alleged as a defense that it was given for work done and materials furnished; that the plaintiff had agreed when the note was delivered that the giving of it should be without prejudice to the right of the defendant to have the proper deductions made in the amount of certain bills theretofore rendered for such work and materials, and that the defendant should not be required to pay the note until such adjustment had been made, and then only so much of it as represented the actual cost to the plaintiff for such materials and labor.

At the trial no evidence was offered on the part of the plaintiff, the defendant, in effect, conceding that it was entitled to recover unless the defense alleged was established. Tlie testimony on the - part of the defendant tended to show that after the bills had been rendered for the work and materials referred to in the answer, the plaintiff’s manager called upon the president of the defendant for payment, and the president then notified him that there was some mistake in the bills and that the charges were too high, etc. Subsequently, another conversation took place between them, in which Mr. Irving, manager of the plaintiff, stated that the plaintiff needed the money called for by the bills, and the president of the defendant responded : “ To accommodate I will do as I did before, and give" you a note, although the bills have not been approved by us.” The president of the defendant testified, referring to this interview, that “ Mr. Irving said lie would take a note. I then asked him what the account was as he had it in his hand and he gave me the aggregate as embodied in the note. I then had the note drawn for the amount and handed it to him. There was something said about the future adjustment of the note. I said to him that it is distinctly understood that we must have these things adjusted before the note was paid. Mr. Irving said he had no authority as to that, but that it would remain with the Hartford people. I said 6 you people have always dealt with us equitably, and I have no doubt ive can adjust the matter,’ and thereupon the note in suit was given.”

This is substantially all the evidence bearing upon what took place at the time the note was made by the defendant and delivered to the plaintiff. No proof was offered which would have justified the jury in finding that the plaintiff, when it took the note, took it subject to a future adjustment of the accounts between the parties, or that any proposition in reference to au adjustment was acceded to, or that the payment of the note depended upon any condition whatever. On the contrary, it affirmatively appears that the manager of the plaintiff, when a proposition of that kind was suggested, informed the president of the defendant that He had no authority as to that.” A fair consideration of the testimony, including the correspondence had between the parties, shows that there was no condition attached to the delivery of the note, and had a verdict been rendered in favor of the defendant, it would have been clearly against the weight of evidence. Conditions relating to the delivery of a note may be shown, but not conditions which modify or change the character of the obligation itself. The former goes to the existence of the contract, while the latter, conceding its existence, seeks to vary the terms of it by parol evidence, and such evidence cannot be received. (Washington Savings Bank v. Ferguson, 43 App. Div. 79.) The consideration is also open to impeachment. (Higgins v. Ridgway, 153 N. Y. 130.) But here, as already indicated, there was no condition attached to the delivery, and the facts proved upon the trial did not establish a failure of consideration. At most, what the defendant alleged and proved would be of benefit only so far as to permit it to recoup as damages or to recover the overcharge, but this could not be done under an answer which simply alleged a defense.

The case of Springer v. Dwyer (50 N. Y. 19) is not in point. In that case the answer alleged sufficient facts to entitle the defendant to recoup his damages, and in this case it does not. The rule is well settled that where a defendant insists upon a counterclaim, it must be pleaded as such, and unless that is done it can be resorted to and used only as a defense. (Bates v. Rosekrans, 37 N. Y. 409 ; Burke v. Thorne, 44 Barb. 363.)

The judgment and order are right and must be affirmed, with costs. . • .

Van Brunt, P. . J., Rumsey, Patterson and O’Brien, JJ., concurred.

Judgment and order affirmed, with costs.  