Opinion
May, 1905.
Francis D. Pollak, for the appellant.
David C. Myers, for the respondent.
The respondent contends that Manheim could not have enforced the payment of the note because he defaulted in the payment of his note given at the same time pursuant to the agreement for the mutual exchange of notes, and that the plaintiff, having taken the note as security for an antecedent debt, is not a bona fide holder, and the note in his hands is subject to any defense that exists against its collection by Manheim. We are of opinion that there was a good consideration for the note as between the original parties; that the execution of the notes constituted it an executed contract; that it was the duty of each to the other to pay his note at maturity, and that the defendant, while he might have a counterclaim for the non-payment of Manheim's note, could not defend against the non-payment of his own on the theory of failure of consideration on account of Manheim's default. ( Rice v. Grange, 131 N.Y. 149.) Moreover, the note not having been diverted, but being unrestricted as to its use, would not be subject in plaintiff's hands to the defense of want or failure of consideration, or that Manheim had subsequently failed to perform his obligation of paying his own note, and the plaintiff having taken it as security for an antecedent debt is regarded as a holder for value. (Neg. Inst. Law [Laws of 1897, chap. 612], § 51; First National Bank v. Wood, 128 N.Y. 35; McSpedon v. Troy City Bank , 2 Keyes, 35; Grandin v. Le Roy, 2 Paige, 509; Tinsdale v. Murray, 9 Daly, 446; Furniss v. Gilchrist, 1 Sandf. 53; Grocers' Bank v. Penfield, 69 N.Y. 502; Continental National Bank v. Townsend, 87 id. 8.) Furthermore, there was an agreement to forbear action on the existing indebtedness, for a few days at least, founded upon a good consideration, to wit, the delivery of the security, and this clearly made the plaintiff a bona fide holder for value. It follows, therefore, that the court erred in directing a verdict in favor of the defendant and should have directed a verdict in favor of the plaintiff.
The judgment and order should be reversed and a new trial granted, with costs to the appellant to abide the event.
VAN BRUNT, P.J., PATTERSON, INGRAHAM and McLAUGHLIN, JJ., concurred.
Judgment and order reversed, new trial ordered, costs to appellant to abide event.