Opinion
November, 1935.
Order granting summary judgment in an action to recover on a promissory note and the judgment entered thereon reversed on the law, with ten dollars costs and disbursements, and motion denied, with ten dollars costs. The note was given in connection with a contract of conditional sale, from which it was apparently detached along a perforated line. The plaintiff is a finance company claiming to be a holder before maturity for value. The defendant claims that before the note came into the possession of the plaintiff the contract of conditional sale was breached and that the plaintiff had knowledge of the breach; or, from the facts appearing on the face of the note, was put upon inquiry and, therefore, had knowledge of or was bound to make inquiry concerning its defect; and that it did not become a holder in good faith. (Neg. Inst. Law, § 95; Kelso Co. v. Ellis, 224 N.Y. 528; Rochester C.T.R. Co. v. Paviour, 164 id. 281.) A further defense is that the note was void in its inception by reason of the fraud and deceit of the seller and payee. If this defense is established as a question of fact on the trial, then the burden rests on the plaintiff to show that it is, and was at all times, a holder in good faith. (Neg. Inst. Law, § 98; Canajoharie Nat. Bank v. Diefendorf, 123 N.Y. 191; Smith v. Weston, 159 id. 194; Vogel v. Pyne, 197 App. Div. 633; American Surety Co. v. Palmer, 211 id. 172; revd. on other grounds, 240 N.Y. 63.) There are questions of fact to be tried in respect to whether the plaintiff is actually a holder in good faith for value and without notice of any defects in the note upon which it sues. Lazansky, P.J., Young, Hagarty, Davis and Johnston, JJ., concur.