$22,500 note of Greig, Goodrich and Dresser which had been given for the check. Nor can there be any doubt that they knew that the prior note had been taken up by the new arrangement and assented to its being so treated, and the referee expressly found that the Hunt transaction operated as a payment of the former obligation. A novation was thus effected, and plaintiff could thereafter look to the substituted debtor only for reimbursement. If the note of a third person to give at the time an obligation is entered into, the presumption is that such note was accepted in payment, and the burden is upon the one accepting to show that it was not thus received. Gibson v. Tobey, 46 N. Y. 637, 7 Am. Rep. 397. If the note of a third person be given for a past indebtedness, the burden is upon the person giving it to establish that it was accepted in payment. Noel v. Murray, 13 N. Y. 167. Even if the latter rule applies the defendant met the burden of proof, for every fact goes to show that the note of Hunt was accepted in payment of the prior obligation of Greig and his associates. Additional security was continually demanded until the collateral became so satisfactory that after the new board of directors and officers of plaintiff knowing all the facts, entered into an agreement to extend the time of payment of the note for three years, and, if the maker desired, for five, provided the interest was promptly paid. The result of what was done was that plaintiff not only ratified the loan to Greig, and treated it as such, but accepted in payment of it, thereby discharging it, an obligation supposed to be entirely secure and highly satisfactory as evidenced by the extension of time given. "In addition, the plaintiff did not act with such promptness after knowledge of the situation as the law required. As early as January, 1903, probably, at least as early as March, and April, 1903, the plaintiff fully understood all the facts in relation to the $22,500 check, except perhaps what bank had cashed it, and it might have ascertained. that fact by looking at the check which had been returned to it early in January of that year. If the defendant was bound to restore the money, it was at least entitled to receive back the 150 shares of Trust Company of the Republic stock which it had surrendered. At that time this stock was worth at least $150 per share, for ten shares appear to have been sold for $1,500. So, too, in October following, when the plaintiff's officers knew that the defendant cashed the check and applied the proceeds to the indebtedness of Greig and his associates, the stock must have continued to have some value, for the plaintiff was satisfied with it as collateral security. Even if the plaintiff was not obliged earlier to ascertain all the facts, it should have acted promptly in October when it was fully apprised of them. In omitting so to act, it not only continued to ratify the acts of its former president by its silence, but it failed to perform its duty to the defendant by reducing the damages which it might suffer as much as it was able." See Decision No. 975. Bills and Notes: Negotiability. The accompanying illustration was held not to be a negotiable instrument. The Negotiable Instruments Law provides that an instrument to be negotiable must contain, among other requirements, an unconditional promise or order to pay a sum certain in money, and must be made payable to order or bearer. In both of these requirements this instrument is lacking. Either deficiency destroys the instrument's negotiability. This instrument could not be transferred by indorsement and delivery because it was made payable to a person and not to order. The instrument could be assigned, but not negotiated. The instrument is payable out of profits. A negotiable instrument must be made payable in money. A negotiable instrument "is a courier without luggage, whose countenance is its passport." The complaint of the plaintiff and payee was demurred to, the demurrer sustained, and on appeal affirmed. The court said in part: "As to the second cause of action, the allegation thereof is equally deficient in substance. The paper set out in the complaint is not a negotiable instrument. Section 20 of the Negotiable Law (chapter 612, p. 722, Laws 1897) provides that an instrument to be negotiable must, among other things, contain an unconditional promise or order to pay a sum certain in money, and section 22 thereof provides: But an order or promise to pay out of a particular fund is not unconditional.' This instrument provides as follows: This amount to be paid out of our profits on the 2 East 40th street job.' Being, therefore, a promise to pay out of a particular fund, it is not unconditional. American Boiler Co. v. Fontham, 34 App. Div. 294, 55 N. Y. Supp. 923. Further, it is not payable to order or to bearer as required by section 20 of the Negotiable Instrument Law. This instrument not being under seal, and not being negotiable, the allegation in the complaint that it was executed and delivered 'for a valuable consideration,' without in any way setting up the facts showing consideration, is a mere conclusion of law. The instrument is, at best, a conditional promise to pay out of a particular fund, to wit, the profits of the makers in a particular job. As there is no averment in the second cause of action that any profits had been earned on said job, even if consideration had been properly alleged, the complaint would still have failed to set forth sufficient facts to sustain this cause of action. "The interlocutory judgment sustaining the demurrer to the complaint should be affirmed, with costs and disbursements to the respondents, with leave to the appellant, however, within twenty days and upon payment of costs in this court and in the court below, to serve an amended complaint. All concur." See Decision No. 976. In States where the Negotiable Instruments Law is in force, it may be confidently stated that a negotiable instrument must conform to the following requirements: 1. It must be in writing and signed by the maker or drawer. 2. Must contain an unconditional promise or order to pay a sum certain in money. 3. Must be payable on demand or at a fixed or determinable future time. 4. Must be payable to order or to bearer; and 5. Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty. The alleged negotiable note on the other side of this sheet is defective in two of these requirements. It is not payable to order or bearer and is not payable in a certain sum of money. It is payable to the plaintiff and out of the profits of contracting job. Demurrer to plaintiff's complaint was sustained, and later affirmed on appeal. |