Kaku v. Giffen

BARNARD, P. J.

This is an action on a promissory note for $5,141.18, executed by the defendants and delivered to the plaintiff. From a judgment in favor of the defendants the plaintiff has appealed on a bill of exceptions.

After the note became due the appellant delivered the same to one Geo. C. Wells with an endorsement reading: “Pay to the order of Geo. C. Wells, without recourse. George Kaku.” Wells exhibited the note and endorsement to Giffen, who had executed the note on behalf of both defendants, and demanded payment, stating that he had purchased the note and was then the owner thereof. Mr. Giffen explained to him that his affairs were all in the hands of a “creditors’ committee” and that he had no funds with which to make payment without the consent of this committee. A month or so later Wells brought suit on the note, alleging that he “is now the true and lawful owner and holder thereof”. This suit was dismissed without prejudice on November 18, 1932.

On April 10, 1933, Wells came to Giffen and offered to compromise the debt represented by the note. As the result of an agreement then entered into, which was approved by the creditors’ committee, Mr. Giffen made a cash payment to Wells and gave him five notes coming due on various dates during the next ten months, and Wells agreed to return the original note, which he did not have with him when the agreement was made. Mr. Giffen paid three of the five notes as they came due and then offered to pay the other two on condition that the original note be surrendered. Thereafter this action was brought by the appellant, although there is no evidence that the note in question had been retransferred to him by Wells.

It is appellant’s contention that he assigned the note to Wells for collection only, that he was the owner thereof at all times, that Wells had no authority to compromise the debt, that since he was in possession of the note when this suit was brought the burden was upon the respondents to show that he did not have title thereto, and that the settlement made is not binding upon him both because Wells had no authority to

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compromise the matter and because Wells did not exhibit the note at the time the settlement agreement was made.