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Altex Aluminum Supply Co. v. Asay

Decided: March 9, 1962.

ALTEX ALUMINUM SUPPLY CO., A CORPORATION OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
WALLACE J. ASAY, DEFENDANT-APPELLANT



Price, Sullivan and Lewis. The opinion of the court was delivered by Sullivan, J.A.D.

Sullivan

Plaintiff, claiming to be a holder in due course, sued defendant on a promissory note dated July 8, 1959. The note was in the amount of $1,225, was payable 12 months after date, and was made by defendant to the order of Home Specialists, Inc. Plaintiff alleged that Home Specialists, Inc. had endorsed and delivered the note as part payment of a debt of $14,000 owed plaintiff by Home Specialists, Inc. The trial court determined that plaintiff was a holder in due course, but on the ground that it took the note as collateral security for the debt. Judgment was entered in favor of plaintiff and against defendant for the amount of the note and interest. Defendant appeals.

Joseph Farber, the secretary-treasurer of plaintiff corporation, testified that on October 26, 1959 the note in question

was delivered to him as partial payment of a book account debt owed plaintiff by Home Specialists, Inc. He said that he received the note at the office of Home Specialists, Inc., and that he saw Jack Ritchey execute the endorsement on the back of the note as president of Home Specialists, Inc. He did not see the secretary of the corporation attest the president's signature, although the endorsement includes such an attestation.

Farber also testified that on October 26, 1959, upon receiving the note, he personally entered it as a credit on the account of Home Specialists, Inc. Plaintiff's books and records were produced at trial to show the entry on the date indicated in Farber's handwriting.

Defendant, testifying in his own behalf, admitted signing the note and delivering it to Home Specialists, Inc., the payee. He said, however, that the payee was supposed to hold the note and "to do nothing with the note," and that defendant would give the payee additional business to pay off the note. He further testified that he did secure a siding job for Home Specialists, Inc., and that his share of the contract price was more than sufficient to pay the note. The payee, however, refused to return the note to him although he made repeated demands for it. Defendant did not claim that plaintiff had any knowledge of these arrangements. The foregoing, of course, would be no defense against a holder in due course.

Defendant also showed that in December 1959 plaintiff had sued Home Specialists, Inc. on the book account debt and in that suit the photostatic copy of the account attached to the complaint did not show the July 8, 1959 note as a credit on the account. On the contrary, in January 1960 plaintiff recovered judgment against Home Specialists, Inc. for the full amount of the book account and interest without giving any credit for defendant's note.

When plaintiff's witness Farber was questioned about this matter and shown the photostatic copy of the account attached to complaint in the previous suit, he admitted that the note

had not been entered as a credit on the book account on October 26, 1959, but at a later date. However, he insisted that the note was taken with the understanding that it would be credited on the account "at the time we took it" and not when the note was collected. He added that plaintiff has never been paid anything on account of its judgment against Home Specialists, Inc., although there is a suit pending against the principals of the corporate debtor on account of the judgment.

We find that the proofs support the judgment in favor of plaintiff. As to defendant's claim that plaintiff did not receive the note "for value," it is clear from the evidence that the note was received by plaintiff in connection with the account of Home Specialists, Inc. It is settled law that a party taking a negotiable note in payment of, or as security for, an antecedent debt, is a holder in due course. Citrin v. Tansey , 107 N.J.L. 368 (E. & A. 1931). Cf. Colozzi v. Bevko, Inc. , 17 N.J. 194, 209 (1955). This is so even though satisfaction of the antecedent debt is conditioned on actual payment of the note. Citrin v. Tansey, supra; Ahern v. Towle , 310 Mass. 695, 39 N.E. 2 d 561 (Sup. Jud. Ct. 1942); Brannan, Negotiable Instruments Law (7 th ed. 1948), ยง 25, pp. 515-516. Defendant argues that the plaintiff received the note only for the purpose of collection. However, the trial court found otherwise, and there is credible evidence to support such finding. This is so despite the clumsy "doctoring" of plaintiff's records to show that a credit had actually been entered on the books.

Defendant's other point is that plaintiff did not prove the genuineness of the signature of the payee nor was there any proof of the authority of the president of the corporate payee to endorse and deliver the note to plaintiff. For these reasons, argues defendant, the trial court erred in allowing the note to be marked in evidence. We do not agree. Plaintiff's witness testified that the note was delivered to him at the payee's ...


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