Goldmann, Kilkenny and Collester. The opinion of the court was delivered by Collester, J.A.D.
Defendant Joseph Shulman appeals from a summary judgment granted by the Bergen County Court in favor of plaintiff James Talcott, Inc. (Talcott) for $25,124.60 in a suit on a negotiable promissory note. The issues on this appeal are (1) whether the pleadings, affidavits and depositions filed showed a genuine issue of material facts precluding the entry of summary judgment, and (2) whether plaintiff occupied the status of a holder in due course of a negotiable instrument.
Defendant is a New Jersey resident engaged in the practice of dentistry. One Jerome Wallens of Atlanta, Georgia, who was related by marriage to defendant, was president of Franchised
Business Opportunities, Inc. (Franchised Business), which corporation was a sales agent for Sayve Corporation of America (Sayve). Sayve was a manufacturer and manufacturer's representative for the sale of portable laundry establishments and equipment.
In 1959 defendant became interested in a proposed venture to install a coin-operated laundry business in Georgia. As a result, a corporation known as Professional Investment Corp., Inc. (Professional Investment) was organized in Georgia, in which defendant and others became stockholders. Defendant was elected president.
On October 15, 1959 Professional Investment purchased the equipment and a portable building required to install a coin-operated laundry in Atlanta from Franchised Business for $33,932.50. As part of the transaction, Professional Investment executed a conditional sales contract with the seller and delivered over its promissory note to Franchised Business in the sum of $27,007.52 as part of the purchase price. Defendant signed the note as a comaker.
The note was payable in 59 successive monthly installments of $450 each and a final installment of $457.50. It further provided that payments would be made at the office of plaintiff James Talcott, Inc. in New York City, "or at such other place as the holder hereof may from time to time appoint."
The conditional sales contract contained the following provision:
"Seller may transfer and sell this agreement and note to James Talcott, Inc., 225 Fourth Avenue, New York 3, New York, in which event assignee shall have all the rights of the Seller hereunder and Buyer agrees to pay the unpaid balance owing to James Talcott, Inc., on due dates. Buyer agrees that Buyer's obligation hereunder shall be unaffected by any default or obligation of the Seller arising out of the sale of the chattels or otherwise and agrees not to interpose any claim against the Seller as a defense, offset or counterclaim in any action by assignee upon this contract or said note."
Following the execution of the conditional sales contract and promissory note, Franchised Business assigned the contract and transferred the note by endorsement to Sayve.
Plaintiff is an industrial finance company. On September 11, 1959 it had entered into an agreement with Sayve whereby it agreed to purchase from the latter conditional sales contracts, installment sales paper, promissory notes and other forms of obligation acceptable to plaintiff, arising out of a sale, lease or rental of machinery, equipment or other merchandise by Sayve to its customers.
In the operation of its finance company business it was the practice of plaintiff to prepare and distribute blank forms of conditional sales agreements and promissory notes to companies who sold them commercial paper. The forms used by Franchised Business and defendant in the above mentioned sale had been prepared by plaintiff and supplied to Sayve for the latter's use.
On December 11, 1959 Sayve sold defendant's promissory note to plaintiff for $19,445.39, transferring it by endorsement. Sayve also assigned the conditional sales contract to plaintiff. On the same date Sayve delivered over to plaintiff a certificate of installation dated November 27, 1959, purportedly signed by defendant as president of Professional Investment, which certified that the equipment described in the conditional sales contract had been delivered and installed.
Professional Investment paid plaintiff installment payments due on said note for 14 successive months, totalling $6,300. It defaulted on the payment due March 21, 1961, and failed thereafter to make further payments. Plaintiff exercised its option to declare the unpaid balance immediately due and ...