Opinion
Submitted May 26, 1933 —
Decided September 27, 1933.
On the sale of an automobile by respondent to one Kelly, the latter executed a conditional sales agreement, together with a note. Respondent assigned the agreement and note to appellant, containing a guarantee of performance and payment. To an action brought for unpaid balance of the purchase price, respondent filed specification of defenses, including payment and an express agreement that, notwithstanding the guaranty, the transaction was without recourse to, or liability against, the respondent. The conditional sales agreement listed the installments and dates of payment, and added "which installments * * * are evidenced by a promissory note (not as payment, but as evidence of the amounts to become due hereunder) made by the buyer to the order of the seller, bearing date hereof, and maturing on the due dates of said respective installments." In response to a notice, the note was produced at the trial, but the attorney for the plaintiff declined to let defendant's counsel see its reverse side, and although he had exhibited the note to a witness and questioned him about it, refused to offer the note in evidence, and was sustained by the trial court. Held, that under the defenses set up, and in view of the use made of the note by plaintiff's attorney, this action was erroneous, especially as the note was said to have on the reverse side the words "without recourse," and beneath these words the name of appellant.
On appeal from a judgment of the Supreme Court where the following per curiam opinion was filed:
"This is an appeal by the John A. McCrane Motors Company, Incorporated, from a judgment rendered against it on a jury verdict in the Passaic District Court. Of the remaining named defendants James J. Kelly was not served and John A. McCrane personally was granted a directed verdict in his favor.
"The action is for the balance alleged to be due on the sale of an automobile from the McCrane Motors Company to Kelly under a conditional sales agreement that was entered into between McCrane Motors Company and Kelly and that, together with a note that is hereinafter mentioned and that really was a part of the agreement, was assigned by the former to the present plaintiff. In the instrument of assignment John A. McCrane Motors Company, Incorporated, guaranteed "full performance of said agreement in all its terms and the prompt payment of any and all sums provided therein." The third count of the state of demand (the only count charging the John A. McCrane Motors Company, Incorporated) recites the conditional sales agreement, the assignment and guaranty by the motors company, and an alleged unpaid balance for which judgment was asked in the sum of $464. The motors company filed specifications of defenses which included the defenses of payment, of an express agreement that notwithstanding the provisions of the guaranty the transaction was without recourse to, or liability against, the motors company and of fraud by the plaintiff in procuring the execution of the guaranty. The jury awarded a verdict to the plaintiff of $245.30.
"The conditional sales agreement listed the amounts and due dates of the installments to be paid under the agreement and added: "which installments * * * are to be evidenced by a promissory note (not as payment, but as evidence of the amounts to become due hereunder) made by the buyer to the order of the seller, bearing date hereof, and maturing on the due dates of said respective installments." Such a note was given by Kelly and was delivered to the plaintiff along with the agreement and the assignment and guaranty. The note was produced by the plaintiff at the trial in response to a notice from the McCrane company to that end, but the attorney for the plaintiff declined to permit defendant's counsel to see the reverse side of the note. And plaintiff's attorney, although, in the course of cross-examination, he had exhibited the note and the reverse side thereof to one of defendant's witnesses and questioned the witness thereon and had shown the note to one of his own witnesses and directly questioned him concerning the same, nevertheless objected to the effort of the defendant to have the note placed in evidence. The court, on that objection, refused to admit the note. The refusal was excepted to and is one of the specifications before us. The theory upon which the court relied in the ruling was that the action was on the conditional sales agreement and the guaranty and not on the note, and that consequently the note was not relevant. Under the defenses and the developments, including the use made of the note by plaintiff's attorney, at the trial we think that the note should have been admitted.
"It appears by the testimony that, notwithstanding written guaranty of payment of the sums called for by the conditional sales agreement, the note, which was included within the terms of the agreement, contained on its reverse side the words "without recourse" and beneath these words the name of the appellant corporation. Samuel Glass, who, at the time of the transaction, was the secretary and general manager of the plaintiff company, called as a witness by the appellant, testified that the assignment of the agreement was in fact "without recourse" to the appellant and that in recognition thereof he had written these words and also the name of John A. McCrane Motors Company, Incorporated, on the note. It was further in evidence that the record of the assignment contained within plaintiff's files and produced therefrom bore a notation that the assignment was without recourse to the McCrane company; also that the uniform practice of the plaintiff, in the event of a retaking of an automobile under a conditional sales agreement, was to return the automobile to the dealer if the assignment from the dealer had been with recourse to him, but, on the other hand, if the assignment had been without such recourse to place a retaken automobile in the hands of an outside dealer for sale on account of the plaintiff; that in the instant case, not only had the automobile been retaken from Kelly by the plaintiff and not been returned to the McCrane company, but it had been resold through an outside dealer at a price that saved the plaintiff financially whole on the entire transaction; and also that a statement received by the appellant from the plaintiff on March 31st, 1930, showing obligations from the appellant to the plaintiff did not include the Kelly account. Even if the note be shorn of all significance except that specifically given to it by the conditional sales agreement, namely, as evidence of the due installments, we think that it had, as such, evidential value. What notations the reverse side of the note may have had as to payment or as to admissions against the plaintiff on the unpaid balance do not appear and were not available to the plaintiff. The note was in effect a part of the conditional sales agreement, was evidential and, potentially at least, material and relevant. It was linked so closely to the contract sued upon and to the defenses thereto that we conclude it should have been admitted and that its exclusion was error.
"The appellant filed forty-three specifications of error with which it was dissatisfied in point of law, and fifteen of these, in addition to the point already discussed, are set up on the brief. We deem it unnecessary to consider them all.
"The judgment below is reversed to the end that a venire de novo may issue."
For the appellant, Feder Rinzler.
For the respondents, Cohn Kohlreiter.
The judgment under review will be affirmed, for the reasons expressed in the opinion filed in the Supreme Court.
For affirmance — THE CHANCELLOR, PARKER, BODINE, DONGES, HEHER, PERSKIE, VAN BUSKIRK, KAYS, HETFIELD, DEAR, WELLS, DILL, JJ. 12.
For reversal — None.