Continental National Bank v. Bell (125 N.Y. 38, 1890)

Andrews, J.

I am unable to find in the record any evidence to justify a conclusion that the note of the defendant was pledged by Crosby to secure rent which might accrue to the plaintiff subsequent to Hay 1, 1885, or that the plaintiff ever acquired any right from Crosby to hold the note as security therefor. The only arrangement between Crosby and the bank in respect to the note, was made some time in February, 1885, and whatever right or interest the bank acquired therein depended upon the arrangement then made. Crosby was indebted to the bank for three quarters’ rent past due, amounting to $1,500, and another quarter’s rent of $500, would become due May 1, 1885, on which day the lease, by its terms, was to expire. The bank had been" unable to collect the rent due. This was the situation when the three notes, including the note of the defendant, were left by Crosby with the bank as security for the rent due, and to accrue under the lease, the bank having previously refused to discount them. The claim now made by the bank is that the notes having been deposited to secure the rent due and to become due, it held them as security not only for the rent accrued and to accrue on the existing lease, but also for any rent which might become due from Crosby on any new letting of the same or other rooms thereafter at any time made. This is, we think, an inadmissible construction of the transaction, in view of the circumstances. There had been at the time no treaty between the bank and Crosby, either for the renewal of the existing lease or for a lease of other rooms. There is no evidence that either party then contemplated that the tenancy would continue beyond the term of the existing lease. It would be quite extraordinary under such circumstances that either party should undertake to provide for such a contingency. The general evidence of the president and cashier of the bank that the notes were left as security for rent due and to become due, fairly interpreted, refers to the rent past due on the existing lease, and to become due thereon. That this was what the bank understood seems to be placed beyond question by the statement of the president in an affidavit made by him and admitted as evidence generally on the trial of the present action, wherein, after referring to this transaction, and to the fact that Crosby was then indebted to the bank in the sum of $1,500 for rent due, and that the bank threatened to turn him out unless the rent was paid, he continues, “ He ” (Crosby) thereupon on or about February 9, 1885, brought to the bank the note on which this suit was founded, and the other notes above referred to, and indorsed them in blank, and delivered them to the "bank as security for the rent due