The opinion of the court was delivered by: BYERS
The plaintiff sues as the owner and holder of a promissory note made, executed and delivered by the defendant on January 22, 1935, whereby for value received she promised to pay to the order of Pioneer Burner Co. $1,132.53 in thirty-six equal consecutive monthly instalments, "beginning one month after date hereof, at the office of Heating and Plumbing Finance Corporation, 37 West 39th Street, New York, N.Y., with interest from maturity and 15% of the unpaid amount of this note as attorneys fee if placed in the hands of an attorney for collection. Upon nonpayment of any instalment when due, all remaining instalments shall immediately become due and payable."
The complaint alleges that, before maturity, the note was duly indorsed and delivered to the Heating and Plumbing Finance Company; and that the defendant defaulted when a balance of $992.97 was still due and owing, and that the Finance Company, after due demand "from the defendant, and pursuant to the National Housing Act, Title I [12 U.S.C.A. § 1701 et seq.] was reimbursed by the plaintiff"; that the Finance Company duly indorsed and delivered said note to plaintiff, now the owner and holder, and that, although demand has been made upon the defendant, she still owes $992.97 with interest.
The answer contains denials of the material allegations in the complaint and, for a separate and distinct defense, pleads that on the date of the note the defendant entered into a contract with the American Home Heating Co., Inc., for the purchase and installation of an oil burner, boiler and appurtenances, which were to be adequate to maintain a stipulated heat during the winter and to provide hot water in the summer, etc., and that the American Home Heating Co., Inc., has not completed or performed the work according to the terms of the agreement, as to which details are pleaded. That the Pioneer Burner Co. is a stranger to the transaction and furnished no consideration for the note made to it in the sum of $1,132.53.
Also there is pleaded a prior action between the plaintiff's predecessor, the Heating and Plumbing Finance Corporation, and the defendant, in the City Court, in which a motion for summary judgment was denied, and that later the action was discontinued; that the Finance Company was at no time a holder in due course and was charged with notice of all the defects in the work for which the promissory note was given, of which it had actual and constructive notice; that, in consequence of the foregoing, the plaintiff in this action is not a holder in due course and is subject to all the defenses available to this defendant against the American Home Heating Co., Inc., and the payee named in the note, the Pioneer Burner Co., and that, by reason of the facts heretofore alluded to, there was a failure of consideration for the promissory note in suit, "and that the same is subject in any event to a set-off equal to or in excess of the total amount of the promissory note".
This cause having been tried upon the facts, without a jury, the court makes and states the following findings of fact:
(a) On or about January 14, 1935, the defendant signed a blank furnished to her by a salesman of heating equipment, who represented both the Pioneer Burner Co. and the American Home Heating Co., Inc., of 538 Vanderbilt Avenue, Brooklyn, New York, which reads in part as follows: "The following information is given for the purpose of obtaining credit under the provisions of the National Housing Act. The approximate amount of credit required by me for 36 months is $1132.53."
Then followed details not presently important, which indicate that an installation in given property, which is identified by street number and other particulars, is comprehended in the application.
(b) That blank was delivered to the Heating and Plumbing Finance Corporation, together with the promissory note referred to in the next finding, and on the reverse side thereof, the blank being filled in in long-hand by the salesman, there is recited that the --
"Cash Selling Price" is $ 985.00
(which is the balance to be
"H&PFC Fee (36) (Add) $ 147.53
x x x Amount of Note $1132.53
"Product or material to be installed and Maker's name:
"3.S.6. Ideal Red Flash for oil Burning
"Complete oil Burning installation.
"Purchased 18 Ave. Plumbing ...