...The defendant, in answer to the complaint of the plaintiffs. respectfully shows:
That for about six years previous to in or about 17 the month of April, 1873, this defendant (Frederick W. Kalbfleisch) was President of the Empire Sewing Machine Company of the City of New York. a corporation duly formed and existing under the laws of the State of New York and having an office at number 294 Bowery Street, in said city; that during such time it was deemed necessary by said company to borrow money for the use thereof and application was made by the Treasurer of said company, George W. Stake, to one William Ruhl, the deceased testator named herein, to obtain such loan for said company. That said Ruhl, said Stake as such Treasurer and this defendant, agreed that the loan or loans made and to be made to said company should be effected upon certain promissory notes, made and to be made by this defendant and endorsed by said Rhul and upon such endorsement they should be procured to be discounted by said company and the money obtained thereon appropriated to the use of said company and that said notes, when due, should be paid by said company. That as collateral to the payment of the said notes, or of any notes given in renewal thereof, the said company deposited with said Ruhl certain bonds of said company and stock of the Mahopac Manufacturing Company and stock of the said The Empire Sewing Machine Company, altogether of the value of twenty-five thousand dollars, as this defendant is informed and believes and that said Ruhl accepted such collateral security for such purpose. That said notes were not paid at maturity and that before the maturity thereof this defendant left certain notes in blank signed by this defendant, with authority to said George W. Stake, Treasurer of said The Empire Sewing Machine Company, to renew the specific notes held by said Ruhl and for no other purpose. That in violation of said authority and without any authority of this defendant, as surety for said company, for the payment of said notes under the agreement aforesaid, said Stake filled said blank notes with other sums than the amounts of the individual notes, theretofore made by this defendant, with the knowledge and consent of said Ruhl and as defendant is informed and believes and charges the fact to be, delivered said notes to said Ruhl and without the knowledge or consent of this defendant and that these unauthorized notes last mentioned, so delivered, are the notes specified and declared upon in the complaint of the plaintiffs in this action. Defendant denies the making of the notes alleged in the complaint.
Second. And for a further and separate defense, repeating and renewing the allegations aforesaid, defendant alleges upon information and belief, that the said Ruhl has parted with the said bonds and stock deposited with him as aforesaid as collateral security and indemnity for the payment of said notes by said company when due and has put it out of defendant’ s power to realize the benefit of said collateral. security and indemnity.
Third. And for a further and separate defense, repeating and renewing the allegations of the first alleged defense herein, this defendant alleges that all of the said original notes and all renewals thereof, made by this defendant to said Ruhl and endorsed by said Ruhl and delivered so endorsed to the said The Empire Sewing Machine Company, as hereinbefore alleged, were made by this defendant without consideration and that said notes, together with the notes declared upon in the complaint, were without consideration and were delivered to said company by said Ruhl, to be discounted for the use and benefit of the said The Empire Sewing Machine Company, without consideration from said company to said Ruhl, or to this defendant and that no consideration existed, as between said Ruhl said The Empire Sewing Machine Company and this defendant in any of the transactions relating to said notes, or any of them. That each and all of said notes, whether valid or invalid, were accommodation notes to said The Empire Sewing Machine Company. Defendant further alleges that said original notes and the renewals thereof, as well as the notes alleged in the complainant, were procured to be discounted by the Treasurer of The Empire Sewing Machine Company aforesaid, at a greater rate of interest than seven per cent per annum; to wit: the sum of one per cent per month upon the amount designated to be paid in each and every of said notes and that said discount was deducted from the amount named to be paid in and by said notes and each of them and the balance only upon each paid to and received by the said The Empire Sewing Machine Company, that is to say:
The Empire Sewing Machine Company agreed to receive said balance only upon the discount of said notes and to allow for the use thereof, in each case, at the said rate of one per cent per month, upon the amount of each of said notes respectively, which amount so allowed was paid by said Company by deducting the amount thereof from each of said notes including said original notes, the renewals thereof and the notes alleged in the complaint. That all of said notes were usurious. Defendant further answering, admits the allegations in the complaint as to the death of said Ruhl and the appointment of the plaintiffs as executors of his last Will and Testament as alleged in the complaint. But defendant denies each and every other allegation in said complaint contained not hereinbefore expressly admitted. Wherefore defendant demands that the complaint of the plaintiffs be dismissed, with costs and prays for such other and further relief in the premises as to the Court shall seem just.
Henry S. Bellows
Att’y for defendant
At a Special Term of the Supreme Court of the State of New York, held at the Court House in the city of New York on the 25th day of January, 1875.
Present: Hon. Charles Donorue, Justice
William Ruhl vs Frederick W. Kalbfleisch
On reading and filing the petition of Henry A. Cassebeer and J. Otto Toussaint, showing the death of William Ruhl, the plaintiff in the above entitled action and the granting of letters testamentary under and by virtue of his last will and testament, to Henry A. Cassebeer and J. Otto Toussaint, by the Surrogate of the County of New York and on motion of Johnson & Cantine, plaintiffs’ Attorneys.
Ordered, That this action be and the same is hereby revived and continued in the name of said Henry A. Cassebeer and J. Otto Toussaint, executors of the last will and testament of William Ruhl, deceased, as plaintiffs and that the said executors be and they hereby are substituted as plaintiffs in the place and stead of the said William Ruhl, deceased and that such revivor and continuance be without prejudice to any of the proceedings already had in this action and that plaintiffs have leave to amend the complaint therein as they may be advised.
defendant: Frederick W. Kalbfleisch
plaintiffs: William Ruhl
started: November 18, 1874
The action was originally commenced by William Ruhl, November 18, 1874, upon the two promissory notes constituting the first and second causes of action set forth in the complaint (folios 10 and 11). Before the defendant’s time to answer the original complaint expired and on November 27, 1874, Ruhl died, leaving a will (folios 7 and 28). January 20, 1875, Ruhl’s will was proved and admitted and letters testamentary thereon issued to the present plaintiffs (folios 7, 8 and 28). An order was made in the action at Special Term, January 25, 1875, by the same Justice who tried the cause at the Circuit, reviving and continuing the action in the names of the present plaintiffs as Ruhl’s executors (folios 8 and 30). This order was, in fact, made upon the written consent of the attorney for the defendant indorsed on the order itself and granted leave to the plaintiffs to amend the complaint as they might be advised (folio 33).
The plaintiffs thereupon amended their complaint by adding two causes of action upon two notes of defendant which became due November 18, 1874 and were held by Ruhl at the time of his death (folios 12 and 13).
The defendant received the complaint as thus amended without objection and answered it (folio 16). No answer to the original complaint was ever served. The answer alleges, in substance, that in April, 1873, the defendant was president of The Empire Sewing Machine Company; that George W. Stake, its treasurer, applied to Ruhl to obtain a loan for it; that Ruhl, Stake as treasurer and defendant agreed that the loans to be made to the Company should be effected upon notes of the defendant indorsed by Ruhl and procured to be discounted by the Company (folios 17 and 18).
The notes which Ruhl indorsed were first made by defendant, individually, in 1869. Ruhl then insisted that the notes should be drawn by defendant, as he had no confidence in the Company, but had in defendant’s responsibility.
T. J. McArthur and his associates organized the Empire Sewing Machine Company and the premises were sold to this company May 1st, 1866. It was intended by this company to establish a large manufactory at this place, an intention which was frustrated by subsequent events and the entire premises and water rights were sold to the Mahopac Manufacturing Company, January 10th, 1869. This company had already established a large manufactory on the Muscoot River, in Westchester County.
Q. What connection had Kalbfleisch with the Empire Sewing Machine Company ?
A. He was our President.
Q. For how long from what time to what time?
A. From 1867 until. 1871, 1872, 1873 until it failed.
Western Empire Sewing Machine Co. was the Empire Sewing Machine Company of Chicago.
Mahopac Manufacturing Company
George W. Stake, who, being sworn, testified:
Q. What is your business?
A. I am a broker at present.
Q. Where you ever connected with the Empire Sewing Machine Company?
A. I was.
Q. What was your position in that company ?
A. Secretary and treasurer.
Q. Where was it located ?
A. 294 Bowery, New York City.
Q. Prior to the 1st of January, 1874, how much in all had been delivered to him of these securities ?
Q, How long before June, 1874, had the company failed ?
A. In November, 1873.
Q. These notes were known to be for the benefit of the Empire Sewing Machine Company‘?
A. At the time they failed these notes were made by Kalbfleisch and renewed.
Q. Where was your office at that time July, 1874 ?
A. Down town; I left the company and was afterwards with the Remington Sewing Machine Company.
Q. Who was the book keeper of the company?
A. Mr. Ponto.
Q. Was Mr. McCarthy a stockholder of the company?
A. Yes, sir; a long time ago he was; he was in the beginning?
Q. These securities which you spoke of before were given to Mr. Ruhl for what purpose, as securities for these notes which he was discounting?
A. Yes. sir.
Q. How many of those securities have been taken back from Mr. Ruhl and where are they ?
A. So far as I know, he has only $8.500 mortgage bonds.
Q. These were Empire Sewing Machine Company bonds, secured by mortgage on the Mahopac property ?
A. Yes, sir; the other stocks, the Empire Sewing Machine Company stocks, are valueless; I think the old certificates of stock are there yet.
Q. How many?
A. I never had occasion to go over them.
Q. The Western Empire Sewing Machine securities were given up?
A. They were given up and changed; I don’t know that I ever gave them back or not; I don’t remember whether I gave them back; I know they were changed.
Q. Your company never received them back?
A. If they came back from Ruhl, the company received them; I cannot say now how that is; I know we made the change; they are of no value.
The Court then adjourned, the jury being ordered to bring in a sealed verdict the next morning.
February 16, 1876