Partridge v. Badger

| N.Y. Sup. Ct. | Sep 7, 1857

By the Court, T. R. Strong, J.

The allegation in the

complaint, that the drafts were accepted by the company by their treasurer, includes an averment of authority to the treasurer to accept the drafts, as the company could not accept by him unless he had such authority. His acts would not be those of the company unless they were authorized by the company ; if thus authorized, they were, in legal effect, the acts of the company. What is necessarily understood or implied in a pleading forms part of it, as much as if it was expressed. (Allen v. Patterson, 3 Seld. 478. Steph. on Pl. 220, 221. 1 Chit. Pl. 640. Keys v. Haseltine, 2 Camp. 604. Chitty on Bills, Barb. ed. 585, 586.)

There is nothing in the case showing the drafts to be within any prohibition of the restraining act. It appears from the evidence that the drafts were issued and accepted to pay an indebtedness of the company to contractors with it, for labor performed; for which purpose the company might make notes or drafts or give its acceptances. A corporation, it is well settled, may, without special authority, make a note or draft or accept a draft, for a debt contracted in its legitimate business. (Moss v. Oakley, 2 Hill, 265. Barker v. Mechanic Fire Ins. Co., 3 Wend. 94. Mott v. Hicks, 1 Cowen, 513. Kelley v. Mayor of Brooklyn, 4 Hill, 263. McCullough v. Moss, 5 Denio, 567. Halstead v. Mayor of New York, 5 Barb. 218. 3 Comstock, 430.) The restraining act has no application to such a case.

Begarding the drafts as having been issued and accepted to raise money to pay the contractors, they are equally free from objection arising out of the restraining act, or want of power in the company. No loan of the drafts by the company, or sale or use of them for circulation as money, by the company, was made or thought of, and a corporation has incidental authority, when not specially restricted, to borrow money for any of its lawful purposes. Some doubt in respect to the authority to borrow has been intimated in the books, but a decision has recently been made by this court, in this district, directly in support of such authority. (See also Beers v. Phoenix Glass Co., 14 Barb. 358, 362.)

The objection to evidence of the consideration and purpose of the drafts and acceptances, does not specify as a ground of it that they are not alleged; if that ground had been stated, the court might properly have allowed an amendment setting them forth, if necessary. It is now too late to take that ground; but if it were otherwise, the court would now permit an amendment, without terms, as it is clear no prejudice would thereby be done to the defendant.

Besides, I am inclined to think, that proof by the plaintiff of a consideration, and that the acceptances were in the legitimate business of the company, was not necessary in the first instance ; that after proof that the acceptances were made by the authority of, and therefore by, the company, the other facts mentioned essential to their validity would be presumed. (Ang. & Ames on Corp. 2d ed. 198. N. Y. Fire Ins. Co. v. Sturges, 2 Coioen, 664. Barker v. Mechanic Fire Ins. Co. 3 Wend. 94. Safford v. Wyckoff, 4 Hill, 442.) Authority from the board of directors must be strictly proved, but when proved, it may, I think, be assumed that there was a valid consideration and proper purpose for the acceptances.

The stock subscription paper was relevant and competent evidence upon the question whether the defendant was a stockholder. The execution of it by the defendant was duly proved, and it does not appear, as is assumed by the objection to it, to relate to another organization.

It was competent for the plaintiff to prove by the testimony of witnesses who were present at an election of directors of the company, who were elected. The books of the company, if they contain a record of the election, which does not appear, although proper, are not the sole evidence to that point; and the fact of who were the directors might also be proved by the testimony of witnesses as to who acted as such. (Angell & Ames on Corp. 2d ed. 222, 3. Conover v. Ins. Co., 1 Cornst. 290. Bank of U. S. v. Dandridge, 12 Wheat. 83. Beers v. Phoenix Glass Co., 14 Barb. 358. Hoyt v. Thompson, 1 £'eld. 320.) There was ample evidence of this character to prove who were the directors, aside from the inspectors’ certificate ; and whether that was rightly received or not is wholly immaterial. This certificate was made by the persons who acted as inspectors, and, as I understand the evidence, at the time of the election, and I do not perceive why it was not competent and proper evidence of what was done on that occasion.

The resolutions accepting the resignation of Bryant as treasurer, and appointing Caldwell to succeed him, not being the acts of the directors as a board, were irregular, but entirely harmless, as it is proved beyond question that Caldwell after-wards acted and was recognized by the company as treasurer ; his acts as such, within the scope of his authority, were therefore binding on the company.

It was also clearly proved, that Tuck acted as treasurer subsequent to Caldwell, and was recognized as such by the company, and his report and statement of the financial condition of the company, proved to have been accepted and adopted by the board of directors, was competent and material evidence, as an admission by the company of the facts therein stated.

The authority of the treasurer to accept the drafts, might also be proved by showing that it was the practice of that officer, with the assent of the board of directors, to accept, and that the acceptances in question were recognized and treated as those of the company. Those acceptances were distinctly and " fully recognized by accepting and adopting the report of Tuck without objection.

The president alone could not confer the authority on the treasurer, but I think his directions to that officer were properly received as part of the history of the transaction, to go for nothing upon the point of authority, unless proved to have been sanctioned or ratified by the board of directors.

The treasurer might, I think, be authorized by the company to accept the drafts in blank as to the amounts; but whether this is so or not, is not material, as his acceptances were adopted by the action of the company on the report of Tuck, the treasurer, after the blanks had been filled.

I see no good reason why the plaintiff might not prove by the transfer book, that it did not appear thereby that -the defendant had transferred his stock; except that such evidence on the part of the plaintiff, that such transfer had not been made, was wholly unnecessary.

The objections made to the introduction of the drafts in evidence, are answered by the remarks already made; except the point that there was no evidence of the signature of the drawer, in respect to which the answer is, that the signature is admitted by the acceptance, and that it was subsequently proved.

The evidence in regard to the payments of the subscriptions for stock was relevant upon the question whether the defendant was a stockholder, and as to the relative amount of the actual capital and the indebtedness of the company.

It was proper to prove the origin, history and objects of the drafts and acceptances, by showing what was done between offi- * cers of the company and the contractors, in connection with proof of the ratification of the drafts and acceptances. This evidence does not contravene the rule that the acts and declarations of individual directors or officers are not binding unless authorized by the company, but is in harmony with it.

I think a proper foundation was laid for the introduction of secondary evidence of the contents of the book of minutes of the company. It was proved by the secretary having charge of the papers, that by direction of the president he delivered the book to an attorney, and that afterwards he called at the office of the attorney and with, the latter looked in the office for it, and could not find it. The president testified that he called on the attorney for the book, and endeavored to get it, but did not, and that he did not know where the book was. Those were the proper persons connected with the company to be examined on the-subject, and I think the facts that they did not know where the book was, and that the secretary searched in the office of the attorney where he left the book, and where it was last seen, so far as appears by the evidence, the attorney also making a search for it in connection with the secretary, without success, was reasonable evidence of the loss of the book. It does not appear that the attorney had any interest in the book, or motive for keeping it, or that there is any ground to suspect that the search by him was not in good faith ; and I do not think it was indispensable that he should be called and examined in regard to the loss. (1 Greenl. Ev. h 558. Cowen & Hill’s Notes, 1228.)

[Monroe General Term, September 7, 1857.

The charge of the judge, and his refusal to charge as requested, were right, with a single exception of no practical importance. It was technically erroneous to advise the jury, that the officers of the company, if any officers other than the board were intended by the term, could authorize or ratify the acceptances, and to refuse to instruct them that the president could not give authority to accept the drafts. But the evidence, aside from

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the directions of the president, of such authority from the board, and of the ratification and adoption of the acceptances by the board, is so full and complete, that the jury could not properly, upon that alone, have found in opposition to it; and if they had done so, the court would have been compelled to set aside their verdict; hence no injury has been sustained by the errors referred to.

I am of opinion that the merits of the case are manifestly with the plaintiff; that no error was committed at the trial, of which the defendant can justly complain; and that a new trial should be denied.

Johnson, T. R. Strong and Welles, Justices.]