57 N.Y.S. 1035 | N.Y. App. Div. | 1899
On the 20th of December, 1897, A. Lindheim, the president and treasurer of the Excelsior Paper Box Company, a corporation organized under the laws of the State of Hew York, .attempted to make a general assignment of the assets of the corporation for the benefit of its creditors to John W. Schaefer, the plaintiff. The assignment executed was regular upon its face, bore the corporate seal and.purported to be executed by the.corporation “by A. Lindheim, President & Treas.” It was acknowledged by Lindheim, and in the acknowledgment Was a statement that the seal was affixed and the name of the corporation signed to the instrument pursuant to authority conferred upon him by the board of directors. The assignee
Upon the trial the foregoing facts and the value of the property sold by the sheriff having been established, the plaintiff rested. The defendants’ counsel then opened the case to the jury, and in opening, stated that he intended to prove that the assignment was never authorized by the board of directors, and that the same was executed by Lindheim without any authority whatever. The plaintiff’s attorney thereupon-moved upon the opening for the direction of a verdict in favor of the plaintiff, and stated that, for the purposes of the motion iC it is admitted that this assignment was not authorized by the board of directors.” Argument was then had, at the conclusion of which a verdict was directed for the plaintiff for the value of thq goods taken, and from the judgment entered thereon the defendants have appealed.
We think the trial court erred in directing a verdict for the plaintiff. The concession that the assignment was not authorized by the board of directors, necessarily conceded its invalidity as to the creditors of the corporation. Under the statute the management of the business and affairs of a corporation is committed to a board of directors, and it primarily possesses all the power which the certificate of incorporation confers. (Beveridge v. N. Y. E. R. Co., 112 N. Y. 1.) The board of directors alone has the power to determine whether a general assignment for the benefit of creditors shall be made, and if so, to direct the execution of it, but the president of a corporation, unless authority be conferred upon him by the board of directors, has no such power. He cannot, unless authorized by the board, dispose of all the property of the corporation, and thus put an end to its existence, and if he attempts to do so, his acts .as against stockholders and creditors are absolutely void.
The case of Rogers v. Pell (154 N. Y. 518), relied upon by the
In the case .now before us the plaintiff’s counsel conceded, as we have already seen, that the board of directors of the corporation never authorized the assignment to be made. It must, therefore, be held, both upon principle and authority, that the act of the president in making it was absolutely void as against the creditors or stockholders of the corporation. If we are correct in this conclusion, then it necessarily follows that the plaintiff could not maintain the action, since his right to the possession of the property" sold depended .entirely upon the validity of the assignment itself. He was. not entitled to the possession of the property alleged to .have, been converted. It belonged to the corporation, and as such could be levied upon and sold by creditors.
Judgment and order should be reversed and a new. trial granted, with costs to the appellant to abide the event.
'Van Brunt, P. J.,. Barrett, Rhmsev and Ingraham,. JJ., concurred. i '
Judgment and" order reversed, new trial granted, costs to appellant to abide event.