144 N.Y. 220 | NY | 1894
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *222 We are of opinion that the referee was right in holding that the bonds sold and delivered to Town, Farrell, *224 Moffett and Ellis, and subsequently transferred to Vilas, or his administrators, were entitled to share pro rata in the proceeds of the sale of the real estate. Those bonds were issued in precise accordance with the authority conferred upon Williams, and the company received the full amount thereof in cash. They have never been paid or discharged by the company, and in the hands of the administrators of Vilas, to the extent of their interest therein, they were valid obligations against the company; and we can perceive no reason, legal or equitable, why they should not share in the proceeds of the real estate.
As to the bonds delivered to the banks for collateral security, a different question is presented. Those bonds were pledged to the banks to secure prior debts of the company. Williams had no authority to pledge the bonds. His sole authority was to negotiate them at a price not less than par and accrued interest, for the purpose of raising money to pay the floating debts of the company. He was bound to sell the bonds for money, or at least so to dispose of them as to pay the debts of the company. If he pledged them they paid no debts of the company, but rather increased than diminished such debts. It has been frequently held that an authority to sell does not authorize a pledge or mortgage (Cumming v. Williamson, 1 Sand. Ch. 17; Waldron v.McComb, 1 Hill, 111; Bloomer v. Waldron, 3 id. 361; AlbanyFire Ins. Co. v. Bay,
Our conclusion, therefore, is that the orders of the General and Special Terms should be so modified as to divide the funds held for distribution pro rata between the respondents and the appellants, so far as the appellants represent bonds sold, as found and determined in the report of the referee, and as thus modified the report of the referee should be confirmed, and the orders affirmed, without costs to any of the parties in any of the courts.
All concur.
Ordered accordingly.