29 A.D. 559 | N.Y. App. Div. | 1898
Lead Opinion
The action was brought upon a promissory note made by the defendant and alleged to -have been delivered by him to the American Loan and Trust Company, of which the plaintiff afterwards became receiver. The defense was that the note was delivered for the convenience of the American Loan and Trust Company and without consideration, to stand as an apparent security for a loan made by that company to the Decatur and Nashville Improvement Company, and upon an ' express agreement made at the time of delivery that the defendant was not to be liable upon the note. The defendant gave evidence tending to establish these facts, which was submitted to the jury, who found that such an agreement was made and that the note was delivered in pursuance of it and for the purpose mentioned in the answer, and they found a verdict for the defendant. A motion for a new trial was denied after the verdict, and the appeal is taken from the judgment entered upon the verdict and from that order.
There is no substantial dispute as to the facts. The defendant was the secretary and treasurer of the Decatur and Nashville Improvement Company, having only a nominal connection with the company and no interests whatever in it. The Decatur and Nashville Improvement Company had been engaged in the construction of the Decatur, Chesapeake and New Orleans railroad. The American Loan and Trust Company had advanced to the improvement company $300,000, which was secured by the bonds of the railroad company. Further advances were necessary to enable the improvement company to ■ complete its work. When that was completed, of course, the stocks and bonds of the railroad company would become more valuable, and the loan and trust company was, therefore, greatly interested in the completion of the railroad. Evans, the vice-president of the loan and trust company, seems to have had charge of the loan to the improvement company. It appeared from the evidence offered by the defendant that it was stated to him that the loan to the improve-
Upon that state of facts, the defendant insisted that his case was controlled by the rule of law that it is a defense to the enforcement of a promissory note against the maker in the hands of an original party to it, that the note was without consideration and was delivered upon condition that the maker should not be liable thereon. (Higgins v. Ridgway, 153 N. Y. 130; 90 Hun, 398; Garfield Nat. Bank v. Colwell, 57 id. 169.) This case, as we think, is clearly within the rule laid down by the cases cited. The facts here are almost identical with those of the case of Higgins v. Ridgway (supra). In that case, the defendant, who was sued upon the note, was a clerk of the firm of Page, Carey & Co. Here, the defendant was the secretary of the improvement company. Page, Carey & Co. had received large loans from the North River Bank. Here the improvement company had received large loans from the trust company. Page, Carey & Co. desired to increase their loans, as did the trust company in this case. The note made by Ridgway was given to enable the bank to advance the money to Page, Carey & Co. without criticism, as the note here was given that the loan might be made by the trust company. The proceeds of Ridgway’s note were put to the credit of Page, Carey & Co., as in this case the proceeds were put to the credit of the improvement company. In neither case was anything received by the maker of the note, or paid to him. The note was delivered to the North River Bank by Ridgway upon an
It was claimed by the plaintiff that there was no proof that Evans, who was vice-president of the trust company, had authority to make the agreement. But it was proved that Evans was the man by whom these loans were negotiated, that he did in fact make the agreement with Thompson, that the note was delivered to him at the office of the trust company at the time the agreement was made and for the purpose of being used to complete this loan; and it needs no citation of authority to establish the proposition that when an officer of a corporation, high in rank, is engaged in the transaction of the business of the corporation at its place of business, the corporation is bound by any agreement that he makes which is apparently within his authority. “ In this case, the corporation, having brought an action upon this note, which was delivered to Evans, must be deemed to have ratified the contract made by Evans to procure the giving of the note. It cannot now adopt the note and refuse to adopt the contract by which it was procured.
No exception is found in the case which requires examination, and for the reasons above stated the judgment and order must be affirmed, with costs.
Patterson and O’Brien, JJ., concurred; Ingraham, J., dissented.
Dissenting Opinion
I dissent. The action was brought to recover the amount of a promissory note made by the defendant, whereby he promised to pay the Decatur and Nashville Improvement Company, or order, $10,000, which said note was duly indorsed by the payee and delivered to the American Loan and Trust Company. The plaintiff as receiver of that company brings this action. The defense is that the said note was signed by the defendant at the trust company’s request, solely for the purpose of enabling it to conceal the true amount of its loan to the said Decatur and Nashville Improvement Company; and that, at the time of the execution and delivery of the note to the trust company it was expressly understood and
Counsel for the plaintiff asked the court to direct a verdict for the plaintiff for the amount of the note, on the ground that there was no proof of any agreement binding upon the trust company to the effect that the note should not be paid in accordance with its terms, and that there was no proof establishing the defense alleged. This motion was denied, and the plaintiff excepted. The court charged the jury that if they reached the conclusion “ that Mr. Evans, as vice-president of the American Loan and Trust Company, agreed with the defendant that he, Thompson, the maker of the note, should incur no liability by the signing and delivery of the note, and accepted the note as an officer of the American Loan and Trust Company under those circumstances, and made the advances to the Decatur and Nashville Improvement Company, to whose order the note was given, with that understanding and full knowledge of those facts, then the defendant incurred no liability to the company by the signing of the note.” To that the counsel for the plaintiff excepted. These exceptions present the only matter to be determined upon this appeal.
The note upon its face was an unconditional obligation upon the defendant to pay a sum of money at a time named. It was executed by the defendant individually, who at that time was the secre-' tary and treasurer of the payee of the note. It was indorsed by the defendant, acting as such secretary and treasurer, and was accejffed by the president of the trust company from the defendant, and for it the trust company paid to the payee, on whose account it was presented to the trust company, the face amount of the note. There is no evidence that the president of the company that made the loan had any knowledge of the alleged conversation between Evans, the vice-president of the trust company, and the defendant, and it is clearly to be adduced from the evidence that if the president of the trust company had been informed that there was any understanding between Evans and Thompson as to Thompson’s liability upon the note, other than that which expressly appears upon the face of the note itself, the note would not have been accepted. The defendant had been expressly told by Evans that Mr. Baldwin, the president of the trust company, had objected to any more advances
But the facts here are entirely different. This note was not given at the request of the trust company, nor for its accommodation. It was given to enable the payee of the note to obtain a sum of money from the trust company, which its officers would not pay to the payee of the note, the improvement company, without the note being executed.
In Higgins v. Ridgway and Garfield Nat. Bank v. Colwell (supra) the testimony was that the note was executed at the request of the president of the bank for the benefit or accommodation of the bank, and not for the accommodation of any third party. No consideration was paid by the bank in either case for the note, and the bank incurred no liability or obligation upon its account, and the note as held by the bank in either case represented no money or property which had been paid by the bank for it. It simply stood in its hands as an obligation made for its benefit upon which it advanced no money and upon which it had incurred no liability.
Here the transaction was entirely different. Of that transaction the defendant had full knowledge. He knew the trust company would not make the loan to the improvement company except upon the condition of the execution of this note, and that the note was executed by him and delivered to the trust company for the purpose of enabling the improvement company to obtain the money upon it. There was thus no conditional delivery of the note to the trust company. It was delivered for the purpose of procuring a loan, and of that the defendant had knowledge. Any agreement between himself and an officer of the trust company was simply an agreement that this obligation which he had assumed toward the trust company, and for which it had advanced this money, should not be an obligation of his, and was, therefore, a coteinporaneous agreement which contradicted the writing, and was an attempt to vary or contradict the written contract between the parties, and consequently inadmissible.
For these reasons I think the plaintiff was entitled to judgment.
Judgment and order affirmed, with costs.