97 Misc. 401 | N.Y. App. Term. | 1916
These are separate appeals from two judgments in favor of the plaintiff, one for $759.43, and the other for $977.49, in two actions tried as one. One action is brought upon four promissory notes, for which judgment was rendered in favor of the plaintiff, and the other upon five promissory notes, the court allowing judgment upon only four and finding that the fifth note had failed for lack of consideration.
The defendant is a domestic corporation. In 1914, Bates, then its president and general manager, made an arrangement with Reilly, the payee of all of the notes, to borrow money from him from time to time at the rate of two and one-half per cent per week, or one hundred and thirty per cent per annum. During the period of the transactions Reilly loaned the corporation altogether over $30,000. When the loans were made checks of the corporation were given to Reilly. The checks were not paid when due, but from week to week two and one-half per cent in cash was paid to Reilly upon the loans. Ultimately demand notes were substituted for the checks. The notes were antedated and all of the. interest was paid upon the loans prior to the giving of the notes, plaintiff claims. The plaintiff acquired the notes in suit from the payee February 24, 1916. The most recent date of any of these eight notes is July 3, 1915. The ninth note upon which judgment was yen
■ The defendant contends that neither the president nor the directors of the defendant had any authority to contract to pay Reilly interest at the rate of two and one-half per cent per week, or one hundred and thirty per cent per annum, and that, consequently, any sums paid to Reilly in excess of the reasonable rate of interest must be applied in part payment of the principal of the loans, if such payments were made, as claimed by the plaintiff, before the demand notes were given; or, if the payments were made after the delivery of the demand notes, they must, also, be regarded as payments in reduction of the notes, since the demand notes, not specifying that they are payable with interest, bear no interest until after demand for payment. No express authority in Bates to contract to pay such a rate of interest was shown. If the terms of a contract entered into on behalf of a corporation by its officers are extraordinary or unusual, such as are not ordinarily made by the president or other officer in the ordinary course of the transaction of the current business of the corporation, the party contracting with the officer is put upon inquiry as to his authority. Western
Even if it should be held that the board of directors
However, the plaintiff contends that the defendant is estopped by its course of dealing from denying authority in the president or board of directors. But, . in order to estop the defendant, the plaintiff must show that Reilly relied upon the course of dealing. In this case plaintiff does not show that Reilly had any knowledge of dealings of the corporation with any other persons than himself nor does he show that in Reilly’s own case Reilly relied on the previous conduct of Bates. There could be no estoppel without such proof. Jacobus v. Jamestown Mantle Co., 211 N. Y. 154, 162.
It follows that the sum so paid as interest upon the loans to the extent that they exceeded six per cent per annum should be applied as payments on account of the principal. This results whether the sums paid as interest were paid before the delivery of these demand notes, as plaintiff contends, or whether some payments were paid before or some after. Assuming that the payments were made before the delivery of the notes, the contention that the defendant, having received the benefit of the loans, cannot repudiate the agreement with respect to the rate of interest, is not sound. Lyon v. West Side Transfer Co., supra. In the Lyon case the plaintiff had rendered services, at an agreed rate of compensation, which it was beyond the scope of the authority, express or implied, of the president of the corporation to agree to pay. It was held that the corporation had the right to repudiate so much of the
Guy and Bijur, JJ., concur.
Judgments modified, and, as so modified, affirmed, with costs.