111 N.E. 487 | NY | 1916
Judgment in favor of the defendants was granted upon the pleadings. The questions involved were discussed in the courts below and we think it is only necessary to comment upon the question in relation to which the courts below were not in agreement. That question relates to the claim of the plaintiff that the agreement referred to in the pleadings is ultra vires and illegal because it involves a guaranty by a corporation of the obligations of another corporation. We think that this claim involves a misapprehension of the true character of the obligation assumed by the six railroad corporations under the agreement. This agreement contemplates a conditional sale of railroad equipment. As was said by the learned justice at Special Term: "It is rather an agreement that in case one of the railway companies makes default in its obligation under the lease any of the others could step in and take the equipment allotted to the defaulting company by making good the rent in arrears. In other words the company so stepping in purchases by this method additional equipment for its own use and agrees to do so at the outset if such a contingency arises. This is a conditional purchase rather than a guaranty of a debt."
The judgment appealed from should be affirmed, with costs to each party appearing and filing a separate brief.
WILLARD BARTLETT, Ch. J., CHASE, COLLIN, CUDDEBACK, CARDOZO, SEABURY and POUND, JJ., concur.
Judgment affirmed. *617
