Case ID: ny-st-rep_57/html/0116-01.html
Source: Caselaw Access Project
Author: {"author": "Van Brunt, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Joseph S. Bryce, Resp’t, v. Louisville, New Albany & Chicago Railroad Company, App’lt.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed November 17, 1893.)
    
    Pleading—Demübbeb.
    In an action upon the guaranty of a corporation, an averment in the complaint that it was made by defendant, who had authority so to do, for value received, under the direction of its board of directors, is not the statement of a mere conclusion of law.
    Appeal from an interlocutory judgment overruling the defendant’s demurrer to the complaint.
    
      Hawkins tfc Delajield (Eugene D. Hawkins, of counsel), for app’lt; Chambers & Baughton ( William P. Chambers, of counsel), for resp’t.
   Van Brunt, P. J.

The complaint alleges the incorporation of the defendant under the laws of the state of Indiana, and the incorporation of the Richmond, Hicholasville, Irvine & Beatty ville Railroad Company under the laws of Kentucky, and that theretofore the said last-named company duly made and executed, for value received, its negotiable coupon bond, in writing, bearing date the 1st day of July, 1889, whereby it promised to pay to the Central Trust Company, or bearer, the sum of $1,000, with interest at 6 per cent., payable semiannually, on the presentation and surrender of the coupons thereto annexed, and thereupon delivered said bond, with the interest coupons thereto annexed, to the Ohio Yalley Improvement & Contract Company, or to its order; that upon the execution of the bond, the same was certified by the Central Trust Company, as trustee; and that thereafter an instrument of guaranty of the payment of said bond and interest was indorsed on said bond by the defendant; and “ that said indorsement of guaranty was so made by defendant, having authority so to do, for value received, and the same was so made, executed, and delivered, under and in pursuance of the direction of its board of directors.” The complaint further alleged that said bond, so certified and guarantied as aforesaid, was sold to him for the sum of $900, by the then president of the defendant; and “that on the 1st day of July, 1891, there became due, for interest on said bond, the sum of thirty dollars; on the 1st day of January, 1892, the further sum of thirty dollars ; and on the 1st day of July, 1892, the further sum of thirty dollars—for all of which sums coupons were annexed to said bond ; and that said coupons were duly presented for surrender and payment, refused; and that notice of the default was duly given to the defendant.” The complaint also contained causes of action upon other similar bonds. The defendant interposed a demurrer to the complaint, upon the ground that, upon its face, the complaint does not state facts sufficient to constitute a cause of action. This demurrer was overruled, and from the judgment thereupon entered this appeal is taken.

It is now urged in support of said appeal that the defendant had no power to guaranty the bonds of railway companies in other states, of which the plaintiff had presumptive notice; and that the plaintiff’s alleged guaranty was for the accommodation of the railroad company executing the same; and that the plaintiff was charged with notice, by reason of the facts alleged with reference to the purchase of the bonds. These grounds really result in the plea that the making of the guaranty was ultra vires of the defendant corporation. "Whatever may be the result upon the trial, it is clear that no such ground can be claimed here, in view of the allegations contained in the complaint. The averment is that this indorsement of guaranty was so made by the defendant, having authority so to do, for value received, and the same was so made, executed, and delivered under the direction of its board of directors. It is urged that this allegation is a mere conclusion of law; but in this we think the learned counsel for the appellant is mistaken. It is the allegation of a conclusion of fact; and facts, not evidence, are to be alleged in a complaint. The question of authority is one of fact, although the existence of such fact may depend upon questions of law. As, for example, whether A. is the agent of B. is a question of fact; but whether certain facts constitute A. such agent may be a question of law. The existence of the agency, however, is nevertheless a question of fact. It follows, therefore, that, in view of the allegations of the complaint, the demurrer is not well taken, and the judgment must be affirmed, with costs, and with leave to withdraw the demurrer, and answer, on payment of the costs and disbursements of the appeal and costs in the court below. All concur.