Case ID: misc_27/html/0235-01.html
Source: Caselaw Access Project
Author: {"author": "Truax, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

J. Owen Moore and George Whitlock, as Administrators, Etc., Plaintiffs, v. Charles E. Monell Co. et al., Defendants
    (Supreme Court, New York Special Term,
    April, 1899.)
    1. Bills and notes — Complaint against indorser — When liable to the payee of a note.
    A complaint by administrators alleged that the defendants executed an agreement providing that the defendant corporation, Monell & 'Co., would make a certain demand note payable to the order of the plaintiffs’ intestate, that the defendant Charles E. Monell would indorse it and that he and the corporation would deliver it to said intestate. It was further alleged that the corporation executed the note and a copy, thereof was set forth, together with the words “ Endorsed, Charles E. Monell ”. On demurrer,
    ■ Held, that there was a sufficient allegation that defendant. had indorsed the note. •
    That under the Negotiable Instruments Law; (Laws of 1897, chap. 612, § 114) he" was liable to the payee as indorser.
    2. Demurrer — When joint demurrer is untenable.
    A joint demurrer by two defendants cannot be sustained if the complaint states a cause of action against either.
    ,3. Corporations — When the indorser of a corporate note cannot plead ultra vires.
    Although the making of a note be beyond the powers of a corporation, yet the act itself is not illegal', and, when authorized by all the stockholders, the note binds the corporation and the indorser cannot escape liability by pleading ultra vires.
    
    Demurrer by defendants to plaintiffs’ complaint.
    Other facts appear in opinion.
    Maas & Goldberg, for plaintiffs.
    R; Krause, for defendants.
   Truax, J.

The complaint alleges that the defendants executed thé agreement annexed to the complaint. That agreement contains a provision to the effect that the defendant corporation will make a noté, payable on demand to the order of plaintiffs’ intestate, for the sum of $14,471.17, with interest, and that after having been indorsed by the party of the second part, it will deliver it to the party of the first part, the plaintiffs’" intestate, and that the party of the second part will indorse the said note so made as aforesaid, and will deliver the same to the said party of the first-part. The complaint further shows that pursuant to said agreement the defendant corporation duly executed and delivered their promissory note in writing and sets forth in full a copy of said note with the words, endorsed, Charles E. Monell.” Perhaps this is not a very artistic way of alleging that said note was'indorsed by said Monell, but I am of the opinion that the allegation - that the note was so indorsed is in effect contained in the complaint.

“ To sustain a demurrer to a complaint,” the Court of Appeals said, in Marie v. Garrison, 83 N. Y. 14, “ it is not sufficient that facts are' imperfectly or informally averred, or that it lacks definiteness and precision, or that the material facts are argumentatively averred; it will be deemed to allege what can by reasonable and fair intendment be implied from the allegations.'” I am, therefore, of the opinion that, by virtue of section 114 of the act in relation ,to negotiable instruments (Laws of 1897, chap. 612), the defendant Monell became liable to the payee as. indorser.

The demurrer interposed is joint in form, by both the defendants. It is well settled that if a complaint states a cause of action against either defendant, siich a demurrer must be overruled.

The defendant Monell, however, contends that the complaint shows that the note set forth in it is ultra vires as against the defendant corporation, and-that, therefore, he is not liable as an indorser. If the making of the note is an act which the corporation had no power to do, still such act was not. in itself illegal, and having been authorized-by all the stockholders of the corporation it becomes a valid act of • the corporation and binding upon it. Kent v. Quick Silver Mining Co., 78 N. Y. 186.

"A bank,” says the Court of Appeals, in the case last cited, has no authority from the State to engage in benevolent enterprises; and a subscription, though formally made, for a charitable object would be out of its powers; but it would not be otherwise an illegal- act; yet if every stockholder did expressly assent to such an application of the corporate funds, though it would still be in .one sense ultra vires, no wrong would be done, no public interest harmed; and no stockholder could object, or claim that there was an infringement of his rights, and have redress or protection. Such an act, though beyond the power given by the charter, unless expressly prohibited, if confirmed by the stockholders could not be avoided by any of them to the harm of third persons.”

It seems to me that these words are peculiarly applicable to this case,

Demurrer overruled, with costs, with leave to the defendants to answer on payment of such costs.

Demurrer overruled, with costs, with leave to answer on payment of costs.