Case ID: wend_3/html/0094-01.html
Source: Caselaw Access Project
Author: {"author": "Savage, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Barker vs. Mechanic Fire Insurance Company of the city of New-York.
    An insurance make a valid promissory note, which will he held contra™1’1 shewn.
    wMch"jí F.as president of an insurance company, promisesto pay a sumcertain, is not the note of the company, but of the maker alone.
    Demurrer to declaration. The first count of the declaration set forth that the Mechanic Fire Insurance Company 0f the city of New-York was a body corporate and politic in . , r , fact and m name; and being such body corporate and politic, anc* one John Franklin being the president of said company, and being thereunto duly authorised, and acting within the SC0Pe °f the legitimate purposes of the company, on the 1st July, 1823, at, &c. made a certain promissory note, and then and there delivered the same to the president and directors of the Life and Fire Insurance Company; by which said note the said John Franklin, as president as aforesaid, promised to pay to the order of the president and directors of the * » Life and Fire Insurance Company on demand the sum of #3172,40, with interest, for value received. The count then proceeded to state that the said Life and Fire Insurance Company then and ever since being a body corporate and politic in fact and in name, by the name of the Life and Fire Insurance Company, and one Joseph Swift being the assistant president, and one Matthew L. Davis’ being the secretary of the said Life and Fire Insurance Company, and they the said Joseph Swift and Matthew L. Davis being thereunto duly authorised, and acting within the scope of the legitimate purposes of the said company, afterwards, &c. on the Same day and year, and at, &c. aforesaid, endorsed the said note, and by that endorsement, ordered and appointed the contents thereof to be paid to the plaintiff, and delivered the note so endorsed to the plaintiff, of which the defendants had notice ; by reason, &c. To this count, the defendants demurred, and the plaintiff joined in demurrer.
    
      S. Cowdrey, for defendants.
    The note is void. The defendants had no authority to issue negotiable paper. (2 Johns. R. 109. 15 id. 358.) The note declared on is not a note of the defendants, but of John Franklin, whereby he, as president of the company, pro mised to pay, &c. If an act be done by an agent for his principal, it must be averred to have been done for the principal, or the agent only is bound. (Com. Dig. Attorney c, 14. 2 Ld. Raym. 418. 6 Johns. R. 96. 9 id. 334. 11 Mass. R. 27. 12 id. 173. 5 id. 299. 6 id. 58. 7 Cowen, 454.)
    The note was not endorsed by the payees. It is stated to have been made payable to “ the president and directors of the Life and Fire Insurance Company,” and the endorsement is by the agents of “ the Life and Fire Insurance Company,’’ averred to be a body corporate. The endorsement, therefore, is not by the payees of the note. But if the terms used embrace the payees, they had no authority to endorse nego,tiable paper. (Statutes, vol. 6, p. 177 b.) Besides, it was not neg0tiab]e. The act concerning promissory notes, (1 R. L. 511,) makes negotiable, notes made and signed by any person or by afactor or agent of any merchant or trader usually entrusted therewith. It has been decided that a corporation will be regarded as a person in law; but it has not been adjudged that a corporation can be regarded as a merchant or trader. The note declared on was the note of the agent of the Mechanic Fire Insurance Company.
    
      D. Selden fy S. A. Foot, for plaintiff.
    A corporation has a •right to máke a note for any legitimate purpose. On its face therefore, the declaration is good. It is averred that in making the note, the corporation acted within the scope of the legitimate purposes of the company ; but this was superfluous-If given for an illegal object, it may be shewn on the trial. (7 Cowen, 540. 2 id. 676.)
    As to the manner of setting out the note, it is optional to set out the facts, or the conclusion of law upon the facts. (1 Chitty, 302. 6 T. R. 662. 2 Burr. 1188.) Besides setting out the note, here is an express promise to pay. (Chitty on Bills, 357. 1 Salk. 128. 2 Camp. 450.) If the note was illegally or irregularly made or endorsed, the subsequent promises binds the makers, and the note will be considered the consideration of the promise.
    The statutes incorporating those companies authorise the transaction of their business by agents ; (Statutes, vol. 5, p. 134 a, and vol. 6, 177 b.;) and the court will infer the acts done within the scope of the authority conferred, until the contrary is shewn. (3 Cowen, 684.)
    A corporation may bind itself by a promise without seal and is liable to an action thereon. A promise by a principal to pay the note of an agent may be enforced. The plaintiff is the bona fide holder of a negotiable note, and entitled to recover, unless notice brought home that the note was illegally made.
    
      D. B. Ogden, in reply.
    The statute incorporating the company, prescribes the mode in which its contracts shall be executed. They must be signed by the president and counter-signed by the secretary. The act is a public act, and every citizen is bound to know its provisions. The plaintiff, therefore ought not to have taken a note not duly executed. The company was incorporated to affect insuran1 J . r ces, not to issue notes ; the issuing of a note, therefore, not being within the scope of its ordinary powers, should be held unlawful, unless the peculiar circumstances inducing the act are shewn, so that the court may judge whether justifiable or not. If the defendants were authorised in making the note, the payees had no right to invest their funds in such securities, and put them into circulation by indorsement. The promise of a principal to pay the note of his agent, if given in the character of agent, is good, but the note here is that of an individual, and the promise of the company is void by the statute of frauds. Besides, there is no special promise averred.
   By the Court,

Savage, Ch. J.

Several objections are raised to the sufficiency of the first count of the declaration: I. That the defendants had no authority to make a promissory note; 2. That the note described is the note of John Franklin, and not of the defendants; 3. That it is payable to the president and directors of the Life and Fire Insurance Company, and endorsed by the assistant president and secretary, in their own names; and 4. That the Life and Fire have no authority to endorse negotiable paper.

1. It has been decided, that a corporation is liable upon contracts not under seal, made by their authorised agents, (12 Johns. R. 230,) and upon an implied assumpsit, (14 Johns. R. 118, 19 id. 65,) and also upon a promissory note, (1 Cowen, 513.) It is averred in the declaration, that the corporation in making the note, were acting within the scope of the legitimate purposes of their incorporation; upon the face of the declaration, therefore, the court cannot say that the defendants can not make a valid promissory note. If they can make a valid promissory note for any purpose, this note must be held good till some cause shall be shewn why it is not so. By the act of incorporation of the ¡defendants, (Statutes, vol. 5, p. 131 a.) they are authorised to make contracts of insurance, but they cannot use their jn any banking operations. They cannot, therefore, make a note intended for circulation as bank paper; but I am not prepared to say that they may not give a note for many purposes, as for office rent, for the payment of a loss, for the payment of their officers, or agents or servants employed by them, and for other considerations. If a note has been given which is unauthorised by law, that should be shewn in the defence.

2. It is said, that the note described in the declaration is the note of John Franklin, not of the defendants. The averments in the count are; That the defendants are a corporation, and one John Franklin being president thereof, and being authorised and acting within the scope of the legitimate purposes of the corporation, on the 1st July, 1823, made a promissory note, and delivered the same to the president and directors of the Life and Fire Insurance Company,-by which the said John Franklin, as president as aforesaid, promised to pay to the order of the president and directors of the Life and Fire Insurance Company, on demand, the sum of $3172,40 with interest, for value received. From this description the note must be in the following form: “ I John Franklin, president of the Mechanic Fire Insurance Company, promise to pay to the order of the president and directors of the Life and Fire Insurance Company, on demand, the sum of $3172,40, with interest for value received. John Franklin.” Or it maybe in this form: “ I promise to pay to the order of the president' and directors of the Life and Fire Insurance Company, on demand, the sum of $3172, 40, with interest for value received. John Franklin, president of the Mechanic Fire Insurance Company.” In neither form can this be said to be the note of the company. In Taft v. Brewster, (9 Johns. R. 334,) the defendants, by the name and description of J. B., T. L. and J. C., trustees of the Baptist society of the town, &c. acknowledged themselves to be bound, &c. The court said, “ It is not the bond of the Baptist church. The addition of trustees to the names of the defendants is in this case a mere descriptio person-arum.” In White v. Skinner, (13 Johns. R. 307,) the contract was in the name of R. S., W. R. and A. H., as directors of the Granville Cotton Manufactory, and signed, “ For the directors, Reuben Skinner.” The court said it was Skinner’s individual .Contract. He should have averred and proved his authority from his co-directors. In this case there is an averment that the president was lawfully authorised ; but it does not appear that he has acted under the authority; he does not say that he signs for the company; he describes himself as president of the company, but to conclude the company by his acts he should have contracted in their name, or at least in their behalf. In Stone v. Wood, (7 Cowen, 453,) the defendant described himself “ as agent of J. and R. Raymond,” but he did not contract in their name: and it was held he was personally liable. So here, though the president, according to the averment in the count, had authority to make a note for the defendants, yet he does not appear to have done so, in a manner to be obligatory upon them. It is unnecessary, therefore, to inquire whether the note was endorsed in such a manner as to authorise an action in the name of the endorsee.

The defendants are entitled to judgment on the demurrer, with leave to the plaintiff to amend on payment of costs. ’