Case ID: ny-super-ct_49/html/0267-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Sedgwick, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE SECOND AVENUE R. R. Co., Respondent, v. SOLOMON MEHRBACH, Appellant.
    
      Corporation—powers of officer—effect of specific authority.—Conversion.
    
    Where the transaction of certain business for the corporation by one of its officers is the subject of specific authorization by resolution, such resolution furnishes the measure of said officer’s authority in regard thereto, though the matters in question may be comprehended by general powers conferred upon him.
    Accordingly, where certain instruments in the form of bonds, signed and sealed by the proper officers of plaintiff, but not delivered, were entrusted to defendant, the president of the company, under a resolution directing him to sell the same at a certain price, and said defendant loaned them to one E., for the purpose of enabling F. to raise money to pay the company for certain of its bonds for which E. had subscribed and had not paid,—Held, a conversion by defendant, and that the question of his general powers as president was immaterial.
    Before Sedgwick, Ch. J., Truax, and Ingraham, JJ.
    
      Decided June 2, 1883.
    Appeal from judgment entered on verdict for plaintiff directed by court.
    
      The facts appear in the opinion.
    
      Smith, Allan & Smith, for appellant.
    
      Hutchins & Platt, and Austin G. Fox, for respondent.
    —The defendant Mehrbach, in allowing the defendant Fellows to obtain possession of and carry away the seven bonds in question, was guilty of a conversion of the bonds.
    Trover lies by the maker of a promissory note for its conversion (Decker v. Mathews, 12 N. Y. 313, 319). This is so whether the defendant has transferred the note or not (Thayer v. Manley, 73 N. Y. 305, 308). The allegation that the defendants converted and disposed of the bonds to their own use is sufficient (Decker v. Mathews; Thayer v. Manley, supra). And it is not necessary to prove that the defendants actually appropriated the proceeds to his own use, or derived any benefit from the use of the bonds (Reynolds v. Shuler, 5 Cow. 323; Connah v. Hale, 23 Wend. 462; Murray v. Burling, 10 Johns. 172; Bristol v. Burt, 7 Id. 254). The conversion was complete at the moment of the unlawful delivery of the bonds to the defendant Fellows, by the consent of the defendant Mehrbach. The action is sustained by showing possession in the plaintiff and the wrongful delivery by the direction or assent of the defendant Mehrbach (Cases cited supra; Ely v. Ehle, 3 N. Y. 509). Nor is a wrongful intent an essential element of the conversion (Boyce v. Brockway, 31 N. Y. 490, 493; Poucher v. Blanchard, 86 Id. 256). The delivery of the seven bonds to the defendant Fellows was unauthorized. But, whatever might have been implied frq>m the alleged custom of the president to pledge the company’s bonds at his discretion, in order to raise money for the company, still, in regard to the bonds in question, he was controlled by an express resolution of the board of directors to sell the bonds, and a violation of that instruction was a conversion (Laverty v. Snethen, 68 N. Y. 522).
    
   By the Court.—Sedgwick, Ch. J.

—The action was for damages for the conversion of what were called in the complaint, bonds. The instruments, seven in number, were in the form of bonds, signed and sealed by the proper officers of the plaintiff, but had not been delivered. While they were in this condition, the defendant, who was president of the plaintiff, loaned them to one Fellows. Fellows had subscribed for twenty-five of the same kind of bonds, had received them, but had not paid the price of them in full. The purpose of the loan was to enable Fellows to raise money with which to pay for the twenty-five bonds in full. This was conversion by the defendant. It was an appropriation by the defendant to himself of the property of the plaintiff.

It was claimed on the trial that the proof showed that the loan of the seven bonds to Fellows was authorized by the plaintiff in general powers that had been conferred by them on defendant, and also that this special transaction had been ratified by the plaintiff. There was no testimony tending to show any ratification. As to the claim of authority under general power, it is not necessary to ascertain what general powers the defendant had, for his powers as to bonds like those in question were the subject of specific authorization by resolution. That resolution conferred on him authority to sell at a certain price. There was no proof that this resolution had become in any way inoperative or unobserved by tacit consent. The loaning to Fellows was not a sale. It was not a transaction, the object of which was a return of money for the loan. It was solely for the benefit of Fellows, to enable him to pay the subscription price of the twenty-five bonds.

There was no error in the proceedings on the trial, and the court was right in directing a verdict for plaintiff.

Judgment affirmed, with costs.

Truax and Ingraham, JJ., concurred.