(91 Hun, 236.)

#### BANK OF PORT JERVIS v. DARLING et al.

(Supreme Court, General Term, Second Department.

December 2, 1895.)

1. Banks—Defective Incorporation—Who can Plead.

The fact that the organizers of a state bank failed to file with the county clerk an affidavit of the payment of its capital stock, as required by law, can only be objected to by the state, and cannot be made a defense by one who in the usual course of business has incurred obligations to the bank.

2. Negotiable Instrument—Indorsement before Delivery.

One who indorses a promissory note to give the maker credit with the payee becomes liable to the payee.

8. Same—Notice of Protest—Reasonable Diligence.

Sending a notice of protest by mail, addressed to the “Estate of” a deceased indorser, at the place where at the time of his death he resided, is sufficient.

*154Appeal from judgment on report of referee.

Claim by the Bank of Port Jervis against Charles T. Darling and Thomas S. Mount, as executors of Jeremiah Darling, deceased. The claim was referred under the statute, and the referee found in favor of claimant for $2,776.22, with interest from February 5, 1894, and $112.43, referee’s fees and disbursements. From the judgment in favor of claimant, entered on the report, defendants appeal; and from an order denying, costs and an additional allowance to claimant, and from part of the judgment, claimant appeals.

Modified.

Argued before BROWN, P. J., and DYKMAN and PRATT, JJ.

Thos. J. Ritch, Jr., for claimant.

Thomas S. Mount (Thomas Young, of counsel), for defendants.

DYKMAN, J.

The plaintiff in this action presented a claim to the defendants, based upon a promissory note, of which the following is a copy:

> “$2,900. Port Jervis, New York, Jan. 2,1894.

> “Thirty days after date, I promise to pay to the order of Bank of Port Jervis twenty-nine hundred dollars at the bank of Port Jervis. Value received. William O. Gould.”

Before the note was delivered to the plaintiff, it was indorsed by the defendants’ testator, Jeremiah Darling, for the purpose of giving the maker credit with the bank. Darling died on the 18th day of January, 1894, and letters testamentary were issued to the defendants, as his executors, on the 12th day of February, 1894. The nóte fell due on the 5th day of February, 1894, and was protested for nonpayment on that day, of which the maker was duly notified. The notices of protest were made by the notary who protested the note,—one to J. Darling, and one to the estate of J. Darling. Both notices were inclosed in an envelope, and directed to the estate of J. Darling, Stony Brook, L. I., his place of residence before he died. The president of the bank had knowledge of the death of the indorser, but failed, upon inquiry, to ascertain whether he left any will or had any personal representative. The notices of protest were not received by the defendants. On the 15th day of February, 1894, the cashier of the bank called upon Charles T. Darling, one of the executors; and, after ascertaining that he was one of the executors, left with him a notice of the protest of the note. When the note became due, the maker, Gould, had a general deposit balance in the bank of $123.78; and on February 14, 1894, he deposited $302.40, without any special direction as to the application thereof. On the 15th day of February, 1894, the bank applied both of these sums to the payment of notes indorsed or made by Gould, which fell due after February 14, 1894, and checks of Gould were given therefor. The claim w7as rejected by the executors, and referred to a referee for a determination, under the statute. The referee decided in favor of the plaintiff, but deducted the sum of $123.78 from the claim, and directed judgment-for $2,776.22, with interest. Costs were denied to the plaintiff by the court, and the plaintiff has appealed from that order, and also *155from so much of the judgment as fails to allow the plaintiff $123.78, applied by it to payment of other paper of Gould. The defendants have appealed from the judgment.

The first question presented by the defendants has reference to the corporate existence and capacity of the plaintiff, the contention being that the bank has ceased to exist. The facts upon which this contention is based are these: In the year 1889 all acts requisite and essential to the organization of a state bank were done by it, except the filing in the Suffolk county clerk’s office, within the year, of an affidavit of the payment of the capital stock, as required by the statute. Such an affidavit was filed with the bank superintendent on the 18th day of July, 1889; and thereupon the bank commenced business, and has continued to do the usual business of banking, such as receiving deposits of money, discounting notes and bills, and making collections. The bank had many transactions with both Gould and Darling besides the one involved in this case. It was a de facto corporation, and neither the defendants nor any other persons who have contracted obligations with it can be permitted to attack any defect in its organization to affect its capacity to sue thereon. Such objections are only available on behalf of the sovereign power of the state, and cannot be raised by private persons to avoid a just liability. McFarlan v. Insurance Co., 4 Denio, 392; Ang. & A. Corp. § 80; Bill v. Turnpike Co., 14 Johns. 416. The filing of the affidavit in the office of the county clerk of Suffolk county is not made a prerequisite to the assumption and exercise of corporate powers. The statute itself contemplates such exercise for a whole year before such filing is required. The defendants cannot therefore escape liability upon that ground.

The next question has reference to the peculiar form of the note. It is made payable to the bank, and, upon the face of the paper itself, the presumption would arise that Darling intended only to assume the liability of a second indorser. For the purpose of overcoming that presumption, the plaintiff proved, and the referee found, that, before the delivery of the note to the bank, the testator of the defendants indorsed the same for the purpose of giving credit to the maker, Gould, with the bank, and that thereafter the bank discounted the note. The defendants’ testator, therefore, became liable to the bank as indorser of the note.

The defendants further insist that no sufficient notice of protest of the note was given. The facts upon which the question depends for determination have been recited. The demand of payment was sufficient, and no personal notice of the nonpayment could have been given, because the indorser was dead. The notice was sent to his place of residence, and although, in such cases, notice is required to be left at the domicile of the deceased, we are not prepared to hold the notice made here as insufficient. Stony Brook was the domicile of the deceased indorser, and notice was sent there. True, it was directed to his estate, but no other direction would be more likely to bring it to his family. His executors were not known to the bank, and, as soon as they were ascertained, they were notified. The law never requires impossibilities. Bea*156sonable diligence is all that is required. No evil has resulted from the course pursued, and the law does not exact every possible exertion which might have been made to effect notice of the dishonor of the paper.

In the case of Willis v. Green, 5 Hill, 232, which was much like this case, it was said in the opinion:

> “If the notice relied upon for that purpose had been sent to the proper place, no doubt it would have been sufficient, under the circumstances of this case, though directed to Johnson after his death.”

Stewart v. Eden, 2 Caines, 121; Bank v. Birch, 17 Johns. 25.

Upon reason and authority, the notice must be deemed sufficient.

In relation to the appeal of the plaintiff, our conclusion is that the sum of $123.78 was improperly deducted from the amount due, and the judgment must be modified by the addition of that sum to the amount thereof. Costs were properly refused to the plaintiff.

The judgment is to be modified in accordance with this opinion, and, as so modified, affirmed, with costs. All concur.