Case Name: The People of the State of New York, Plaintiff, v. Mercantile Co-operative Bank of New York, Defendant. In the Matter of the Claim of Henry D. Poole, Appellant; Charles D. Robinson, Receiver of the Mercantile Co-operative Bank, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1905-04
Citations: 104 A.D. 219
Docket Number: 
Parties: The People of the State of New York, Plaintiff, v. Mercantile Co-operative Bank of New York, Defendant. In the Matter of the Claim of Henry D. Poole, Appellant; Charles D. Robinson, Receiver of the Mercantile Co-operative Bank, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 104
Pages: 219–223

Head Matter:
The People of the State of New York, Plaintiff, v. Mercantile Co-operative Bank of New York, Defendant. In the Matter of the Claim of Henry D. Poole, Appellant; Charles D. Robinson, Receiver of the Mercantile Co-operative Bank, Respondent.
Contract by a bank giving to an individual the exclusive right to act as its agent in a State in which it could not lawfully do business—resolution of its directors assuming a bond given by its president for a loan to him to make good his shortage to the bank.
A contract made by a banking corporation, which could not lawfully do business in Union county, in the State of New Jersey, whereby it conferred on an individual the exclusive right to conduct its .business in that county, is invalid, and the individual, who knew of the invalidity of the contract at the time of making it, cannot recover damages because of a breach of the contract by the corporation.
A banking corporation cannot be held liable upon a resolution passed by its board of directors to the effect that the corporation would indemnify the president of the bank against liability upon a personal bond previously executed by him, and from which the bank obtained no benefit except possibly by the liquidation of a shortage in the president’s account.
Appeal by Henry D. Poole from am order of t-lie Supreme Court, ■made at the Kings County Special Term and entered in the office of'the clerk of the county of Kings on the. 6th day of June, 1904, confirming the report of a referee.
Philip Carpenter, for the appellant.
W. E. Kisselburgh, Jr. [H. Louis Jacobson with him on the brief], for the respondents.

Opinion:
Miller, J.:
Two items of the appellant's claim,, disallowed'by the referee, are presented for consideration, on this appeal. The first item is for damages for breach of a contract between the defendant bank and the claimant, made on the 8tli day of January, 1894, whereby -the claimant was appointed resident manager of said defendant in Union county, New Jersey, and given the exclusive right to sell its stock and conduct its business in said county. It appeared that in March, 1894, the relations created by said agreement were terminated by said defendant. It also appeared that at the time of the making of said contract said defendant had no right to do business in the State-of New Jersey, not having complied with the laws of that State to enable it so to do. The claimant by the contract, for the breach of which damages are claimed, engaged to. do that which was unlawful, and which by the laws of New Jersey subjected him to an action-for, penalties, and in fact.' he was prosecuted for business which,he transacted in said .State for the defendant bank under a parol contract of employment, prior to the making of said written agreement. The claimant subsequently brought an action in the Supreme Court of this State, against the defendant bank, in which he alleged said parol contract of employment and a representation 'and agreement on the part of said defendant that it had complied with-the laws of the State of New Jersey in respect to the conditions necessary to enable it to do' business'in said State,. 4nd .other appropriate allegations by which he sought to recover damages on account of the prosecutions instituted against him in the Státe of New Jersey occasioned by reason of the falsity of said alleged representations and breach of said alleged agreement. The judgment in that action, entered upon the verdict of a jury- in favor of the defendant, would seem to be an adjudication of the matters therein determined. The claimant in this proceeding seeks to recover damages for breach of a contract performance of which was unlawful. His knowledge of the illegality of the contract must have been directly involved in the action brought by him to recover damages, and the judgment against him is conclusive upon that proposition. If it is possible for a party in any case to recover damages for the breach of an illegal contract, it certainly is not possible where he has knowledge at the time of making the contract of its illegality.
The second item is for the sum of $10,000 alleged to have been loaned by the claimant to said defendant bank, or in the alternative $16,458.34 damages for the breach of an alleged contract on the part of said defendant bank to pay the dues on 300 shares of its stock held by the claimant. As to this item the evidence discloses that on the 8th day of Januaiy, 1894, the claimant executed to the defendant bank a deed of certain real property situate in the State of New Jersey, which the claimant asserts was worth $15,000; that on the same day the claimant subscribed for 300 shares of stock of a certain class of the defendant bank, and the defendant bank executed an agreement to the plaintiff whereby in consideration of the sum of $13,860, agreed to be paid in monthly installments of $111, which was the amount of the dues, interest and premium on said 300 shares of stock, it agreed to reconvey said property. At the same time the defendant bank paid to the claimant the sum of $10,000 which he in turn immediately paid to one John W. Newbery, who was the president of the bank, and who gave back his personal bond conditioned upon the payment by him of said monthly installments of $111. Said dues were not paid, by reason of which the claimant alleges that he lost his property. The claimant's theory is that said Newbery represented the defendant bank; that in fact the said $10,000 was obtained by him for the benefit of the bank, and that it was liable on his personal agreement to pay the monthly dues. He admitted that he supposed Newbery was short in his account with the bank and that a portion of the $10,000 at least was desired to make good such shortage, and it does not appear that the defendant bank received any benefit whatever from the $10,000 loaned by the claimant to Newbery, except possibly by way of such shortage being made good.- It is very clear that the agreement for breach-of which the claimant seeks- to recover in this proceeding was the personal agreement of said Newibery, and that the defendant'bank could not be made liable for its breach notwithstanding the resolution subsequently passed'by. the board of directors proposing to indemnify said Newbery from loss ón his. undertaking with the claimant, which could have had no 'more force than a resolution to make him a present of the amount of money specified in it. Upon the. proofs the claimant's remedy is against Newbery on his bond.
The findings of the referee are fully supported by the evidence, and the order confirming the referee's report and overruling the appellant's exceptions must be affirmed, -with costs.
Hibschbbbg, P. J., Babtlett, Jenks and Rich, JJ., concurred.
Order affirmed, with costs. '
(&mz8 DETERMINED IN THE • FIRST DEPARTMENT IN, THE APPELLATE DIVISION, 1905. .