Case Name: The National Bank of Newport, Respondent, v. H. P. Snyder Manufacturing Company, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1905-07
Citations: 107 A.D. 95
Docket Number: 
Parties: The National Bank of Newport, Respondent, v. H. P. Snyder Manufacturing Company, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 107
Pages: 95–98

Head Matter:
The National Bank of Newport, Respondent, v. H. P. Snyder Manufacturing Company, Appellant.
Corporate note—7low far its validity is established by the signatures of the president and treasurer of the corporation — its effect in the case of accommodation paper — what proof is competent to establish its chan'acter.
In an action brought by a bank against a corporation to recover upon a promissory note purporting to have been executed by it and which was discounted by the plaintiff bank, it is doubtful whether the mere fact that the note is attested by the signatures of the president and treasurer of the corporation is sufficient to establish the validity of the note.
It seems, that there should be proof of the specific authority of the president and treasurer to affix the corporate, name to the note as its obligation, or that the corporation received the avails of the note, or that there was a course of business which justified the plaintiff bank in accepting the note as the obligation of the corporation.
Even if proof of the execution of the note by the president and treasurer be sufficient to bind the corporation upon a note for its benefit, such rule would not obtain if the note was in fact accommodation paper to the knowledge of the plaintiff bank.
In such a case proof that the note was made for the benefit of the payee; that the bank knew of that fact; that it was put in circulation" without the defendant’s authority, and that the payee paid the interest thereon when it was renewed is competent.
Appeal by the defendant, the H. P. Snyder Manufacturing Company, from a judgment of the Supreme Court in favor of the plaintiff, entered'in the office of the clerk of the county of Herkimer, on the 30th day of December, 1904, upon the verdict of a jury rendered by direction of the court after a trial at the Herkimer Trial Term, and also from an order entered in said clerk’s office on the 15th day "of December, 1904, denying the defendant’s motion for a new trial made upon the minutes.
Myron G. Bronner, for the appellant.
Robert Forsyth Little, for the respondent.

Opinion:
Spring, J.:
This action was commenced to recover on a promissory note of. $5,000, dated July 14, 1903, due in four months, purporting to be executed by the BE. P. Snyder Manufacturing Company, a domestic corporation, and attested by its president and treasurer, and payable to the order of the Newport Knitting Company, also a domestic corporation. The note in suit was the end of a series of notes, each similar in form, and commencing with the 1st of November, 1901, negotiated with the plaintiff.
On the trial the genuineness of the signatures of the president and treasurer to the note was admitted, although the admission did not extend to their authority to give the note in suit or any of the series. The reception of the note in evidence was objected to by the defendant on the ground that the authority of these officials to execute the note did not appear, but the note was received' without this proof..
We doubt whether the mere fact that the note was signed by the president and treasurer is sufficient to establish the validity of the note. (People's Bank v. St. Anthony's R. C. Church, 109 N. Y. 512; Bangs v. National Macaroni Co., 15 App. Div. 522.) There should be proof of the specific authority to affix the corporate name to the note as its obligation, or that the corporation received the avails of the note or that there was a course of business which justified the bank in accepting it as the obligation of the corporation.
The proof is equally defective as to the indorsement of the payee, but it does appear that the avails were credited to that company, and it is not made a party, so that it .may not be necessary to state the facts -as to the transfer of the note by it.
Even if proof of the' execution of the note by the president and treasurer were sufficient to bind the corporation on a note for its benefit, such rule does not obtain if the note was in fact accommodation paper, and the bank knew of this defect. (National Park Bank v. G. A. M. W. & S. Co., 116 N. Y. 281; Bank of Genesee v. Patchin Bank, 13 id. 309; Dan. Neg. Inst. [3d ed.] § 392.)
If the proof excluded, and to which we will advert later, had been received, it may be that the defendant could have produced sufficient evidence to permit the jury to find that the note was accommodation paper executed without the authority of the defendant and that the bank was aware of the infirmity at the time the note was accepted by it.
Mr. Senior was director and secretary of the defendant and also manager of the Newport Company, the payee named in the note. He testified: "I am acquainted with Joseph T- Wooster, who is cashier of the plaintiff, the National Bank of Newport; ,1 have known him since late in 1890. I had a conversation with him at the plaintiff's bank in the village of Newport, in about the month of November, 1901, concerning the note dated on or about November 13, 1901, which I have spoken of. I called at the bank and Mr. Wooster said to me that the bank examiner had found fault with the Newport paper, and that something had got to be done about it. He asked me if some of it couldn't be paid. I said it could not be; it was not convenient for us to pay it. He asked me if we wouldn't get the H. P. Snyder Manufacturing Co.'s note in the place of the Homer P. Snyder note. I said that I thought it could be done. That Mr. Sheard and I owned half of the stock of that company, and I thought we could get it all right, but of course I would have to go ; home and find out. Mr. Wooster said that if I found it to' be all right to send up the H, P. Snyder Manufacturing Co., note."
The defendant sought to show that in pursuance of this' conversation he saw the officers of the defendant and that the original note. was thereupon given. We think this .evidence was competent, if followed up, as the defendant endeavored to do, by showing that the note was really for the benefit of the payee and that the bank knew this fact, and that the officers put the note in circulation without the authority of the defendant. The defendant in various ways attempted to show the origin of this series of notes, but the evidence was excluded at the instance of the plaintiff. This class of evidence may have been important and should have been received.
Again, the defendant endeavored to show that the interest on these notes at each'renewal was'paid by the Newport Company and not by the defendant, and that none of them was ever presented to the defendant for payment. This evidence with some other that was excluded may be significant upon the question of the knowledge which the plaintiff had as to the character of the paper whether that of the defendant or intended for the accommodation of the payee. It may be that these two manufacturing.corporations were so interconnected that the defense alleged is of no importance, but we cannot determine that question now with substantially all the proof excluded.
The judgment should be reversed and a new trial granted, with costs to abide the event.
All concurred.
Judgment and order reversed and new trial granted, with costs to the appellant to abide event.