Case Name: New York, Providence and Boston Railroad Company, Resp't, v. William P. Dixon, as Assignee of Henry and Edward Morgan, of the Firm of M. Morgan's Sons, App'lt
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1889-04-16
Citations: 22 N.Y. St. Rep. 684
Docket Number: 
Parties: New York, Providence and Boston Railroad Company, Resp’t, v. William P. Dixon, as Assignee of Henry and Edward Morgan, of the Firm of M. Morgan’s Sons, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 22
Pages: 684–688

Head Matter:
New York, Providence and Boston Railroad Company, Resp’t, v. William P. Dixon, as Assignee of Henry and Edward Morgan, of the Firm of M. Morgan’s Sons, App’lt.
(Court of Appeals, Second Division,
Filed April 16, 1889.)
1. Assignment—Fob benefit of cbeditobs—Liability of individual
pbopebty fob firm debts.
The firm of M. Morgan's Sons were the financial agents of the plaintiff. In June, 1884, when the firm failed, and made a general assignment without preference, it was indebted to the plaintiff in a certain sum of money. Henry Morgan, a member of the firm, also made a general assigmm nt without preference of his individual property. Held, that the firm is liable to the plaintiff for the amount due it on deposit, and that the balance of the estate of Henry Morgan" after payment of his individual liabilities must be applied in payment of the firm obligations.
2. Corporations—Liability of agents not different from that of
NATURAL PERSONS.
There is no difference in principle or precedent between the powers, duties and liabilities of the agents of corporations and those of natural persons, unless expressly made so by the act of incorporation or by-laws.
3. Same—Liability of treasurer in absence of proof of breach of
duty.
Henry Morgan was the treasurer of the plaintiff corporation, but it did not appear that he had been guilty of a breach of any duty imposed by the contract between the corporation and him as its treasurer, or by the charter and by-laws. Held, that in the absence of such proof, he must be held to the same measure of liability, and none other, as that imposed upon all classes of persons who are clothed with fiduciary relations towards property in which others are beneficially interested.
•4. Same—Ratification of acts of treasurer.
It was contended by the plaintiff that the sending of certain remittances to the order of Morgan’s Sons, was in effect sending them to the treasurer, because done at nis request. It appeared that his doing so was ratified by the plaintiff. Held, that Henry Morgan cannot be held liable to respond for the fund, as treasurer.
Appeal by the defendant from a judgment of the general term of the supreme court in the first judicial department, entered upon an order made April 3, 1888, directing judgment in favor of plaintiff on a submission of a controversy without action on agreed facts.
The statement of facts agreed upon and submitted was as follows:
The New York, Providence and Boston Railroad, whose road extends from New London and Stonington, Connecticut, to Providence, Rhode Island, was incorporated by the Legislature of the state of Rhode Island in June, 1832.
Mr. Matthew Morgan of New York, father of Henry and Edward Morgan, the above named assignors, and founder of the firm of Matthew Morgan & Son, bankers of New York, was the first president of the company, and that firm were its financial agents. After Matthew Morgan’s death his sons continued the banking business,'changing the-firm name to M. Morgan’s Sons, and one of them, Henry Morgan, the senior partner of the firm, in September, 1867, became treasurer of the railroad company, and continued to serve in that capacity, being elected year by year, until June, 1884; and the firm of M. Morgan’s Sons continued to act as the financial agents of the railroad •company; they kept its transfer books and paid all dividends to stockholders, and frequently were in advance to the company. Henry Morgan, who was one of the largest individual stockholders of the railroad company, served as treasurer of the railroad company without salary, and the firm of M. Morgan’s Sons neither charged nor allowed interest on the railroad company’s account. The account, itself, on the firm’s books was kept in the name of the New York, Providence and Boston Railroad Company, and on the books of the railroad company the account was kept in the name of M. Morgan’s Sons. The railroad company did not keep an account in the name of Henry Morgan, treasurer. Remittances were at one time made to the order of the treasurer, but after December, 1880, at the request of Henry Morgan, made, because of expected absence, the remittances were sent (though, so far as the minutes show, no action was taken by the board of directors on the subject) direct to the order of the firm of M. Morgan’s Sons. The annual printed reports distributed to the stockholders of the railroad company, stated the funds in the hands of M. Morgan’s Sons; there was no statement showing funds in the hands of the treasurer.
In June, 1884, the firm of M. Morgan’s Sons failed and made an assignment without preference.
The individual members of the firm, Henry and Edward Morgan, at the same time made assignments, without preferences, of their individual estates. All the assignments were made to William P. Dixon. The books of the firm of M. Morgan’s Sons show that at the time of the failure there was due to the railroad company the sum of $94,000. The debts of the firm of M. Morgan’s Sons were large, and the creditors of the firm will receive but a portion of the amount, due them. The admitted debts of the individual members of the firm were small and will be paid in full.
The individual estate of Henry Morgan is sufficient to-pay the amount due the railroad company in full, if, in the opinion of this honorable court, it should be decided that his individual estate is liable.
Wheeler H. Peckham, for app’lt; William Allen Butler, for resp’t.
Reversing 13 N. Y. State Rep., 445.

Opinion:
Parker, J.
—It appears from the books of M. Morgan'& Sons, bankers, the financial agents of the New York, Providence and Boston Railroad Company, that, in June, 1884, when the firm failed and made a general assignment, without preference, for the benefit of creditors, it was indebted to plaintiff in the sum of $94,000.
Henry Morgan, the defendant's assignor, was a member of the firm of M. Morgan's Sons; he also made a general assignment, without preference, of his individual property. The liability of the firm to the plaintiff for the amount on deposit is unquestioned. That the balance of the estate of Henry Morgan, after the payment of his individual liabilities, must be applied in payment of the firm obligations follows as a matter of law. The question now to be determined is whether or not Henry Morgan is also liable for such amount as treasurer of the plaintiff.
There is no difference in principle or precedent between the powers, duties and liabilities of the agents of corporations, and those of natural persons, unless expressly made-by the act of incorporation or by-laws. Angell & Ames on Corp. (9th ed.), § 315; Pomeroy's Eq. Juris., Vol. 2, § 1062, and notes.
The stipulation states that the plaintiff is a foreign corpo ration to wit, a corporation of the state of Rhode Island, but is silent as to what are the powers, functions and duties of the treasurer of such foreign corporation, as determined by its charter and by-laws. Neither does it appear that Henry Morgan has been guilty of a breach of any duty imposed by the contract between the corporation and him, as its treasurer, or by the charter and by-laws.
The stipulation is silent upon those points.
In the absence of such proof, as between Henry Morgan, as such treasurer, and the plaintiff, he must be held to the same measure of liability, and none other, as that imposed upon all classes of persons who are clothed with fiduciary relations towards property, in which others are beneficially interested. •
By such standard, he cannot in any event, be held liable to respond to the plaintiff for moneys not received by him, and we think it cannot be held from the evidence before us, that the treasurer received from the plaintiff the moneys in controversy.
Many years prior to the election of Henry Morgan, as treasurer, the firm of Matthew Morgan & Son, were the financial agents of the plaintiff, and after the death of Matthew Morgan, the firm of M. Morgan's Sons, continued to act in such capacity, down to the time of the making of the general assignment.
As financial agents of the plaintiff, the firm kept the transfer books of the railroad company, paid all dividends to stockholders; frequently advanced money to the company, and neither charged nor allowed interest on the railroad company's account.
On the part of the railroad company, it is not only admitted in so many words that M. Morgan's sons were its financial agents, but, in addition, it appears from the manner in which the plaintiff conducted its business, that while Henry Morgan was its treasurer, it nevertheless recognized and permitted the exercise of certain functions by M. Morgan's sons, whom they termed financial agents, which were not attempted to be exercised by its treasurer.
The keeping of the transfer books of the company, the payment of dividends, the advancement of money, the waiver of interest on advancements, the refusal to allow interest on deposits, by the financial agents, were ratified and acquiesced in by the corporation.
Beyond this the plaintiff distinctly recognized the relation existing between it and M. Morgan's sons, by keeping the account on its_ own books, in the name of such firm, and by publishing in its annual reports distributed to stockholders, that its funds were in the hands of M. Morgan's sons.
It appears clearly,_ theretofore, that the railroad company recognized the relation existing between it and its financial agents, to be separate and apart from the obligations and duties of its treasurer.
That in its transactions with M. Morgan's sons as financial agents, it did not transact nor did it understand it was transacting business with Henry Morgan as treasurer.
Now it appears that prior to December, 1880, and prior also to the deposit of the moneys in question, remittances were, for a time, made to the order of the treasurer who-deposited them with M. Morgan's sons, but about that time, at the reguest of the treasurer, because of expected absence, the remittances were thereafter sent to the order of the firm of M. Morgan's sons. The financial agents, therefore, and not the treasurer, received the moneys with which the plaintiff seeks to charge the treasurer in this action, and under no rule of liability applicable to agents or trustees, can the plaintiff recover of Henry Morgan that which he has. not received, and which it has, in fact, paid to other parties.
If however, it be conceded, as contended for by the respondent, that the sending of remittances to the order of' M. Morgan's Sons, was in effect, sending them to the treasurer (because done at his request), and that the deposit with the firm must be deemed a deposit by him, liability of Henry Morgan as treasurer to respond for the fund is not. established.
The moneys are not now in his possession, he has not, wasted or mixed them with his own, but has properly discharged his trust by depositing the funds with the banking firm recognized, by the plaintiff, as its financial agent, and place of deposit, for a long period of years.
Had the designation of M. Morgan's Sons as the place of deposit, been made by the treasurer, in the first instance instead of the plaintiff, and conceding further that he can be held to have received and deposited the moneys with the banking firm, still he cannot be held liable as treasurer, because his act in so doing was fully ratified by the plaintiff.
His request that the remittances be sent to M. Morgan's-Sons because of his intended absence, was a distinct notice of the place of deposit'. It called the attention of plaintiff sharply to the fact, and- plaintiff acquiesced in the depository by the sending of remittances to the order of the firm, and further evidenced the acquiescence by keeping the-account on the books of the corporation, in the name of the banking firm, and by reporting to its stockholders that its funds were in the hands of M. Morgan's Sons.
The conduct of the corporation constituted a complete ratification of the act of the treasurer (if his act it was), in. selecting the place of deposit, and absolved him from liability in that regard.
It follows as the necessary result of our views that the judgment appealed from should be reversed, with costs.
All concur.