Case Name: Grand Allen Holding Corporation, Appellant, v. M. & S. Circuit, Inc., Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1932-06-17
Citations: 236 A.D. 2
Docket Number: 
Parties: Grand Allen Holding Corporation, Appellant, v. M. & S. Circuit, Inc., Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 236
Pages: 2–10

Head Matter:
Grand Allen Holding Corporation, Appellant, v. M. & S. Circuit, Inc., Respondent.
First Department,
June 17, 1932.
Joseph A. Seidman of counsel [Albert G. Seidman with him on the brief], for the appellant.
Bernard Fliashnick of counsel, for the respondent.

Opinion:
Martin, J.
On June 28, 1928, the plaintiff was the owner of a building located on Grand street, New York city. The Allen Theatre Corporation was the lessee of a portion of the premises and was in arrears in the payment of its rent. In consideration of the plaintiff permitting the Allen Theatre Corporation to sublet the premises and in payment of the said arrears, the Allen Theatre Corporation assigned to plaintiff its claim against the Dubuque Fire and Marine Insurance Company, arising out of a fire loss under a policy of fire insurance. This assignment, to the extent of $1,416.66, was reduced to writing and executed by the Allen Theatre Corporation, the corporate seal affixed and its execution duly acknowledged by its secretary.
Thereafter the Allen Theatre Corporation received a check from the Dubuque Fire and Marine Insurance Company for the sum of $1,600 in settlement of its claim under the policy. The plaintiff claims that instead of turning over to it the sum of $1,416.66 out of the sum so collected as provided by the assignment, Max Cohen, the officer of the Allen Theatre Corporation who had executed the assignment, indorsed the cheek and it was deposited in the account of the defendant M. & S. Circuit, Inc., of which corporation Max Cohen was treasurer.
The defendant retained the proceeds of the check, although it was established by the appellant that defendant had prior knowledge of the assignment. No part of said sum of $1,416.66 has been paid to plaintiff by either the Allen Theatre Corporation or the defendant M. & S. Circuit, Inc., although payment thereof was duly demanded.
The trial court at the close of plaintiff's case dismissed the complaint, giving as a reason that the plaintiff failed to show any authority on the part of Max Cohen to execute the assignment and on the ground- that agency could not be proved through the agent, Max Cohen.
In Quackenboss v. Globe & Rutgers Fire Ins. Co. (177 N. Y. 71) the Court of Appeals held that where the plaintiff proved, in an action brought upon a contract, that the contract was signed by the president and secretary of the corporation alleged to have made the contract, and that the seal of the corporation was affixed thereto, it was reversible error to exclude the contract when offered in evidence, since it will be presumed that the officers of the corporation did not exceed their power, as the seal is. prima facie proof that it was attached by the proper authority, and it is for the party objecting to its execution to show that it was affixed surreptitiously or improperly. In its opinion the court said: "It is an ancient and well-established rule of law that where the seal of a corporation is affixed to a contract or written instrument, to which such corporation is a party, and it is signed by the president and secretary or other proper officers, it will be presumed that such officers did not exceed their powers, as the seal is prima facie proof that it was attached by proper authority, and it lies with the party objecting to its execution to show that it was affixed surreptitiously or improperly.
"It is manifest that there was no sufficient proof overcoming the presumption arising from the execution of the contract in question to justify the court in excluding it. Whatever proof was given as to the regularity of the contract bore not upon its admissibility, but upon its effect when received. The court could not improperly exclude the plaintiff's most material and important evidence, indeed, that which was the very basis of his action, and then, because he had not made sufficient proof to sustain his complaint, hold that the erroneous ruling should be disregarded. Such a claim finds no justification in law. When the plaintiff was refused his legal right to have the contract admitted, he was not required, nor would he be expected, to introduce other proof to establish his cause of action."
In Imbrie v. Schlicht Combustion Process Co. (130 App. Div. 675) this court held that where the claims of a corporation are assigned by a writing under seal, signed by the vice-president and attested by the secretary, it is prima facie evidence of the title in the assignee. A debtor sued by the assignee and defending solely upon the ground that the assignment was invalid, is not entitled to a dismissal of the complaint by merely showing that the written assignment was not affirmatively authorized by a resolution of the directors. (See, also, Hastings v. Brooklyn Life Ins. Co., 138 N. Y. 473, and Barkin Construction Co. v. Goodman, 221 id. 156.)
The proof submitted at the trial of this action was sufficient to establish that the assignment was a valid assignment and the burden rested upon the defendant to show that it was not authorized.
The plaintiff also properly contends that the defendant, being a stranger to the assignment and having notice thereof, through its treasurer, Max Cohen, cannot question or attack the authority of the person making the assignment when it has received and accepted all the benefits accruing therefrom. In support of that contention the plaintiff relies on the case of Castle v. Lewis (78 N. Y. 131, 135), where the court said: " Aside from the consideration suggested, much less should the defendants be permitted to step in and defeat the very purpose in view between the contracting parties, viz., the security given for the money loaned. They are entire strangers to the transaction, and have had no connection with it. They cannot go back of the assignment, and thus collaterally impeach a transfer for a want of formalities .imposed by statute for the benefit and protection of others. None but the corporation and its stockholders or creditors can impeach a transfer of property by the corporation for the want of the previous action of the board of directors; and then only by a direct action brought for that purpose. It will thus be seen that even if a private creditor might contest the validity of the transfer, the-defendants are not in a position to do so. Not only are they deprived of any such defense upon the grounds already adverted to, but they claim no interest in the property in their answer, and content themselves by a simple denial of the allegations in the complaint. (See Smith v. Hall, 67 N. Y. 48; Savage v. Corn Ex. Ins. Co., 36 id. 655.) "
The defendant argues that to sustain an action for moneys had and received it was necessary for the plaintiff to plead and prove that the moneys alleged to have been received were the property of the plaintiff and that the defendant promised to return the same, or that they were received for the plaintiff's use. The plaintiff did establish by the testimony of Max Cohen all of the facts necessary to sustain a cause of action. The defendant overlooks the fact that it was clearly competent to prove such facts by Max Cohen.
In Brown v. Cone (80 App. Div. 413) the court said: " The objection of the appellant to the testimony of the witness Bryan, who did the hiring, as to his authority from Mr. Van Praag, was not well taken. The unsworn declarations of an alleged agent are not admissible to establish his agency as against the alleged principal, but this rule does not exclude his testimony under oath as to the actual transactions between the parties tending to establish the relation of principal and agent."
In Steuerwald v. Jackson (123 App. Div. 569) the court held that because an agency as against the principal cannot be established by the declarations of an alleged agent, it does not follow that the agency cannot be proved by the testimony of the agent. At page 570 the court said: " It is true, as contended, that agency as against the principal cannot be established by the declarations of the alleged agent. But this rule often misleads to the contention that such agency cannot be proved by the testimony of the agent, which is not the rule. (Brown v. Cone, 80 App. Div. 414; 2 Greenl. Ev. [15th ed.] § 63.) The landlord called her husband as a witness, and he testified upon her examination that he was the agent of the premises and that he had been in charge of renting them for two years — a period covering the time when the alleged renewal was given."
In Tiernan v. Havens (162 App. Div. 656) the court said: " On this appeal the respondent furnishes us with a large number of authorities to show that agency can never be established by declarations of the supposed agent. We do not question this elementary rule, but it has application only to declarations of the supposed agent out of court, and does not apply to the material testimony of the supposed agent in court, on the witness stand."
In Kelly v. Utica Fire Ins. Co. (203 App. Div. 335) the court said: "Apparently the appellant has in mind the rule that the declarations of an agent cannot be proven to establish agency. But it is always proper to call the agent himself to prove his contract of employment or agency." (See, also, Mullen v. Quinlan & Co., 195 N. Y. 109.)
The testimony submitted by plaintiff not only established agency but proved that Cohen, the secretary of the corporation, was acting for the corporation when he executed the assignment.
If the defendant intended to raise an issue as to Cohen's lack of authority, it should have pleaded that defense affirmatively.
The judgment dismissing the complaint should be reversed and a new trial ordered, with costs to the appellant to abide the event.
Finch, P. J., and Sherman, J., concur; Merrell and McAvoy, JJ., dissent and vote for affirmance.