Case Name: ST. JAMES CO. v. SECURITY TRUST & LIFE INS. CO.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1903-04-17
Citations: 81 N.Y.S. 739
Docket Number: 
Parties: ST. JAMES CO. v. SECURITY TRUST & LIFE INS. CO.
Judges: 
Reporter: West's New York Supplement
Volume: 81
Pages: 739–747

Head Matter:
ST. JAMES CO. v. SECURITY TRUST & LIFE INS. CO.
(Supreme Court, Appellate Division, First Department.
April 17, 1903.)
1. Money Lent—Action—Evidence—Admissibility.
The taxes on defendant’s building were paid out of the treasury of the plaintiff corporation on a check drawn by plaintiff’s treasurer, who was-also vice president of defendant, and had charge of the building. Held,. in an action by the plaintiff to recover as for money lent, that testimony offered by defendant tending to show that the money used to pay the-taxes really belonged to plaintiff’s treasurer and another individually, and had merely been deposited in plaintiff’s bank account, was irrelevant,, and properly excluded.
2. Corporations—Officers—Authority to Borrow Money.
Where the vice president of a corporation having general charge of its; real estate borrowed money to pay taxes, and in an action by the lender to recover the money claimed only to have had implied authority to borrow it, evidence that he had no special authority was properly excluded, the question being whether he had authority by virtue of his position as vice president and manager of the property, under the resolution giving him general powers in connection therewith.
Ingraham and Hatch, JJ., dissenting.
Appeal from Judgment Entered on Report of Referee.
Action by the Security Trust & Life Insurance Company against the St. James Company. From a judgment in favor of plaintiff, defendant appeals.
Affirmed.
The action was brought to recover $42,749.10 alleged to have been loaned-by the plaintiff to the defendant on or about July 11, 1900, and by consent a reference was ordered. Proof was given upon the trial to show that this sum was paid out by the plaintiff’s treasury and used in the payment of taxes-upon the St. James Building, which was owned by the defendant. At the time of the transaction Mr. James N. Stout was vice president of the defendant company, was also treasurer of the plaintiff, the St. James Company, and by checks of the St. James Company, which he signed as treasurer to the order of the receiver of taxes and the department of water supply, he paid the taxes upon the building. Such payment was made by Mr. Stout after written notice was received by him as vice president of the defendant on July 7, 1900, from the Bond & Mortgage Guarantee Company, which had. guarantied the first mortgage on the building to the Mutual Life Insurance Company, that said insurance company insisted that the taxes due should be paid or the mortgage would be foreclosed, and that if the taxes were not at once paid, and receipted bills shown, the Bond & Mortgage Guarantee Company would be compelled to place the matter in the hands of its attorney to commence foreclosure proceedings. When this notice was received the defendant was without funds, and in order to meet the demand and pay the taxes it was necessary for it to obtain, money, which was done in the manner stated.
One of the defenses was that the money so obtained and paid was not the money of the plaintiff, but belonged in fact to Mr. Stout and Mr. Bruce Price, who were stockholders of both companies. Evidence was given to show that the moneys which finally paid the taxes were advanced by Mr. Stout and Mr. Price, and deposited in the treasury of the plaintiff company, and were for the most part obtained by them from Mrs. Price. The defendant attempted to go further into the relations between Mr. Price and Mr,. Stout, and, when prevented from so doing, took exception to, the rulings of the referee. It appears, however, that prior to the commencement of this action Mr. Stout and Mr. Price had adjusted their affairs with each other and exchanged releases.
Another separate defense was that Mr. Stout, as vice president of the defendant, had no power or authority to borrow money for its account, and thereby charge it with liability. It was not denied that he was at the time the defendant’s vice president as well as the treasurer of the plaintiff company, and it was shown that the defendant had given him charge of the St. James Building. Evidence as to specific authority to borrow the money with which the taxes were paid was excluded, and exception taken. The referee found in favor of the plaintiff for the amount demanded in the complaint, and from the judgment so entered upon his report the defendant appeals.
Argued before VAN BRUNT, P. ]., and HATCH, McLAUGH-LIN, O’BRIEN, and INGRAHAM, JJ.
Jacob Halstead, for appellant.
E. Laflin Kellogg, for respondent.

Opinion:
O'BRIEN, J.
The plaintiff company, having shown that the defendant, through its vice president, had received at his instance from the plaintiff moneys from its treasury which were actually used for the payment of the taxes due on defendant's building, had sustained the burden resting upon it, and the referee was justified in his conclusion in its favor. The contention is made, however, that the judgment' should be reversed for errors committed to the prejudice of the defendant in rulings upon evidence.
The defendant sought to prove that Mr. Price and Mr. Stout, the latter being principal owner of the plaintiff company, and both being large stockholders in the defendant company, were desirous of preventing the foreclosure of the mortgage held by the Mutual Life Insurance Company upon the St. James Hotel property, which was the largest and principal asset of the defendant company, and that on their own account, and for their own benefit, and gratuitously, and without any reference to whether they were or were not to receive back repayment, they undertook to discharge the obligation which rested upon the defendant company of paying the taxes which were due on the St. James Hotel property. To that end it was sought to examine into the transactions between Mr. Stout and Mr. Price as to the accounts between them, and as to what they said and did in and about the time that the $42,000 was borrowed from Mrs. Price by Mr. Stout, and by him placed in the treasury of the plaintiff company.
With respect to all this class of evidence it seems to us that it was entirely incompetent, immaterial, and irrelevant, because this ac tian was not for an accounting between Mr. Stout and Mr. Price, but was an action at law between the plaintiff corporation and the defendant corporation to recover moneys lent. If an accounting between Mr. Stout and Mr. Price could have any material bearing on the issues presented, it was herein made to appear by uncontradicted evidence that all their differences with respect to stock and borrowed money were adjusted and settled prior to the trial before the referee, and upon that basis Mr. Stout was released from any and all claims which Mr. Price might have had against him growing out of their relations as officers, stockholders, or persons otherwise interested in either of the two corporations. In any aspect, therefore, whether the taxes were, as the result of an agreement, paid out of the moneys which belonged to Mr. Price and Mr. Stout jointly before they were placed in the plaintiff's treasury had no relevancy to the issue as to whether or not the plaintiff loaned to the defendant. It could make no difference nor was it any -concern of the defendant, whose moneys were deposited in the bank account of the plaintiff. It was conceded that the payment of the taxes was an obligation which rested on the defendant. It was also shown that it was the plaintiff's check which paid the taxes, and so far as it was necessary to show that the money had actually gone into the plaintiff's treasury, and from what source it was received, this clearly appeared from the cross-examination of Stout.
The most that could be claimed of such evidence is that it might have had a tendency to prove as matter of defense that the plaintiff was not the real party in interest. If it had been proved, however, that originally the money borrowed from Mrs. Price had been so borrowed by both Mr. Price and Mr. Stout, it was conclusively shown that it went into the plaintiff's treasury, which thus got the legal title to the money, and that thereafter the taxes were paid with the plaintiff's check. When it is recalled that there is no suggestion that the money was stolen by Mr. Stout or came wrongfully into his possession, nor is Mr. Stout or Mr. Price or anybody here asserting any claim to the money as against the plaintiff, and the further fact, proved without dispute, that the transaction was one between the plaintiff and the defendant by which moneys to which concededly the plaintiff had legal title were borrowed to pay the debt of the defendant, it becomes evident that the defense sought to be proved would not, if established, be available, because payment of the judgment to the plaintiff will fully protect the defendant against claims by third parties. This, under the authorities, is the test as to whether or not the plaintiff is the real party in interest. Sheridan v. Mayor, 68 N. Y. 30; City Bank New Haven v. Perkins, 29 N. Y. 554, 86 Am. Dec. 332; Gage v. Kendall, 15 Wend. 640.
It was further contended that it was erroneous to exclude evidence upon the question of whether or not Mr. Stout as vice president of the defendant had power or authority to borrow the money. If the claim had been made that he had special authority, and that was a crucial point in the case, such evidence would be relevant. Mr. Stout, however, did not claim express authority, but insisted that as an officer of the company, and pursuant to the resolution which gave him charge and management of the St. James property, he had implied authority to do all things necessary, including the borrowing of money to pay taxes, so as to avoid foreclosure anj save and protect the property for the benefit of the defendant. Whether he had such power did not depend upon any specific authority to negotiate the loan, but turned upon whether, by virtue of his position as vice president of the company and manager of this particular property under the resolution which gave him general powers in connection therewith, he was authorized and justified, for the benefit of the defendant, in making the payment so as to bind it. The exclusion of the evidence, therefore, bearing upon the question of specific authority, we think was proper.
The other points of the appellant we have examined, but find no reason therein presented calling for a reversal. Our conclusion, therefore, is that the judgment should be affirmed, with costs.
VAN BRUNT, P. J., and McLAUGHLIN, J., concur.