Case Name: The A. D. Farmer & Son Type-Founding Co., Respondent, v. The Humboldt Publishing Co., Appellant
Court: New York City Court
Jurisdiction: New York
Decision Date: 1899-04
Citations: 27 Misc. 314
Docket Number: 
Parties: The A. D. Farmer & Son Type-Founding Co., Respondent, v. The Humboldt Publishing Co., Appellant.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 27
Pages: 314–317

Head Matter:
The A. D. Farmer & Son Type-Founding Co., Respondent, v. The Humboldt Publishing Co., Appellant.
(City Court of New York, General Term,
April, 1899.)
Corporations — Cannot endorse for accommodation.
A corporation has no power to endorse a note for the accommodation of the maker, and where the nature of the endorsement, made by a secretary and treasurer not authorized so to endorse, is known to the holder, the latter cannot recover against the endorsing corporation.
Appeal from ajudgm'eñt entered on the verdict of a jury.
William Stuart, for appellant,
Campbell & Hance (Eugene Lanier Sykes, of counsel), for respondent.

Opinion:
Conlan, J.
The action was brought.by the A. D. Farmer & Son Type-Founding Company against The Humboldt Publishing, Company as indorser before delivery of a note made by one Samuel Simpson. The answer denies that the name of the defendant The-Humboldt Publishing Company was indorsed thereon before delivery of the same by the maker thereof, but states that it was indorsed after delivery by a person wholly unauthorized to in-, dorse the same, and without the consent and direction of the defendant, The Humboldt Publishing Company; it,' therefore, states that the unauthorized indorsement was made solely for the accommodation of the maker, which fact is known to the plaintiff, and that the defendant received no consideration for such indorsement:
The facts are substantially admitted and are to the following effect:
That, on the 6th day of April, 1896, a representative of the plaintiff, who then had in his possession the note in.suit, called on one O'Laughlin, who was the secretary and treasurer of the defendant company, when the following conversation took place: " I told him I was from A. D. Fármer & Sons, and I asked him would he as treasurer of The Humboldt Publishing Company indorse paper to a certain amount for Mr. Simpson, as Mr. Simpson was anxious .to buy some type from us; " and he said: "Well, about what amount? " and I said: " Well, I don't know, it may be six or seven hundred dollars' worth; " and he said: " Oh, yes." He said: "Anything up to a thousand dollars." He said: "We have at present eighteen hundred dollars' worth of paper, and we are waiting only for Simpson to. get to work to print for us, because it is dead material for us at present and unless Simpson gets to work it is no good to us; " and I said; " Then will you give me some note to that'effect to my people?" and he said: " Certainly; " and thereupon indorsed the note.
This was clearly an indorsement for the accommodation of Simpson and to enable him to purchase type from the plaintiff. Simpson was not even a party to procuring the indorsement; it was done by and through the plaintiff, who presented to O'Laughlin, and, therefore, knew the character of the indorsement.
Ro attempt was made to show that the defendant, ever received any consideration for its indorsement from either the maker or the payee named in the note/nor that the secretary.or.treasurer had any authority to indorse notes not immediately connected with the business of the corporation. In National Park Bank v. German-American Mut. Warehousing & S. Co., 116 N. Y. 287, the court said: - .
" The powers of corporations are those enumerated in the statutes under which they are incorporated, in the general statutes, in the articles of association, and like instruments, executed in pursuance of the statutes, and also, such powers as flow from or are incidental and necessary to the exercise of the enumerated powers.-
" Counsel have not directed our attention to,, nor have we found in any of the statutes referred to, a provision empowering the defendant- to bind itself" by making or indorsing promissory notes for the accommodation of the makers for a consideration paid. It is well settled that such a power is not incidental to the powers expressly conferred on corporations organized under statutes authorizing the formation of corporations for banking, insuring, manufacturing and like business corporations."
In Fox v. Rural Home Co., 90 Hun, 365; affirmed, 157 N. Y. 684, the court said:
" So far as we know no corporations organized under the statutes of this State are authorized to bind- the property of their shareholders by accommodation indorsements, ' except guarantee and indemnity companies."
There is no evidence showing that the defendant's cashier was authorized to bind it by accommodation indorsements, and it having-been shown to be such, which fact plaintiff knew before the taking of the note, the burden was upon it to show that the -defendant had power to make such indorsement, and that its cashier had authority to make this, or such indorsement; this burden the plaintiff did not assume and the evidence is not of a character to authorize the court to presume that the defendant- was authorized to make such accommodation indorsements, or that its cashier had power to make such indorsements.
The answer puts in issue the authority of the secretary and treasurer to indorse the name of the corporation.
On the trial the defendant sought to show want of authority as well as want of consideration.
'To this-plaintiff objected and. the objection was-sustained. . This was error. Wahlig v. Standard Pump Manufacturing Co., 5 N. Y. Supp. 420. .
It follows . that the judgment should be. reversed-and a -new-trial ordered, with costs to the appellant to abide the event. ;
McCarthy and O'Dwyer, JJ., concur.
Judgment reversed and' new trial ordered, with costs to appellant to abide event.