Court Opinion

ID: 7334045
Source: CourtListenerOpinion
Date Created: 2022-07-25 22:25:52.464198+00
Date Added: 2024-06-11T16:20:11.655473
License: Public Domain

RÜMSEY, J.
The action was brought upon a promissory note made by the defendant, and alleged to have been delivered by him to the American Loan & Trust Company, of which the plaintiff after-wards became receiver. The defense was that the note was delivered for the convenience of the American Loan & Trust Company, and without consideration, to stand as an apparent security for a loan made by that company to the Decatur & Nashville Improvement Company, and upon an express agreement made at the time of delivery that the defendant was not to be liable upon the note. The defendant gave evidence tending to establish these facts, which was submitted to the jury, who found that such an agreement was made, and that the note was delivered in pursuance of it, and for the purpose mentioned in the-answer, and they found a verdict for the defendant. A motion for a new trial was denied after the verdict, *1019and the appeal is taken irom the judgment entered upon the verdict, and from that order.
There is no substantial dispute as to the facts. The defendant was the secretary and treasurer of the Decatur & Nashville Improvement Company, having only a nominal ■ connection with the company, and no interest whatever in it. The Decatur & Nashville Improvement Company had been engaged in the construction of the Decatur, Chesapeake & New Orleans Eailroad. The American Loan & Trust Company had advanced to the improvement company $300,-000, which was secured by the bonds of the railroad company. Further advances were necessary to enable the improvement company to complete its work. When that was completed, of course, the stocks and bonds of the railroad company would become more valuable, and the loan and trust company was therefore greatly interested in the completion of the railroad. Evans, the vice president of the loan and trust company, seems to have had charge of the loan to the improvement company. It appeared from the evidence offered by the defendant that it was stated to him that the loan to the improvement company had been criticised, and that a further loan to the company could only be made by procuring two or three parties to give their personal notes, and make the loan in that way to the company, and thus avoid further criticism. The defendant was requested to be one of the parties to give a note upon which further advances might be made to the improvement company. He objected to assuming any personal liability, but was assured that the note was merely a formal matter, to enable the trust company to make a loan to the improvement company without criticism, that he would incur no personal liability by signing it, and that the trust company would take care of the note. This conversation was had at the time of the delivery of the note to Evans at the office of the loan and trust company, Evans being the person who was intrusted with the management of this business.
Upon that state of facts, the defendant insisted that his case was controlled by the rule of law that it is a defense to the enforcement of a promissory note against the maker, in the hands of an original party to it, that the note was without consideration, and was delivered upon condition that the maker should not be liable thereon. Higgins v. Ridgway, 153 N. Y. 130, 47 N. E. 32; Id., 90 Hun, 398, 35 N. Y. Supp. 944; Bank v. Colwell, 57 Hun, 169, 10 N. Y. Supp. 864. This case, as we think, is clearly within the rule laid down by the cases cited. The’facts here are almost identical with those of the case of Higgins v. Ridgway, supra. In that case, the defendant, who was sued upon the note, was a clerk of the firm of Page, Carey & Co. Here the defendant was the secretary of the improvement company. Page, Carey & Co. had received large loans from the North River Bank. Here the improvement company had received large loans from the trust company. Page, Carey & Co. desired to increase their loans, as did the trust company in this case. The note made by Eidgway was given to enable the bank to advance the money to Page, Carey & Co. without criticism, as the note here was given that *1020tlie loan might be made by the trust company. The proceeds ■ of Kidgway’s note were put to the credit of Page, Carey & Co., as in this case the proceeds were put to the credit of the improvement company. In neither case was anything received by the maker of the note, or paid to him. The note was delivered to the North Eiver Bank by Kidgway, upon an express agreement that he should incur no liability upon it, precisely as was the case here. There is no distinction in the facts, and the cases are alike, not only in principle, but in instance; so that the decision in Higgins v. Kidgway is a precise authority in the case at bar.
It was claimed by the plaintiff that there was no proof that Evans, who was vice president of the trust company, had authority to make the agreement. But it was proved that Evans was the man by whom these loans were negotiated; that he did in fact make the agreement with Thompson; that the note was delivered to him at the office of the trust company at the time the agreement was made, and for the purpose of being used to complete this loan; and it needs no citation of authority to establish the proposition that when an officer of a corporation, high in rank, is engaged in the transaction of the business of the corporation at its place of business, the corporation' is bound by any agreement that he makes which is apparently within his authority. In this case, the corporation, having brought an action upon this note, which was delivered to Evans, must be deemed to have' ratified the contract made by Evans to procure the giving of the note. It cannot now adopt the note, and refuse to adopt the contract by which it was procured.
No exception is found in the case which requires examination, and. for the reasons above stated, the judgment and order must be affirmed, with costs. All concur, except ING-KAHAM, J., dissenting.