Warner v. Chappell

By the Court, E. Darwin Smith, J. The referee, I think, decided this case correctly. The note, at the time of its transfer, was the property of the Eochester City Bank, and was past due and in suit. Chappell had no defense to it in the hands of the bank. But if he had, the transfer was necessarily subject to all his equities, and the defense might have been made in this suit. If the purchase of this note by the plaintiff was made with the funds of Peck, the note should be deemed paid, as Peck was the principal debtor and the [313] defendant an accommodation indorser for him. But this defense is clearly not established. The plaintiff swears that after several renewals and shifts he paid the note from the original discount of which the money was obtained which was paid for the purchase of the note. There is no evidence that' tends to establish that the money paid to Montgomery on the purchase of the note belonged to Peck. The money was obtained by the discount of a note made by the plaintiff and Spencer and indorsed by one Vary. Peck’s name was not on the note. The arrangement for the purchase of the note was made at his instance and request, and by his procurement, but nothing more is made out by the evidence on this point than that the plaintiff was his friend, and was willing to do him a favor by purchasing this note and stopping the suit against Peck and Spencer. This transaction was not unlawful, though it appears unfriendly towards the defendant, who was a mere accommodation indorser for Peck. But the equities between these parties are not before us. All that we can pass upon is the question whether the note remains valid in the hands of the plaintiff. I think the referee rightly decided this question of fact, that the purchase by the plaintiff was not a payment by Peck. The only question that remains is whether the plaintiff acquired a valid title to the notes by the purchase of the same of Montgomery and the transfer thereof by him. I think there can be no doubt on this point, upon the evidence of Montgomery. He swears, »without objection or exception that the evidence was by paroi, that he got authority from the bank to make the transfer. It must be presumed, under this testimony, if necessary' that such authority was contained in a proper resolution of the board of directors of the bank for that purpose duly passed. But ‘if this be not so, and the transfer of these notes would otherwise be within the restriction of § 8 of art. 1st, title 2d, chap. 18 of the first part of the revised statutes, making void all transfers of the property and effects of a [314] moneyed corporation exceeding $1000, not authorized by a resolution of the board of directors of such bank, the last clause of the section, declaring that the said section shall not be construed to render void any conveyance, assignment or transfer in the hands of a purchaser for a valuable consideration and without notice, will protect the plaintiff’s title to the notes. The plaintiff was a purchaser for the full value of the notes, and paid the price in cash, without notice of the omission of the bank to pass the requisite resolution to authorize such transfer. This portion of the section has been construed to mean that if the transferee or assignee, in such a case, had no notice of the want of authority of the officers of the corporation to make the transfer in question, (1 Selden, 356; 15 N. Y. Rep. 191, 192; 3 Comst. 290,) he was within the protection of this clause of the section. In the case of Curtiss and others v. Leavitt, (15 N. Y. Rep. 192,) Judge Paige says: “If the purchaser shows that he paid value for the property, and if there is no proof that he had any notice of the omission of the directors to pass a previous, resolution, his conveyance will not be invalid. He can repose upon affirmative proof of a valuable consideration and the want of proof of notice. The obligation rests upon the party asserting his conveyance, to prove affirmatively that he had actual notice, or what is equivalent thereto, that there had been no previous resolution to authorize the execution of the conveyance.” It seems to me quite clear that this case, in respect to the transfer of this note for cash and for the full value, is not within the policy, spirit and intent of the statute, independently of these authorities. The note is negotiable, and title to it passed by delivery. I do not see, therefore, why the plaintiff did not acquire a lawful title^to the note, nor why he is not entitled to maintain this action. The judgment therefore, I think, should be affirmed. [Monroe General Term, September 3, 1860. Smith, Johnson and Knox, Justices.] Judgment affirmed.