120 N.Y. 145, Wilson v. Metropolitan Railway Co.

Citation:120 N.Y. 145
Party Name:SAMUEL C. WILSON, Respondent, v. THE METROPOLITAN ELEVATED RAILWAY COMPANY, Appellant.
Case Date:April 15, 1890
Court:New York Court of Appeals

Page 145

120 N.Y. 145

SAMUEL C. WILSON, Respondent,

v.

THE METROPOLITAN ELEVATED RAILWAY COMPANY, Appellant.

New York Court of Appeal

April 15, 1890

Argued February 28, 1890.

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COUNSEL

Edward S. Rapallo for appellant. The plaintiff was not a bona fide holder of the notes sued upon, without notice. (Garrard v. P. & C. R. R. Co., 29 Penn. St. 154; Shaw v. Spencer, 100 Mass. 388; Pendleton v. Fay, 2 Paige, 202; Hill v. Simpson, 7 Ves. 162; Petrie v. Clark, 11 S. & R. 377; Williamson v. B. Bank, 7 Ala. 913; Parsons on Part. [ 3d ed.] 221.)

Francis C. Barlow for respondent. The note in suit was made by the defendant-- that is, Kneeland, president, and Niebuhr, treasurer, were authorized to make it, and Kneeland, president, was authorized to negotiate it. (Booth v. Bank, 50 N.Y. 401; 16 id. 125.) The plaintiff paid value for the note, before maturity. (P. Ins. Co. v. Church, 81 N.Y. 222.) When plaintiff was asked to discount a corporate note signed by Kneeland, president, he was bound to satisfy himself that 'Kneeland, president, ' had authority to bind the corporation by the note, since his authority was not to be inferred merely from his office. (Risley v. R. R. Co., 1 Hun, 202; 62 N.Y. 240, 245; Adriance v. Roome, 52 Barb. 399; Williams v. Mitchell, 17 Mass. 101; Cowing v. Altman, 71 N.Y. 435, 442, 443; Coates v. O'Donnell, 94 id. 176; Hascall v. L. Assn., 5 Hun, 151, 155; Bank v. Warren, 7 Hill, 91, 95; Lovett v. S. S. Mill, 6 Paige, 54.) One who discounts the note of a corporation which is expressly authorized by a resolution of its directors to be issued to pay a salary, or to pay for goods bought, or money borrowed, is not bound to inquire whether the salary is legally payable, or whether the goods were bought or the money borrowed.

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(N. R. Bank v. Aymar, 3 Hill, 262; E. Bank v. Monteath, 26 N.Y. 505; R. B. Bank v. Turguand, 6 El. & Bl. 327, 332; City of Lexington v. Butler, 14 Wall. 296; Bissell v. R. R. Co., 22 N.Y. 290; Barnes v. O. Bank, 19 id. 164; Safford v. Wyckoff, 4 Hill, 445; Bank v. Bank, 10 Wall. 644, 645; 1 Daniell on Neg. Inst. § 385; 1 Parsons on Notes and Bills [2d ed.], 164, 165.) The contention that the defendant had no power to pay its president a salary, and to raise the money to do so, by its notes, is untenable. (Laws of 1850, chap. 140, § § 5, 6; 2 R. S. [ 6th ed.] § § 5, 7; Laws of 1872, chap. 885, §§ 2, 3.) The power to give the president a salary, is expressly conferred upon the directors, by statute, though not by its charter. (2 R. S. [ 6th ed.] 390, 391, § 1; McCullough v. Moss, 5 Den. 575; Beveridge v. R. R. Co., 112 N.Y. 22, 23; Risley v. R. R. Co., 1 Hun, 202, 204; Angell & Ames on Corp. § 257; Parsons on Notes & Bills [2d ed.], 114; Partridge v. Badger, 25 Barb. 170; Barry v. M. E. Co., 1 Sandf. Ch. 289, 290; Willmarth v. Crawford, 10 Wend. 343; Safford v. Wyckoff, 4 Hill, 445, 446; 1 Abb. Dig. 116, 117, 207-209; Ex parte P. R. Co., L. R. [ 2 Ch. App.] 617...

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