Wilson v. Metro. Ry. Co.

Decision Date15 April 1890
PartiesWILSON v. METROPOLITAN RY. CO.
CourtNew York Court of Appeals Court of Appeals

OPINION TEXT STARTS HERE

Appeal from a judgment of the general term of the court of common pleas of the city and county of New York, affirming a judgment entered on a verdict of jury by direction of the trial court. Plaintiff sued on a promissory note for $2,500, made by the defendant to its own order. At the close of the testimony each party moved for a direction of a verdict in its favor; both thereby conceding that the facts in the case raised questions of law only to be determined by the court, and that there were no questions of fact to be passed upon by the jury. Upon such request the court directed the jury to render a verdict in favor of the plaintiff, and against the defendant, subject to the opinion of the court. Thereafter, and during the same term, the court, after hearing counsel for the respective parties, sustained the verdict, and judgment was entered thereon for $3,117.21. Defendant made a motion for a new trial which was denied. Defendant appealed from both the judgment and order which were affirmed at general term.

The defendant is a duly-organized domestic corporation. On the 20th day of May, 1879, it leased its railway franchises, etc., to the Manhattan Railway Company, a duly-organized domestic corporation, which thereupon took possession of the defendant's railway, and has ever since, with unimportant exceptions, operated the same. Sylvester H. Kneeland was a stockholder, a director, and the president of the defendant, from the 8th of November, 1882, until August, 1884. What services he rendered, if any, as such president does not appear. The office of president, up to about the time of making the note in question, had never been a salaried one. No agreement was made by the defendant to pay Kneeland a salary, or to give him any compensation for his services, before the 5th of June, 1884. Shortly after 3 o'clock on the day last named, committees representing the defendant and the Manhattan Railway Company entered into a memorandum agreement for the merger and consolidation of the two companies. This agreement provided that ‘the Manhattan Company consolidated to assume all liabilities' (of the defendant,) ‘* * * and to receive all assets' (of the defendant.) Subsequently the two corporations were consolidated, substantially on the basis stated in the memorandum. About 3:30 P. M., on the same day, at a meeting of the board of directors of the defendant, regularly appointed, the committee of that company presented the memorandum agreement so entered into, and it was unanimously adopted. At the same meeting the following resolution was unanimously adopted: ‘Resolved, that S. H. Kneeland, the president of the company, shall be paid a salary of $25,000 per annum, from the time of his election as such.’ Mr. Kneeland presided at this meeting, and put the resolution to vote. On the 18th of June, 1884, another duly-appointed meeting of the directors of defendant was held, at which the following resolution was unanimously adopted: ‘That the president by and he is authorized to use the credit of the company, by issuing and negotiating its notes, or otherwise, for paying the salary of said president; said notes to be signed by the president, and counter-signed by the treasurer, in the usual way and form, and not to exceed the limit of the amount heretofore authorized.’ Mr. Kneeland presided at this meeting, and put the question to vote. In accordance with the provision of the last resolution, notes were issued, signed by S. H. Kneeland, as president of the defendant, and counter-signed by the treasurer. They were made payable to the order of the defendant, and indorsed by S. H. Kneeland, as president and individually, and aggregating, as it is claimed, $48,950. These notes matured at various dates from August 8 to October 31, 1884. This suit is brought upon one of such notes, which was transferred directly to the plaintiff by Kneeland, under the following circumstances: On May 26, 1884, plaintiff cashed for Mr. Kneeland a check for $7,650, drawn by the Mercantile Trust Company on itself, by giving him the full full value thereof. Plaintiff held the check uncollected until June 28, 1884, on which day Kneeland sent to him the note in suit and two other notes issued, as above stated, of like amount and tenor, and varying slightly in dates. The plaintiff then discounted the three notes, giving Kneeland, as the proceeds of the discount, the check of the Mercantile Trust Company, instead of cash, and charging him with the $7,650 advanced to him on May 25th, together with interest to the date of the discount, and crediting him with the three notes discounted, less the interest thereon, to their maturity. This left a balance against Kneeland of $283, which the latter paid to the plaintiff in cash. Two of the notes thus discounted were paid. The one in suit was not, and hence this action.

Edward S. Rapallo, for appellant.

Francis C. Barlow, for respondent.

PARKER, J., ( after stating the facts as above.)

This court has decided at this term in the case of Railway Co. v. Kneeland, ante, 381, that certain notes, including the one in controversy, are valid legal obligations against the defendant, in favor of a purchaser for value, before maturity, and without notice of the circumstances attending their issue. It is insisted, however, that the plaintiff is not in a position to claim that he is a bona fide holder without notice, because the note was made by the corporation payable to itself, indorsed by Kneeland, as president and individually; it was sent to him by Kneeland through a messenger, and therefore, it is said, he knew when he received it that the company's note was being applied by its president to his personal benefit and...

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