In re Utica Nat. Brewing Co.

• Decision Date: 23 November 1897
• Citation: 154 N.Y. 268,48 N.E. 521
• Parties: In re UTICA NAT. BREWING CO.
• Court: New York Court of Appeals Court of Appeals

154 N.Y. 268

48 N.E. 521

In re UTICA NAT. BREWING CO.

Court of Appeals of New York.

Nov. 23, 1897.

Appeal from supreme court, appellate division, Fourth department.

In the matter of the Utica National Brewing Company, a dissolved corporation. From order disallowing certain claims, the executrix of William C. Willcox appeals. William Ker.

P. C. J. De Angelis, for appellant.

William Kernan, for respondent.

GRAY, J.

Upon the final accounting of the receiver of the Utica National Brewing Company, it was referred to a referee to report as to certain disputed claims, among other things, and this appeal brings up for our review the correctness of his report as to the claims presented by the First National Bank of Utica and by the estate of William C. Willcox, deceased. The first of these claims was allowed by the referee; but the other he disallowed, and his disposition of both has been approved by the courts below. The executrix of William C. Willcox now appeals to this court from the disposition so made.

The Utica National Brewing Company was formed in May, 1893, by the consolidation of two corporations, known as the National Brewing Company and the Utica Brewing Company. At the time of this consolidation, these companies were indebted to the First National Bank of Utica upon several promissory notes, payable to the order of William C. Willcox, and indorsed by him, aggregating in amount the sum of $47,962. These notes severally matured subsequent to the consolidation; but they were renewed, some two and some three times, by the giving of new notes for the same amount and of like tenor. These renewal notes were held by the bank at the time when this proceeding for the voluntary dissolution of the new company was commenced. Subsequently the bank recovered judgments against each of the two companies upon the notes it held, and it has assigned its claim against the estate in the hands of the receiver of the new company to William F. Welch, respondent here.

The objection was made to the claim of the bank, as presented to the receiver, that the taking of the renewal notes, after the consolidation was effected, and the incidental transactions connected therewith, and the reduction to judgment against the consolidating companies of their liability upon the notes, constituted, in legal effect, a discharge of the consolidated company from its statutory liability for the payment of the debts of those companies. It was claimed that the notes which were outstanding against the constituent companies, at the time of their consolidation, were in fact paid. Whether the taking of the renewal notes was in payment or in discharge of the obligation represented by the previous notes was a question to be answered by ascertaining the intention of the parties, as manifested by the facts and circumstances attending their transactions, and we have an explicit finding of fact by the referee upon the subject. He found that there was no intention on the part of the makers or indorsers of said notes, or on the part of the bank, to pay the former notes, or that the taking of said new notes was to have the effect of such payment, but that, on the contrary, it was the intention of all the parties to extend the time of payment of said notes by renewals thereof. His finding is supported by the evidence, and, with the unanimous affirmance by the appellate division, now becomes conclusive upon the question. It destroys whatever presumption of payment might arise from the taking of the renewal notes. Bank v. Bigler, 83 N. Y. 51. The operation of the renewal notes was to further extend the time of payment of the obligation and to evidence its continued existence. The evidence must be regarded as having negatived the idea of any agreement that the new promises to pay should be equivalent to payment. Iron Co. v. Walker, 76 N. Y. 521. The Phoenix Ins. Co. Case, 81 N. Y. 218, does not deny the general rule. In the opinion it is observed, but only in passing, that by common understanding and usage, the transaction of discounting a note, to take up a prior note held by the bank, and the crediting of the avails to the party, might be regarded as an extinguishment of the prior note. There is no such element of usage here.

Nor did the recovery of the judgments upon the notes affect the creditor's rights against the new company. Their effect was, simply, to effect a change in the form of its liability to its creditor. It was open to the creditor, under the provisions of the statute, pursuant to which the consolidation of the companies was effected (chapter 691, Laws 1892), to entorce the liability, either against the corporation whose debt it was, or against the new corporation whose debt it became under the statute, which made it liable to pay and discharge all the liabilities of each of the corporations consolidated. Section 12. The very purpose of this statute, while permitting companies to consolidate themselves into a single corporation, was to preserve to the creditor all his rights, unimpaired by what was done, and its operation is to furnish to him remedies necessarily concurrent in their nature. The creditor's pursuit of a remedy against his original debtor presents no legal obstacle to his effort to collect his debt from the new company.

It is argued, however, in effect, that by the terms of the consolidation agreement the new corporation was freed from the debts and liabilities of the corporations merging into it. If we might assume that such was intended as a result of consolidation under the agreement,...