Jacobs v. Monaton Realty Investing Corp.

• Decision Date: 09 June 1914
• Citation: 105 N.E. 968,212 N.Y. 48
• Parties: JACOBS v. MONATON REALTY INVESTING CORPORATION.
• Court: New York Court of Appeals Court of Appeals

212 N.Y. 48

105 N.E. 968

JACOBS

v.MONATON REALTY INVESTING CORPORATION.

Court of Appeals of New York.

June 9, 1914.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Arthur Edwards Jacobs against the Monaton Realty investing Corporation. A judgment for plaintiff, on demurrer to the complaint, was affirmed by the Appellate Term (80 Misc. Rep. 649,141 N. Y. Supp. 1033), and again by the Appellate Division (160 App. Div. 449,145 N. Y. Supp. 611) and defendant appeals by permission. Reversed and complaint dismissed.

See, also, 146 N. Y. Supp. 1095.

Appeal, by permission, from an order of the Appellate Division of the Supreme Court in the First judicial department, entered January 6, 1914, which affirmed a determination of the Appellate Term of the Supreme Court, which affirmed the order and judgment of the City Court of the City of New York, rendered upon a motion for judgment upon the pleadings pursuant to section 547 of the Code of Civil Procedure, in favor of the plaintiff for the sum of $773.42. The pleadings before this court were the complaint and the demurrer to it.

The facts set forth as the first cause of action are: The defendant is a domestic business corporation and has its principal place of business in the city of New York. It is not incorporated under the Banking Law (Laws of 1909, c. 10) or the former Banking Law (Laws of 1892, c. 689). About February 23, 1909, it made an agreement in writing with the plaintiff (a copy of which is attached to and made a part of the complaint), in material part as follows:

‘United States of America

‘Monaton Realty

‘Investing (Monaton) Corporation. (R. I. C.)

‘Incorporated

State of New York.

‘This is to certify that, in consideration of the payment of one hundred, seven and 36/100 dollars annually (or of the optional sum of $9.20/100 each month) in advance during the period of 10 years from the date hereof Monaton Realty Investing Corporation hereby promises to pay to Arthur Edward Jacobs or to the recorded owner hereof, at the expiration of said period, upon presentation and surrender of this certificate to the company at its head office in the city of New York the sum of fifteen hundred dollars in gold coin of the United States of the present standard of weight and fineness, which sum includes interest on said payments at the rate of six per cent. per annum as herein provided, and in addition thereto such portion of the profits as the directors of the company may consider just and equitable. This certificate is subject to the ‘Privileges and Provisions' hereon indorsed which are hereby referred to and made part of the same.’

The formal clause of execution by the corporate officers and the corporate seal immediately follow. Indorsed thereon are the words:

‘Privileges and Provisions. The payments on this certificate being accepted by the company for investment in business, not for deposit, the owner has the following Privileges of Surrender Before Maturity:’ (a) To apply at any time the payments with accrued interest in purchase of real estate, for sale by the company subject to its regular selling conditions; (b) to transfer at any time the certificate to another person, by indorsement and record thereof on the company's books; (c) to receive on the second or later anniversary a paid-up certificate payable at the maturity date of the original certificate, or to receive cash, according to a stated schedule, on 60 days' notice in writing to the company; (d) in the event of the owner's death his legal representatives may receive the total amount of the premiums paid with 4 per cent. interest to the date of death in cash, or continue this certificate to maturity by complying with its conditions, ‘provided always, that no surrender, transfer or other privilege above shall apply while any installment remains due and unpaid. * * * Interest on this certificate except as otherwise specified, with be computed on the net annual rate installments (considered as paid yearly in advance) at the rate of six per cent. per annum, compounded and credited annually, thus making with the annual payments the face value of this certificate at its maturity.’

Further indorsements provide as to the time, place, and extension of the time of payment of the installments, the nonforfeitable nature of the certificate and the rights of the holder in case of default, the right of the corporation to accelerate the maturity of the certificate and finally as follows:

‘In addition to the face value of this certificate at its maturity it shall be entitled to and the owner shall receive such portion of the profits of the company as shall be apportioned thereto by the directors thereof.’

Pursuant to said agreement the plaintiff had paid to the defendant the sum of $377.20 in monthly payments of $9.20 each, beginning with February 23, 1909, and ending with June 23, 1912, repayment of which the defendant has refused. The second cause of action is based upon a certificate of identical tenor mutatis mutandis under which the plaintiff had paid $190.03 in monthly payments of $6.13 within the period mentioned. The third cause of action was based upon a dissimilar certificate and will be considered independently. The action is for the recovery of the payments under the certificates.William D. Guthrie, of New York City, for appellant.

Gustav Lange, Jr., of New York City, for respondent.

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

[1] The judgment was rendered and sustained upon the ground that the defendant was not empowered to receive the moneys of the plaintiff and their recovery was authorized under the decisions of this court. Tracy v. Talmage, 14 N. Y. 162, 67 Am. Dec. 132;Curtis v. Leavitt, 15 N. Y. 9;Sacketts Harbor Bank v. Codd, 18 N. Y. 240;De Groff v. American Linen Thread Co., 21 N. Y. 124;Oneida Bank v. Ontario Bank, 21 N. Y. 490;Irwin v. Curie, 171 N. Y. 409, 64 N. E. 161,58 L. R. A. 830. The primary inquiry is: Do the allegations of the complaint, admitted as true, establish conclusivelythat the defendant surpassed its powers in receiving the moneys.

Neither the time when, nor the purpose for which, the defendant was organized, is alleged. It may have been formed ‘for any lawful business purpose or purposes other than a moneyed corporation, or a corporation provided for by the Banking, the Insurance, the Railroad, and the Transportation Corporations Laws, or an educational institution or corporation which may be incorporated as provided in the education law.’ It is a stock corporation. Business Corporations Law, Laws 1909, c . 12 (Consol. Laws, c. 4) § 2. Its lawful business purpose may have been the buying, developing or improving, and selling of real estate, or mining or manufacturing or another. It might not ‘by any implication or construction be deemed to possess the power of carrying on the business of discounting bills, notes, or other evidences of debt, of receiving deposits, or buying and selling bills of exchange, or of issuing bills, notes or other evidences of debt for circulation as money .’ General Corporation Law, Laws 1909, c. 28 (Consol. Laws c. 23) § 22, as amended by L. 1911, c. 771. Its statutory powers were those given by the Business Corporations Law, the General Corporation Law, and the Stock Corporation Law; and it did not possess and could not exercise ‘any corporate powers not given by law, or not necessary to the exercise of the power so given.’ Id. Laws 1909, c. 28 (Consol. Laws, c. 23) § 10. It was empowered to borrow money and issue and dispose of its obligations for any amount so borrowed, for it is enacted (Stock Corp. Law, Laws, 1909, c. 61 [Consol. Laws c. 59] § 6):

‘In addition to the powers conferred by the general corporation law, every stock corporation shall have the power to borrow money and contract debts, when necessary for the transaction of its business, or for the exercise of its corporate rights, privileges or...