Credit Alliance Corp.. v. Sheridan Theater Co.

• Decision Date: 24 November 1925
• Citation: 149 N.E. 837,241 N.Y. 216
• Parties: CREDIT ALLIANCE CORPORATION v. SHERIDAN THEATER CO., Inc.
• Court: New York Court of Appeals Court of Appeals

241 N.Y. 216

149 N.E. 837

CREDIT ALLIANCE CORPORATION

v.SHERIDAN THEATER CO., Inc.

Court of Appeals of New York.

Nov. 24, 1925.

Action by the Credit Alliance Corporation against the Sheridan Theater Company, Inc. From a judgment of the Appellate Division (210 App. Div. 599, 206 N. Y. S. 389) reversing a judgment of the Trial Term for defendant (121 Misc. Rep. 656, 202 N. Y. S. 217), and directing judgment for plaintiff, defendant appeals.

Judgment of the Appellate Division reversed and that of the Trial Term affirmed.

Appeal from Supreme Court, Appellate Division, First Department.

Henry Brill and William Kaufman, both of New York City, for appellant.

Henry A. Jones and Morgan J. O'Brien, Jr., both of New York City, for respondent.

McLAUGHLIN, J.

This action was brought to recover money had and received. There is little or no dispute between the parties as to the material facts involved. The appeal presents a question of law only.

At the trial a jury was waived, and the question presented was submitted to the court by the consent of both parties, each agreeing that a verdict might be directed as though a jury were present. The court directed a verdict in favor of the defendant, but on appeal the judgment was reversed and a judgment directed in favor of the plaintiff.

The defendant, a domestic corporation, had as its president one Max Spiegel, as its treasurer William F. Rafferty, and one Coombs as its secretary. Under a resolution passed by the board of directors of the corporation (the three persons named constituted all of the board of directors), it could borrow money only upon notes signed by the president and the treasurer. Spiegel, asserting that he represented the defendant corporation, applied on its behalf to the plaintiff for a loan of $2,500. The plaintiff agreed to make the loan provided it was paid a bonus of $250. This was agreed to, and thereupon Spiegel delivered to the plaintiff corporation what purported to be five promissory notes of $500 each of the defendant corporation and, as collateral security for the payment of the notes, a certificate for 100 shares of the capital stock of the defendant corporation. The notes and stock purported to be executed by the Spiegel as president and Rafferty as treasurer. Rafferty never signed the notes or the certificate. His name was forged in each instance.

When the first note fell due, the same was not paid, and thereupon the plaintiff corporation brought an action in the Municipal Court of the City of New York against the defendant to recover the amount with interest. Rafferty interposed an answer on behalf of the defendant corporation alleging that his signature to the notes and the certificate was forged. Thereupon the plaintiff discontinued that action and brought this one to recover the total amount loaned, on the theory of money had and received. It appeared that when the notes and stock were delivered, the plaintiff, in exchange therefor, gave either to Spiegel, or some one representing him, a check for $2,250 payable to the order of the defendant corporation. This check Spiegel had certified, and then he deposited it in a bank to the credit of the defendant. Almost immediately thereafter he drew a check of the defendant payable to his own order for the amount deposited, again forging the name of Rafferty. This check he deposited in a bank to his own credit.

[1][2] The trial court, as above indicated, dismissed the complaint holding, as appears from the opinion, that the action could not be maintained for money had and received, since the defendant had never had any benefit of the amount deposited or exercised any dominion over it, or ratified...