Hanover Nat. Bank of New York v. American Dock & Trust Co.

• Decision Date: 03 March 1896
• Citation: 148 N.Y. 612,43 N.E. 72
• Parties: HANOVER NAT. BANK OF CITY OF NEW YORK v. AMERICAN DOCK & TRUST CO.
• Court: New York Court of Appeals Court of Appeals

148 N.Y. 612

43 N.E. 72

HANOVER NAT. BANK OF CITY OF NEW YORK

v.AMERICAN DOCK & TRUST CO.

Court of Appeals of New York.

March 3, 1896.

Appeal from supreme court, general term, First department.

Action by the Hanover National Bank of the City of New York against the American Dock & Trust Company on a warehouse receipt purporting to have been issued by defendant. From a judgment of the general term reversing a judgment entered on a verdict directed in favor of defendant (26 N. Y. Supp. 1055), said defendant appeals. Affirmed.

The plaintiff, a national bank, brought this action against the defendant, a corporation created by chapter 881 of the Laws of 1872 and engaged in carrying on a warehouse and storage business, to recover the possession of a quantity of cotton, or, if delivery could not be had, for the value thereof. The defendant has power, under said statute, to issue negotiable receipts, transferable by indorsement and delivery, for any property stored with it, and the holder thereof is made the owner of such property, either ‘absolutely or as a pledge for any advance or credits on the same, as the case may be, subject, however, to all charges thereon.’ From 1876 until 1890 one M. W. Stone was vice president of the defendant, and from 1890 until his death, on the 27th of March, 1891, he was president. While holding either office he had power, according to the by-laws, to sign the certificates or receipts issued by the defendant, but he was never the sole officer having that authority, as the secretary or treasurer was also empowered to act in that capacity. In fact, Stone signed substantially all of the receipts issued while he was an officer of the defendant. As he was the ‘business head’ of the company, it was regarded as safer and more convenient to leave that duty to him, ‘almost exclusively,’ so that he could keep ‘track of it,’ and thereby the danger of issuing duplicate receipts would be avoided. He was the general superintendent of the piers and warehouses, and had more to do with the business management than any one else. While vice president, he issued five certificates for cotton actually deposited, each to his own order, as follows, viz.: June 15, 1881, for 100 bales; November 9, 1881, for 83 bales; March 16, 1886, for 41 bales; April 14, 1886, for 85 bales; May 24, 1886, for 261 bales. There was evidence tending to show that each of these receipts or certificates was used, returned, and canceled in the regular course of business. A stub corresponding to the certificate was made out, when the latter was issued, and a receipt was taken from Stone, individually, for the negotiable certificate. This receipt and the stub always continued in the possession of the company, and the certificates, when surrendered on the delivery of the cotton, were filed or pasted in the same book therewith, so as to present at a glance a complete history of the transaction. The cotton was not always delivered all at once, and, in case of a partial delivery, sometimes the old certificate was surrendered, and a new one issued, and sometimes an indorsement of the fact was made on the back of the certificate, which was retained by the owner of the cotton. Thus, five indorsements of partial delivery appear on the back of the certificate issued April 14, 1886, in the following form, viz.: ‘Indorsement for delivery. The property mentioned below is hereby released from this receipt for delivery from warehouse. Aug. 6, 1886, three (bales), M. W. Stone, V. P. Gendar.’ Four other indorsements, similar in form, follow, each signed in the same way, the last one being dated October 30, 1886. Gendar was the bookkeeper, and, as such, made the indorsements, and signed his name beneath the entry in each instance. The certificate dated June 15, 1881, for 100 bales, was surrendered on the 29th of November following, 17 bales being then delivered, and a new certificate issued for the remaining 83 bales. On the stub of the certificate dated March 16, 1886, were the words, ‘Taken over; not found,’ and on that dated April 14, 1886, were the words, ‘Storage paid for by M. W. S.; not found.’ These entries were not explained, although an explanation was asked of an officer of the defendant, when a witness on the stand. The blanks in the body of said receipts were filled out in the handwriting of Mr. Hascy, who was at the time secretary of the defendant. In 1878 and 1891 he was also one of the directors. The form of the certificate issued to Mr. Stone, and the method of doing the business with him, was the same in all respects as in the case of a stranger. The clerk in charge of the defendant's warehouse reported to the company the cotton stored by Stone the same as any other, but never heard any comment made upon the fact.

For 12 or 13 years prior to 1891, the plaintiff was in the habit of lending money upon certificates issued by the defendant, either directly or by accepting them as collateral security upon the discount of notes. From 1884 until 1891 it had been lending Stone money upon such certificates as collateral. In 1884 or 1885, Mr. Halls, the assistant cashier of the plaintiff, asked Mr. Hascy, at the office of either the plaintiff or the defendant, if any officer other than Mr. Stone was authorized to sign the certificates, and Mr. Hascy answered ‘No,’ and added that the president and treasurer were not able to attend to it at their other places of business, by looking up the matter on the books so as to know that the entries were all right, and ‘so the whole authority was conferred upon Mr. Stone to be the sole man to sign these receipts.’ The substance of this was repeated subsequently on several occasions, when similar inquiries were made. On March 17, 1891, the plaintiff discounted for Stone his individual note for $5,000, at 90 days, and took from him, as collateral security, a certificate of the defendant in the usual form, signed by Stone as president, dated March 11, 1891, for 172 bales of cotton. It was issued ‘for account of M. W. Stone,’ who indorsed it individually, and, in the list of officers at the top, his name appeared as president. On the left-hand margin there were printed, transversely across the paper, these words: ‘This receipt is valid only when signed by either the president or treasurer.’ Mr. Donald, the cashier of the plaintiff, who represented it in discounting the note, knew that Stone was president of the defendant, and would have known, had he noticed, that the blanks in said certificate were filled in in Stone's handwriting. Mr. Donald made no inquiries as to whether the cotton was on deposit with the defendant of any one except Stone. He trusted to Stone's representations, and, in reliance upon them and upon the certificate, made the loan. Upon January 15, and February 6, 1891, the plaintiff, through Mr. Halls, had discounted notes of Stone for $5,000 and $6,000, respectively, taking similar certificates as security. When Stone died, on March 27, 1891, all three certificates were outstanding, the notes to which they were collateral being none of them due. The defendant claims that no cotton was deposited by Stone as the basis for any one of these three certificates, and gave evidence tending to establish that as a fact. This action is founded on the certificate dated March 11, 1891, the defendant having refused to deliver the cotton mentioned therein upon demand made. It appeared upon the trial that Stone obtained from the lithographer who printed certificates for the defendant a number of blanks laid aside as defective for some reason. The certificate in question was not numbered by the printing machine, as those in common use by the defendant were, but the number was stamped upon it, probably by a rubber stamp.

At the close of the evidence the counsel for the defendant asked the court to direct a verdict in its favor. The counsel for plaintiff thereupon asked ‘to go to the jury on the question whether the action of the defendant in permitting Mr. Stone to issue certificates in his own favor during the years 1881 and 1886 was not such an acquiescence in his act as gave the plaintiff a right to rely upon the validity of such a certificate when issued by Mr. Stone; also, upon the question whether the information given to Mr. Halls by Mr. Hascy, the secretary of the company, did not justify the plaintiff in relying upon this collateral security as being valid when signed by Mr. Stone, and whether the long course of dealing, allowing Mr. Stone to have the entire control of this business, did not estop the defendant from claiming that this certificate is invalid.’ The court denied the application of the plaintiff, and granted that of the defendant; exception to each ruling being taken. Upon appeal to the general term, the judgment entered in favor of the defendant was reversed, and a new trial granted. From that determination this appeal is brought.

REVIEW ON APPEAL-CORPORATIONS-AUTHORITY OF OFFICERS-EVIDENCE.

1. A plaintiff against whom a verdict has been directed is entitled, on appeal, to the most favorable inferences that can fairly be drawn from the evidence.

REVIEW ON APPEAL-CORPORATIONS-AUTHORITY OF OFFICERS-EVIDENCE.

2. Authority to an officer of a warehouse company to sign receipts for cotton deposited with the company does not authorize him to issue receipts in his own favor, even for cotton actually deposited by him. Bank of New York Nat. Banking Ass'n v. American Dock & Trust Co., 38 N. E. 713, 143 N....