Nat'l Park Bank v. German-American Mut. Warehousing & Sec. Co.

• Decision Date: 08 October 1889
• Citation: 22 N.E. 567,116 N.Y. 281
• Parties: NATIONAL PARK BANK v. GERMAN-AMERICAN MUTUAL WAREHOUSING & SECURITY CO.
• Court: New York Court of Appeals Court of Appeals

116 N.Y. 281

22 N.E. 567

NATIONAL PARK BANK

v.GERMAN-AMERICAN MUTUAL WAREHOUSING & SECURITY CO.¹

Court of Appeals of New York, Second Division.

Oct. 8, 1889.

Appeal from a judgment of the general term of the superior court of the city of New York, affirming a judgment entered on the report of a referee.

The plaintiff was incorporated in 1865 under the national banking act, and the defendant was incorporated in 1872 under chapter 701 of the Laws of New York, passed May 14, 1872. Both corporations were engaged in business in the city of New York,-the defendant at No. 45 Broad street,-and both still exist, though the defendant discontinued all business in May, 1879. Squires, Taylor & Co., (individual partners, Robert C. Squires, Charles E. Taylor, and Burnet Forbes,) commission merchants dealing in tobacco at No. 45 Broad street, New York, began business October 1, 1878, and failed December 30, 1878. Robert Squires was a director and the president of the defendant from a date prior to November 1, 1876, until his death, in February, 1879, and he was a director of the plaintiff from January 15, 1875, until his death. He was the father of Robert C. Squires, of the firm of Squires, Taylor & Co., a brother-in-law of Burnet Forbes, of that firm; and, when Squires, Taylor & Co. failed, they owed Robert Squires $25,000. August 27, 1878, Squires, Taylor & Co. made their promissory note, of which the following is a copy: ‘New York, August 27th, 1878. Four months after date, for value received, we promise to pay to the order of ourselves, at the National Park Bank, in New York, ten thousand dollars, having deposited with said bank, as collateral security for payment of this or any other liability or liabilities of ours to said bank, due or to become due, or that may be hereafter contracted, the following property, viz.: In the store of the German-American Mutual Warehousing and Security Company, one hundred hhds. tobacco, the market value of which is now $12,500; with the right to call for additional security, should the same decline; and, on failure to respond, this obligation shall be deemed to be due and payable on demand, with full power and authority to sell and assign and deliver the whole of said property, or any part thereof, or any substitutes therefore, or any additions thereto, at any brokers' board, or at public or private sale, at the option of the said bank, or its president or cashier, or its assigns, and with the right to be purchasers themselves at such brokers' board or public sale, on the non-performance of this promise, or the non-payment of any of the liabilities above mentioned, or at any time or times thereafter, without advertisement or notice; and, after deducting all legal or other costs and expenses for collection, sale, and delivery, to apply the residue of the proceeds of such sale or sales, so to be made, to pay any, either, or all of said liabilities, as said bank, or its president or cashier, shall deem proper, returning the overplus to the undersigned. SQUIRES, TAYLOR & Co.’ Squires, Taylor & Co., the makers and payees of said note, indorsed it in blank; and thereupon the president of the defendant indorsed it as a second indorser, in form following: ‘GERMAN-AMERICAN MUTUAL WAREHOUSING & SECURITY COMPANY. ROBERT SQUIRES, President.’ This note was then (August 27, 1878) discounted by the plaintiff for, and the avails credited to, said firm.

September 2, 1878, Squires, Taylor & Co. made a second note, dated that day, for the same amount, time, and in precisely the same from as the first note, and which was indorsed by said firm, and by the defendant, in the same manner; and it was discounted by the plaintiff, September 11, 1878, for, and avails credited to, said firm. September 11, 1878, Squires, Taylor & Co. made a third note, dated that day, for $12,000, for the same time, and in precisely the same form, as the first note, except 120 hogsheads of tobacco, stated to be of the value of $15,000, were pledged as security. Said firm and this defendant indorsed said note in the same manner in which the first note was indorsed; and it was then (September 11, 1878) discounted by the plaintiff for, and the avails credited to, said firm. November 27, 1878, Squires, Taylor & Co. made a fourth note, dated that day, for $4,000, for the same time, and in precisely the same form, as the first note except 40 hogsheads of tobacco, stated to be of the value of $5,000, were pledged as security. Said firm and this defendant indorsed said note in the same manner in which the first note was indorsed; and it was on that day (November 27, 1878) discounted by the plaintiff for, and the avails credited to, said firm. Squires, Taylor & Co. paid the president of the defendant $360 for indorsing said four notes, being at the rate of one-fourth of 1 per cent. per month for every month of the time said notes ran. In December, 1878, said firm pledged to said bank 40 hogsheads of tobacco as security for the four notes, in addition to those pledged as security for each note. The four notes were dischonored and duly protested. Upon a sale of the tobacco pledged, the first and second notes were paid, and such sums applied on the third and fourth notes that there was due on them May 7, 1879, $12,621.63, for the recovery of which this action was brought against the members of the firm of Squires, Taylor & Co., who did not defend, and against the appellant, which defends on the grounds (1) that the board of directors of the defendant was without power to authorize its president to bind it by contracts of indorsement, made for the accommodation of others,...