New York Nat. Exch. Bank of City of New York v. Crowell

• Decision Date: 05 October 1896
• Docket Number: 199
• Citation: 177 Pa. 313,35 A. 613
• Parties: New York National Exchange Bank of the City of New York v. Harry P. Crowell, Charles Class, Joseph R. Gibb, Charles H. Newell and Amos H. Evans, Copartners trading as Crowell & Class Cold Storage Company, Appellants
• Court: Pennsylvania Supreme Court

35 A. 613

177 Pa. 313

New York National Exchange Bank of the City of New York v. Harry P. Crowell, Charles Class, Joseph R. Gibb, Charles H. Newell and Amos H. Evans, Copartners trading as Crowell & Class Cold Storage Company, Appellants

No. 199

Supreme Court of Pennsylvania

October 5, 1896

Argued April 2, 1896

Appeal, No. 199, Jan. T., 1896, by defendants, from order of C.P. No. 1, Phila. Co., Dec. T., 1895, No. 359, making absolute a rule for judgment for want of a sufficient affidavit of defense. Affirmed.

Assumpsit on a promissory note.

The plaintiff's statement of claim was as follows:

The plaintiff claims of the defendants the sum of $2,500, and the sum of $2.08, the cost of protest, together with interest on said sums from January 8, 1894, which is justly due and payable to the plaintiff by the defendants upon the cause of action whereof the following is a statement.

For several years before the giving of the note upon which this suit is brought, the defendants, Harry P. Crowell and Charles Class, as copartners, carried on the cold storage and general storage and warehouse business at their warehouse, 50 and 52 North Delaware avenue, Philadelphia, and traded as the Crowell & Class Cold Storage Company.

In April, 1892, the defendants, Harry P. Crowell, Charles Class Job R. Gibb, Charles H. Newell and Amos H. Evans, presented to the governor of Pennsylvania a certificate of incorporation signed by them, asking for a charter for the Crowell & Class Cold Storage Company for the purpose of furnishing cold and general storage for produce, meats fruits, and other articles of food and perishable merchandise, and the conducting of a general storage and warehouse business, the business to be transacted at Philadelphia. The defendants, Harry P. Crowell and Charles Class, by said certificate, each subscribed for six hundred and forty-seven shares of stock of the proposed corporation and the defendants, Job R. Gibb, Charles H. Newell and Amos H. Evans, each subscribed for two shares of stock. The said business continued to be conducted at the defendants' warehouse, the said 50 and 52 North Delaware avenue, Philadelphia, from September 5, 1893, to January 8, 1894, and before and after those dates under the said firm name of the Crowell & Class Cold Storage Company. The said certificate of incorporation was not recorded in the office for the recording of deeds, etc., in and for the city and county of Philadelphia until November 14, 1893. On September 5, 1893, the defendants, at Philadelphia, before the recording of the said certificate of incorporation in the recorder's office at Philadelphia, gave their promissory note, whereof the following is a copy:

"$2,500.

PHILADELPHIA, Sept. 5th, 1893.

"Four months after date we promise to pay to the order of ourselves -- twenty-five hundred dollars at our warehouse 50-52 N. Dela. ave. without defalcation value received.

(Signed) "THE CROWELL & CLASS COLD STORAGE CO.

"By CHARLES H. NEWELL, Treas.

(Indorsed) --

"THE CROWELL & CLASS COLD STORAGE CO.

"By CHARLES H. NEWELL, Treas." and the defendants then and there indorsed the said note, and then and there caused the said note to be delivered to the plaintiff, and the plaintiff discounted the said note for value before maturity, and before the recording of the said certificate of incorporation in the recorder's office at Philadelphia, and the plaintiff became and was the holder of said note for value before maturity, and before the recording of the said certificate of incorporation in the recorder's office at Philadelphia, without knowledge or notice of any of the facts herein averred in reference to the presentation to the governor of Pennsylvania of the said certificate for a proposed incorporation, and without knowledge or notice of any attempt or intention upon the part of the defendants to form themselves into a corporation.

On November 14, 1893, after the defendants had made the said promissory note, and after they had indorsed it and caused it to be delivered to the plaintiff, and after the plaintiff had discounted said note for value without notice, the defendants had the said certificate of incorporation recorded, or caused or permitted it to be recorded in the office for the recording of deeds, etc., in and for the city and county of Philadelphia, in charter book No. 19, page 314.

When the said note became due, to wit, on January 8, 1894, it was duly presented for payment at the defendants' warehouse, 50 and 52 North Delaware avenue, Philadelphia, and payment of the same duly demanded of a proper person according to the tenor of said note, and payment was refused, of all of which the defendants, on January 8, 1894, had due notice, and the note was duly protested on January 8, 1894, for nonpayment. And the defendants thereupon became liable to pay to the plaintiff the said sums of money with interest as aforesaid, but the defendants have failed to pay said sums or any part thereof.

The affidavit of defense was as follows:

Harry F. Crowell and Charles Class, two of the defendants, being duly sworn, say that they have a just and legal defense to the whole of the plaintiff's claim, as set forth in the statement filed as follows:

They did not, at the time of the giving, or of the receiving, of the said note in suit, transact business as the Crowell & Class Cold Storage Company, either alone or in connection with the other defendants; the said note was not given by or for them, or with their concurrence, or in any business with which they were then connected; nor did they receive the consideration thereof. They were not copartners with the other defendants.

Prior to April, 1892, these two defendants did transact business together, but not in connection with the other defendants, and not under the name of Crowell & Class Cold Storage Company, but under the firm name of Crowell & Class. In the early part of 1892, they agreed with certain persons to sell to them their business, and with a view to the said sale, and at the instance of the purchasers, they applied for a charter as a corporation under the corporation act of 1874 and its supplements. The certificate was duly approved according to said act, and was duly enrolled on April 25, 1892, in the secretary's office in Harrisburg, in charter book No. 36, page 170, and letters patent were issued by the governor incorporating the said company.

A meeting of the board of directors was held on February 14, 1893, at which arrangements were made to complete the sale of the business to the said purchasers; and at said meeting, these deponents having resigned their offices which they had previously held, their successors were duly elected; and on the 15th day of the same month -- February, 1893 -- all their shares in the capital stock of the said company were duly assigned on the books of the company to the purchasers, and from thenceforth neither of these deponents has ever had any interest in the said company, or the capital stock thereof, or in its business, assets or profits. Circulars were issued and sent to all persons dealing with the concern, stating that these deponents had no further connection with said business. All of this occurred long before the giving of the promissory note now sued on. Wherefore deponents say that even if said corporation were incomplete, and if plaintiff had no knowledge or notice thereof, and if it dealt with the company as a private partnership, then they, the said deponents, had no connection therewith, and their credit was not in anywise pledged to plaintiff, and said plaintiff did not deal with them or either of them, or on their credit. Wherefore they are not liable to plaintiff for the amount of said note.

And deponents further say that said note appears on its face to be the note of a company which executes the same by and through its treasurer, and they therefore say that it is not true, as alleged, that said plaintiff had no knowledge or notice of any attempt or intention on the part of the persons interested in said company to form themselves into a corporation; and deponents are advised that plaintiff, having dealt with said makers of the note on the basis of a corporation, cannot now set up the alleged informality in failing to record the certificate as set forth, notwithstanding the issue of said letters patent. These deponents, not being connected with the defendant company, have no knowledge respecting the giving of the said note or the circumstances under which it was given to plaintiff; and for all that appears it was received by plaintiff directly from the officers of the company. All of which these deponents expect to be able to prove on the trial of the said case.

The court made absolute a rule for judgment for want of a sufficient affidavit of defense.

Error assigned was above order.

Judgment affirmed.

J. H Gendell and John G. Johnson, with them A. J. Kelly, for appellants. -- It seems extraordinary that the statute should provide that where letters patent issue under the seal of the state, and are signed by the governor, not only purporting to create a corporation, but which that same statute directs shall incorporate the parties in fact and in law, those letters should have no such effect at all; and if the question were an open one we should press the view that the failure to record is a mere irregularity, harming no one. A recording had taken place in Harrisburg which was...