text:
    Jonathan Odell v. George Greenly.
    When two persons exchange promissory notes, each note, in judgment of law, is founded on a valuable consideration, and is therefore valid at its inception, and from its first delivery.
    Hence, in an action against the maker of one of the notes, the defence of usury cannot be admitted to defeat the title of a holder to whom the note was transferred for value upon its maturity.
    The transaction is not altered, nor the defence rendered available by the fact that the person who exchanged notes with the defendant promised to protect that of the defendant at its maturity.
    Nor is the right of the plaintiff to maintain his action upon the note, at all affected by the circumstance that he holds collateral securities for its payment.
    Judgment for plaintiff affirmed, with costs.
    (Before Oakley, Ch. J., Duke, and Slosson, J.J.)
    Feb. 14; Feb. 24, 1855.
    Appeal by the defendant from a judgment in favor of the plaintiff, for $732.16, with interest and costs.
    The action was against the defendant as the maker of a promissory note for $625, dated ISTov. 26, 1853, payable, with interest, four months after date, to the order of H. Woodruff, and endorsed by him to the plaintiff. The only defence set up in the answer was usury. On the trial before Slosson, J., and a jury, on the 23d October, 1854, the plaintiff had the note in evidence and rested.
    The defendant then called as a witness, Hampton Woodruff, who testified as follows: “ I know the parties to this action; I am the payee of the note in evidence; I borrowed it from the defendant Greenly; I exchanged notes with him; he receiving my note in chan "e ⅛! I borrowed his note, with the understanding that I was io protel^ ^ j I received the money on the defendant’s note from the plaintiff, less a discount of one per cent, a month. Previous to the maturity of said note, I failed; I stated to the plaintiff that I could not pay it; I went to see the defendant, the maker; the note was in the “Butchers and Drovers’ Bank” for collection. The plaintiff agreed to renew the note he held, if the defendant would give a new note, bearing simple interest; the defendant did so; the note was withdrawn from the bank, and the present note — the one in evidence — substituted.
    On being cross-examined, the witness said: I gave my own note in exchange for the first note: when I returned the first note to the defendant Greenly, he returned to me the note I gave to him in exchange therefor: my note I gave to him, was to his order, and a counterpart of the one he gave me; I had not failed at the time of the first exchange; my credit in the market, was, at the time, unimpaired.
    The direct examination being resumed, the witness said: The consideration of the first note, was my note in exchange; that was all; the note was made solely for my accommodation; I was unable to respond, if compelled to, when the first note was given, for over twenty cents on the dollar; the last note, (the one in evidence,) was for the full amount of the first note, with interest from date.
    The defendant’s counsel then offered to prove, by this witness, that the witness put securities in the plaintiff’s hands, which, by a written memorandum, the plaintiff agreed should stand as collateral, in case the note was not paid.
    To which evidence the plaintiff’s counsel objected, and the court sustained the objection, and ruled out the said evidence, and to which ruling the defendant’s counsel duly excepted. .
    The case was then submitted to the juiy. And the court instructed the jury, that giving one note in exchange for another, gives consideration, and that there was nothing in the evidence to vary the legal effect of this rule, in the present case.
    To which charge of the court, the defendant’s counsel duly excepted.
    The jury then found a verdict for the plaintiff, for six hundred and fifty-one dollars and eighty-eight cents, (.ffiolyw-)
    From the judgment on this verdict, the defendant appealed.

      S. P. Allen for the defendant,
    insisted that the case was not within the general rule as to the exchange of notes, and that the judgment ought to be reversed.

      G. D. Newman, for the plaintiff contra.

   By the Co'ttbt.

Slosson, J.

The court instructed the jury that giving one note in exchange for another gives consideration,, and that there was nothing in the evidence to vary the legal effect of the rule in the present case.

In other words the court withdrew from the consideration of the jury, the question of “ whether the notes were, in fact, exchange notes ?” There was but one witness, (Woodruff,) and the only part of his testimony, which could raise a question of doubt, was that in which he stated that he was to protect the first note.

The first note was discounted by the plaintiff, at a rate exceeding seven per cent. This was not disputed.

We think the Judge was right in withdrawing the case from the jury.

The evidence of Woodruff was explicit, that he gave his own note in exchange for the first note, and that it was made negotiable by being made payable to the defendant’s order.

There is nothing to show that the defendant was placed under restriction as to its use.

Had he negotiated it to a third party, there could have been no defence to it, for the. defendant’s own note in Woodruff’s hands, was a good consideration for it.

True, Woodruff promised to protect the defendant’s note, but this he would have done, had he paid his own note in the hands of the defendant, or of an assignee of it. The promise to protect, was but a promise to indemnify, which he was legally bound to do without a promise, if the transaction was for his accommodation, But’this imposed no restraint upon the negotiability of his note in defendant’s hands, and though in fact, the defendant did not negotiate Woodruff’s note, but retained it and returned it to him on receiving his own note (the first one) back again, this is no evidence that he might not have done so.

It is not credible that Woodruff’s note was considered or received as a mere memorandum note, as is contended. If the abject had been a receipt merely, for the defendant’s note, by Woodruff, the latter would- have either given a receipt in terms, or a note to defendant, without words of negotiability. Can there be a doubt that if Woodruff, (supposing there had been no renewal,) had not taken up defendant’s first note, the defendant might have sued him upon his note; or, that the defendant might have provided himself with funds, for the purpose of taking up his own note, by procuring a discount of Woodruff’s note; or, that he might have so provided himself in anticipation, and without waiting for Woodruff to fail in his promise to protect his (defendant’s) note ? Had he done so, it would' have, in effect, accomplished the very thing which Woodruff promised, to wit, to protect defendant’s note, and without any detriment to Wood-ruff.

I cannot see in what light the two notes can be regarded, other than that of available exchange notes in each others’ hands; and though the transaction was not for the defendant’s accommodation, mutually with that of Woodruff, that would not affect the character of the paper which he received, as the consideration for his own.

If this view be correct, then there was nothing to go to the jury, and the defence of usury is not admissible. (Rice v. Mather, 3 Wend. 62; Dowe v. Schutt, 2 Denio, 621; Mum v. Cumipin Co., 15 J. R. 44.)

The offer to prove that the plaintiff had received securities, which he agreed to hold as collateral, in case the first note was not paid, was properly overruled — since, if true, it would not have affected his right to sue upon the note.

Judgment affirmed, with coste.


source: Caselaw Access Project

author: Oakley, Ch. J.

license: Public Domain

text:
    New York Marbled Iron Works v. A. Smith and Benj. G. Wilder.
    The averment in a complaint that a promissory note was endorsed, imports its delivery by the endorser.
    The provisions of the act of 1849, “in relation to suits by and against joint stock companies and associations,” refer only to unincorporated companies and associations.
    A corporation cannot be dissolved by a mere resolution of its members or stockholders : it can only be dissolved by a judicial sentence, or by a surrender of its charter accepted by the state.
    Where the negotiable note of a third person is accepted as payment of an antecedent debt, the endorsee is entitled to protection as a holder for value.
    It is doubtful whether upon the trial of a cause, the Judge has' any power so to amend an answer as to let in an entirely new defence. At any rate the granting or denial of such a motion rests In the discretion of the Judge, and his decision is therefore not properly subject to an exception. It cannot be reviewed in an Appellate Court.
    An action properly commenced by a corporation is not abated by the dissolution of the corporation, but may be continued, without a special application to the could, in its corporate name.
    Judgment for plaintiffs, with costs.
    (Before Oakley, Ch. J, Dueb and Slosson, J.J.)
    Feb. 14;
    March 3, 1855.
    This was an aetion against the defendant Wilder as the drawer, - and the defendant Smith as the endorser of a promissory note for' $1,797.63.
    As several questions on the trial arose on the pleadings, it is neeessary to state them m extenso.

    The above plaintiffs, by Charles A. Peabody, their attorney, •for complaint say, bn information and belief, that they are a corporation, duly chartered under and by the laws of the state of New York, and pursuant to an act of the Legislature of the said state, entitled “ An Act to authorize the Eormation of Corporations for Manufacturing, Mining, Mechanical, or Chemical purposes,” passed February 17, A. D. 1848.
    That the above defendant, Benjamin Gr. Wilder, heretofore, and on or about the sixteenth day of March, A. D. 1853, for a good consideration, made and executed his promissory note, whereof the following is a copy, and endorsed the same in his own name, and delivered the same to Adam Smith, the other defendant above named.

      That the said defendant, Adam Smith, in his own hand, duly endorsed the same, by writing his own name on the back thereof, for a good consideration, and sold or passed away the same for value.
    Plaintiffs further say, on information and belief, that when the same became due and payable, it was duly presented at the bank therein mentioned, and payment thereof was demanded of the paying teller therein, and refused, of which said demand and refusal the said defendant, Adam Smith, had notice.
    That said note is now wholly unpaid, and is held and owned by plaintiffs, who demand, judgment thereon against the defendants for the sum of eleven hundred and ninety-seven dollars and sixty-three cents, with interest thereon from the nineteenth day of July, 1853, together with seventy-five cents, and interest thereon, in addition thereto, for costs of protest against said Smith, besides costs of this suit
    ■COPY NOTE ABOYE MENTIONED.
    * $ 1,197.63. New Yoke, March 16, 1853.
    “ Four months after date, I promise to pay to the order of myself, eleven hundred and ninety-seven -¡⅜⅜ dollars, at the Bank of North America, value received.
    [Signed,] “B. Gr. WILDER.
    Endorsed,
    “ B. G-. Wilder.
    “ Adam Smith.”
    The defendants in this action, severally answering .therein, say, that .they have not any knowledge or information, sufficient to form a belief that the said plaintiffs are a corporation, in manner and form as stated in the complaint in this action, or that they ever were a corporation, in any form whatever, and they controvert and deny the same.
    These defendants, further answering, deny that the promissory note in said complaint mentioned, is held and owned by the said plaintiffs: and they say that said plaintiffs never gave any valuable consideration for said note, or that they have any interest therein, or title thereto.
    The defendant .Smith, for himself, says, that be has no kmowl-edge or information sufficient to form a belief, whether, when said note became due, it was duly or at all presented for payment, and payment thereof demanded and refused, as in said complaint is alleged, or otherwise, and he therefore controverts and denies the same; and he denies that he ever had any notice thereof, as alleged in said complaint, or that he was ever duly notified of the same.
    These defendants, further answering, severally deny that the defendant Adam Smith duly endorsed the said note for a good consideration, and sold or passed away the same for value, as in said complaint is alleged, or otherwise.
    These defendants, further answering, severally say, that said note was made by the defendant Wilder without any consideration being paid or passed to him therefor, and for the accommodation of the defendant Smith, and to be applied by him to a specific purpose, to wit, to enable him to purchase, or to be applied towards the purchase of, a ship or vessel, and if not so applied, to be returned and canceled; that the same never was so applied, nor was the same over returned or cancelled. And the defendants say, (the said Wilder upon information and belief,) that said Smith passed said note to one Charles Crosby, as security for an association or partnership calling themselves the New York Marbled Iron Works, but which association, they are informed and believe, was never duly incorporated so as to become a corporation; that the same was so passed as a security, but not as a paymént of an antecedent debt of, or claim against, said Smith, amounting to one thousand and fifty-nine dollars and fifty-nine cents. That said Crosby was informed of the character and history of said note, when he received the same, and an agreement was made that said Smith should redeem the same, and take it back, and pay up his account.
    The said Smith, further answering for himself, saith, that the claim against said Smith, as aforesaid, was for mantels, alleged to have been furnished on his account, to the value of the said sum of $1,059.59; and it was represented and alleged, that the same had been so furnished, and that the same were of an excellent character and description, and were fully worth that sum. That the said representations superinduced the giving of said note, as aforesaid; but he discovered that there had been a misrepresentation in regard to said mantels — that the same were not of good quality, and were of but little value.
    And these defendants, further answering, severally say, that said note was passed as aforesaid, without the knowledge, privity, consent, or concurrence of said Wilder, and without his approbation.
    And the defendants, further answering, severally say, that said defendant Wilder hath never received any value or consideration for said note, from any source whatever.
    The issues raised by these pleadings were tried before Duer, J., and a jury, on the 16th October, 1854. The complaint having been read at the request of the counsel for the defendants, the counsel moved that it should be dismissed, upon the following grounds:
    First. — That the complaint does not state facts sufficient to constitute a cause of action. It does not show any title in the note mentioned in the complaint, in the plaintiffs. It does not show any right in the plaintiffs to sue. It does not show how they got the note, or what, if any, interest they have therein.
    Second. — Plaintiffs show no authority, nor is there any, to sue in the name they do.
    Third. — The plaintiffs, if a corporation, should show that fact. They merely allege, on information and belief, that they are a corporation. The fact is within their own knowledge, and it should have been averred as a fact.
    Fourth. — The complaint does not allege that there is any thing due to the plaintiffs on the note; nor does it show that they are the real parties in interest in the suit.
    The court denied the motion, and the counsel for defendants excepted.
    The plaintiffs’ counsel then read in evidence two certified copies of the certificate of incorporation of the plaintiffs, duly signed and acknowledged by the associates, and containing all the particulars required to be stated by § 1 of the Act to Authorize the Formation of Corporations for Manufacturing Purposes, &c., passed Feb. 17, 1848. One of these copies was duly certified by the Clerk of the City and County of New York, the other by the Secratary of State. The original of the first copy was stated to have been filed in the County Clerk’s office, on the 20th of November, 1852; that of the second, in the Secretary of State's office, oñ the 22d of November, 1852.
    The note set forth in the complaint was then produced and read in evidence.
    Demand and refusal of payment, and notice to the endorser thereof, were then duly proved by the notary, who protested the note. The plaintiffs’ counsel then rested.
    The counsel for the defendants again moved the court to dismiss the complaint on the-grounds,
    First. — That the plaintiffs have failed to sustain their complaint, or to make out a cause of action against defendants.
    Second. — That no sufficient evidence had been produced to show that the plaintiffs have ever complied with the requirements of the general manufacturing law, sufficiently to become a corporation, or of suing and being sued in a corporate name; and,
    Third. — That the action should have been brought in the name of the President or Secretary.
    The Court denied the motion, and the defendants’ counsel excepted.
    Defendants’ counsel read in evidence, from the -book of minutes of the plaintiffs, under date of August 22, 1853, resolutions in the following words:
    “Aug. 22,1853. — At a meeting of the stockholders of the New York Marbled Iron Works, at the office of J. F. Butterworth, Esq., G. F. Forrest acting as Secretary — Present, Charles Crosby, J. F. Butterworth, S. F. Butterworth, H. H. Butterworth, G. J. Forest — on motion of G. J. Forrest, Resolved, That J. F. Butter-wort, who, as trustee of this company, has title to the real estate of this company, be directed to sell said real estate at public auction ; and that so much of the proceeds of the sale as is necessary, be applied to the payment of the debts, and the residue be divided, pro rata, amongst the stockholders; and also that the President be directed to sell all other property, of every nature and kind, belonging to the company. On motion of J. F. But terworth, Resolved, That the company be dissolved.

      “J. W. WHEELWRIGHT,- Sec'y,

    “By Geo. J. Forrest, Sec'y pro tem.

    “H. H. BUTTERWORTH, Pres't.”

      Defendants’ counsel then stated that the complaint was sworn August 26, 1853, subsequently to the passage of the resolution to dissolve, and moved for a dismissal of the complaint, on the ground that the corporation had been dissolved before the commencement of this action; and as those resolutions showed that the plaintiffs, even if they ever had any corporate existence, ceased to have any such existence on that day.
    The court denied the motion, and defendants’ counsel excepted.
    Defendants’ counsel then called the defendant Adam Smith, as a witness for defendant Wilder, who, being sworn on behalf of defendant Wilder, testified as follows:
    I reside in-Brooklyn, and did so reside March 16,1858, and have ever since; I know Benjamin Gr. Wilder; (the promissory note in spit was here shown to witness, and he said:) I have seen this note before, and have had it in my possession; I got it from Wilder; I gave nothing for it; I got it with others, for the purpose of buying a ship; they all were borrowed notes; Wilder was to have a bill of sale of the ship, as security for the notes; a contract for the purchase had been made, but the purchase was not consummated; no provision was made for the disposal of the notes; if the purchase were to fall through, I was to make the purchase from a third party, and the notes were to be used in part payment; I was to take bill of sale to myself, and assign the same to Wilder; I then owed plaintiffs for mantels purchased ; they were bought for cash; the money was then due to plaintiffs; some one on their behalf — I think Charles Crosby, Secretary of the company — presented the bill for payment; I had the money, and was going to pay it to him, but I had to get some of these notes -turned into money before I could use them, and so I gave to Crosby the note in suit, and kept the money, intending to use the latter towards the purchase of the ship.
    Defendants’ counsel here showed to witness a paper signed Charles Crosby, Secretary. Witness said that it is the receipt given to him, witness, for the note, and read the paper, as follows:
    “Received, New York, March 19, 1853, from Adam Smith, Esq., B. G-. Wilder’s note, dated March 16, 1853, payable four months after date, ■ at the Bank of North America, for eleven hundred and ninety-seven ⅛\ dollars, to be taken bn account of bill of mantels, etc., amounting to ten hundred and fifty-nine ⅜⅝ dollars, and the 'difference accounted for, or to return the same within five days. Said note to be endorsed by Adam Smith.
    “$1,197 ⅛⅞ - CHAS. CROSBY, ' '
    “ Sec'y N. Y Marbled Iron "Works."

    Witness then continued as follows: — Wilder never got any thing from' me, nor, to my knowledge; from ány oné else, for this note. The debt to the plaintiffs was my individual debt."
    Question by defendants’ counsel. — What was the'value of "the articles furnished to you, for which the noté was given? Objected to by plaintiffs’ counsel, as improper:
    The court decided that this evidence cannot be allowed' under the pleadings — to which defendants’ counsel excepted.
    Defendants’ counsel then offered to prove by this witness, that the mantels were of less value than the sum agreed to be paid— to which counsel for plaintiffs objected, and the court excluded the evidence.
    Defendants’ counsel then moved to amend the answer, so that the denial of value may be as fully set forth as to Wilder, as it is as to Smith.
    Plaintiffs’ counsel objected, and the court denied the motion— to which the defendants’ counsel excepted.'
    Defendants’ counsel then offered to prove by this witness, that the mantels were utterly worthless, and an absolute injury to the houses, and had to be removed from the house's; and that no value whatever was, therefore, given for the note.
    Plaintiffs’ counsel objected, and the court refused to admit the evidence.
    On cross-examination by plaintiffs’ counsel, the witness said: I received from Mr. Barnard, who had made the trade between us, a small amount of money, for the excess of Wilder’s note' over the amount of the bill; do not think it was quite' $100; T don’t remember that he brought the plaintiffs’ note for the balance.
    Plaintiffs’ counsel then showed to witness a paper, and asked him whether the signature to it was his? Witness said that'it was.

      Plaintiffs’ counsel then read tlie paper in evidence, as follows:
    “New York, April 12th, 1853.
    “ You will please pay the bearer, Ool. B. Barnard, the balance due me on Mr. Wilder’s note, which I gave you in settlement of bill mantels in Brooklyn houses, and much oblige
    “Yours, etc., . “ADAM SMITH.
    “ To Mr. Ceosby,
    “ Sec. ofK T. Marbhd IronWorks.”
    Plaintiffs’ counsel then exhibited to witness a receipt, signed, “ Adam Smith, Benj. Barnard, Agent.”
    Witness testified as follows: — I know Benjamin Barnard; have seen him write, and know his handwriting. I don’t know whether this is his signature to receipt, now shown to me. It may be; I think it probably is his signature; I am rather of opinion that it is. He had no authority to sign my name.
    Defendants’ counsel admitted that the signature is in the handwriting of Benjamin Barnard, but did not admit that he was Smith’s agent, or had any authority to sign his name.
    Witness resumed: — Barnard came to me, and told me that plaintiffs had mantels for sale that would suit me, and I told him that I would take them at the prices named by him. I did not employ him to make the trade. I did not send him to plaintiffs to purchase the mantels. He came from them, and said that they had the mantels for sale. I bought the mantels, and gave to plaintiffs Wilder’s note in payment. I don’t remember Barnard’s bringing me any note. Barnard brought me some money from plaintiffs in return; I don’t remember the amount; I think it was less than $100 — between $70 and $100. I think that at first something was said about a note, but at last the money was brought.
    Plaintiffs’ counsel then offered to read in evidence a receipt— signed Adam Smith, Benj. Barnard, Agent — to which defendants’ counsel objected, on the ground that there was no evidence that he was Smith’s agent, or had any authority to sign his name; at any rate, no authority to sign his name to any such a paper. The court overruled the objection, and said defendants’ counsel excepted.

      Plaintiffs’ counsel then read tlie receipt in evidence, as follows:
    . “ Hew Yoke:, April 13th, 1853.
    “Received from New York Marbled Iron Works, their note, dated March 16th, 1853, at four months, for one hundred and thirteen ¶⅝ dollars, being in full for balance of B. Gr. Wilder’s note of same date and time, over and above account rendered for bill of mantels as per statement.
    “ $113 rhr. “ ADAM SMITH.
    “BENJ. BARNARD, Agent.'1

    Witness resumed — I never had in my hands the note of plaintiffs ; I did not know Barnard had a note, when he spoke to me of it; when he spoke of a noté, I told him I did not want it; when he brought the money, I received it.
    Plaintiffs’ counsel then asked witness whether he had the bill of items of the articles furnished by plaintiffs to him.
    The court suggested that if plaintiffs went into an examination of that biR, and the value of the goods for which this note was given, it would let in Wilder to the defence offered on the ground of the value of the goods.
    Plaintiffs’ counsel thereupon withdrew the question. Defendants’ counsel excepted to the suggestion of the court, inasmuch as he had not objected to the question.
    Plaintiffs’ counsel then rested his cross-examination.
    Defendants’ counsel then put the question which had been withdrawn by plaintiffs’ counsel — Whether witness had the bill of items furnished? To which witness replied, that he had had such a bill, but had mislaid it, and had never found it; that he had looked for it, and had not been able to find it; it was for the articles furnished — the mantels.
    Question. — Through whose instrumentality did you buy those mantels? Objected to by plaintiffs’ counsel, and objection sustained. Exception.
    Defendants’ counsel stated that his object in putting the question was, to show that the goods had been bought through plaintiffs’ agent, who had represented the articles to be good, and of .the value charged for them; and that he intended to follow it up by showing that the representation was incorrect; and that after the bill for the articles was settled by giving Wilder's note, they were discovered to be worthless, or of little value.
    Plaintiffs’ counsel objected; the. court refused to admit the testimony, and defendants’ counsel excepted.
    Defendants’ counsel then called as a witness, J. F. Butterworth, who testified as follows: I was one of the original stockholders of the plaintiffs; all the original trustees were stockholders; I think there were other stockholders; the whole amount of capital was paid in, in money; I paid $12,000. The company engaged in the manufacture of marbleized iron mantels, and castings generally, for houses; they continued this business during the whole time of their existence. I don’t think that they have made any annual report; the secretary would know better than I. I don’t know how long the company continued to do business; I think more than one year after its organization. I was the first president. The company was formed in 1852, in November or February, I think; it continued to do business about eighteen months, I think; I don’t know the time; the minutes will show. It is not carrying on business now. It owned real estate on Sixth Avenue, which has been sold to Charles L. Frost; the proceeds were applied to the payment of the debts; nothing has been divided among the stockholders. I have no interest in this note, other than as a stockholder. I do not own all the scrip — only $15,000 of it. The debts are all paid, with trifling exceptions. No division among the stockholders has yet been made. (On being shown the book containing the minutes of the meetings, he said:) — "We commenced business November 20, 1852. I was in error about the length of time we continued in business.' The transfer-books were closed at the time of the resolution to dissolve. It is likely that we finished up the work which was on hand. We were at work as a corporation, at the time of our passing the resolution to dissolve; we never did business as a corporation after that time.
    Defendants’ counsel insisted that the plaintiffs, as a corporation, are not entitled to recover, as they had transacted no business for one year previous to the trial; and that the stockholders are the only parties in interest, and are the persons entitled to recover, if any one; and on this ground, moved to dismiss the complaint.

      ■ The court denied the motion, and the counsel for defendants excepted.
    Question. — Who were the. managers or trustees of the company, at the time of the passage of the resolution to dissolve ? Objected to by plaintiffs’ counsel.
    Defendants’ counsel stated that he expected to prove that witness, and other persons whom he named, are the real parties in interest, in this suit, and the only parties; and that plaintiffs have no interest whatever herein; and that the action, if war-rantable at all, can be maintained only, and should have been brought, in their names; and that the company had not, for one year previous to the time of trial, carried on business, or possessed a corporate existence, and that the witness, and the others whom he named, are the equitable administrators of said company. The court overruled the question, offer, and evidence, and defendants’ counsel excepted.
    Defendants’ counsel here rested the case.
    Plaintiffs’ counsel then called Augustin H. Giddings, who testified that he served the summons in this action on Smith, July 25th, 1853, and on Wilder, August 15th, 1853.
    The court then instructed the jury to render a verdict for plaintiffs, subject to the opinion of the court at General Term, on the exceptions, and judgment in the mean time, to be suspended.
    The jury rendered a verdict for plaintiffs, for $1,302.23.

      O. A. Peabody, for the plaintiffs,
    insisted that all the objections raised on the trial were properly overruled, and that the exceptions there taken ought to be disallowed, and judgment be rendered for the plaintiffs on the verdict.

      S. Sanxay, for the defendants,
    argued at large in support of the .exceptions, and strenuously insisted that the complaint ought to have been dismissed, and that the evidence which had been offered on the part of the defendants, and excluded by the Judge, ought to have been received. That the court ought, therefore, now to dismiss the complaint, or grant a new trial. He relied strongly on the “Act in relation to suits by and against Joint Stock Companies and Associations,” passed April 7,1849, (Laws, 1849, p. 389,) as proving that the action ought to have been brought in the name of the President or Treasurer of the plaintiffs, and not in their corporate name, and also on the proof that had been given that the corporation was dissolved.
   By the COURT.

Oakley, Ch. J.

It would have been a great error to have dismissed this complaint, since its defects, if any, are such as the Judge, under the provisions of the Code, was bound to disregard, or at once to have cured by an amendment; but, in reality, the complaint avers substantially all the facts which the plaintiffs were required to prove on the trial to entitle them to recover, and this, as we have frequently said, is the sole test of the sufficiency of a complaint, which, it is alleged, does not contain facts sufficient to constitute a cause of action. The averment that Smith endorsed the note, does not mean that he merely wrote his name on the back of it, but that he transferred the note with his name so written by a proper delivery, and taken in connection with the averment, that the plaintiffs are the owners and holders of the note, is equivalent to saying that he endorsed and delivered it to them. (Greswold v. Laverty, 12 Leg. Observer, 316.) In England, the law appears to be settled by recent decisions, that under a plea denying an endorsement, facts showing a non-delivery may be given in evidence, and this evidently on the ground that an endorsement includes and imports a delivery. (Marston v. Allen, 8 Mees and Wels. 494, and cases there cited.)

• The objection that the plaintiffs had no right to bring the action in their corporate name, is founded on a mistaken construction of the Act of 1849, “In relation to suits by and against Joint Stock Companies and Associations,” which provides that every such company or association may sue or be sued in the name of its president or treasurer for the time being, with the same effect “ as if the suit were prosecuted in the name of all the shareholders or associates in the manner now provided by law.” (Law of 1849, chap. 258, § 1, pp. 389, 390.) Even if this act were held to apply to incorporated companies, the privilege which it confers of suing in the name of a president or treasurer would not take away the right which belongs to every corporation as such, and which the general act under which the plaintiffs were organized, expressly, recognizes, of suing and being sued by its corporate name. (1 R. S. chap. 18, § 1, p. 599; Law 1848, p. 55, § 2.) The only effect would be to give an election to prosecute a suit in either form. But we are clearly of opinion that the provisions of the act of 1849 are applicable only to unincorporated companies or associations, since it is only suits by or against such that must or can be prosecuted in the names of all the shareholders — and the intention of the Legislature thus to limit the application of the act, is rendered still more manifest by the 5th section, which declares that nothing contained in the act shall be construed to confer upon the companies or associations to which it refers any of the rights or privileges of corporations; a declaration which, in respect to companies already possessing all these rights and privileges, would not be merely unnecessary but absurd.

The other objections to the complaint are so plainly groundless as scarcely to require a remark. Although a defendant in an answer under oath, is not permitted to answer upon information as to facts within his personal knowledge, no such rule is applicable to averments in a complaint, and so applied, the rule would be arbitrary and senseless. Whether the material facts stated in a complaint, are stated upon information or knowledge, it is equally the existence of the facts that is averred, and that the plaintiff is bound to prove upon the trial. Hence the form of the averment is to the defendant a matter of entire indifference. The objection that the complaint does not show that there is any thing due to the plaintiffs upon the note, it is not easy to understand. The complaint states that the note is wholly unpaid, and the plaintiffs as holders, demand judgment for its whole amount, with interest.

ISTor is it easy to understand the. additional ground upon which, when the testimony- on the part of the plaintiffs was closed, the motion for the dismissal of the complaint was founded. We are unable to see that there was any deficiency whatever in the proof that was given in support of the averment, that the plaintiffs were duly incorporated under the General Manufacturing Law. The certificates that were read in evidence, were authenticated in the manner that the statute prescribes; they contain all the particulars which the statute requires to be specified; they were duly signed and acknowledged by the associates, and were filed in the proper offices; and the statute positively declares, that upon the filing of the certificate, the associates become a body corporate, by the name mentioned in the certificate, and therefore, at once capable by this name of suing and. being sued; We know not that any additional proof could have been .given,; we are certain that none could be legally required.

We pass to the objections that arose upon the defence.

•It was proved that on the 22d of August, 1853, the stock* holders of the company adopted a resolution, that “ The company be dissolved;” and upon this proof the counsel for the defendants again moved that the complaint should be dismissed. The ground of the motion was, that as the complaint was not sworn to until the 26th of August, the action had been commenced, after the corporation, by its voluntary dissolution, had ceased to exist. We think that the Judge was entirely right in again denying the motion, and that the exception to- his decision must be overruled.

It would be sufficient to say, that the fact that the complaint was not verified until the 26th of August, was not even presumptive evidence that the action had not been commenced on an earlier day, and that if such a presumption was raised, it was overthrown by the subsequent proof, that the service of the summons upon each of the defendants preceded the adoption of the resolution. But we are satisfied that this proof was unnecessary, and that the motion for dismissing the complaint ought to have been denied, even had it been admitted that the action was not commenced until after the passage of the resolution. The reason of our conviction is, that the resolution was, on its face, inoperative and void. It did not, and could not, dissolve the company. No corporation can be dissolved by a mere resolution of its directors, stockholders, or members, not even where all its-members concur in the act. By the law of this state, there are only two modes by which the dissolution of a corporation can be effected by the voluntary action of its members. The one, by a petition to the Supreme Court, in which the statutory powers of the Chancellor are now vested; the other, by a formal surrender of its corporate rights and privileges to the state; and in the first ease, the dissolution is not completed until the prayer of the petition has been granted by the court, nor in the second, until the surrender has been accepted by the government. (2 R. S. pp 466, 7, 3 Burr, R. 1866; 2 Kent’s Com. p 310-11.)

There are two defences set up in the answers, which, had they been sustained by proof upon the trial, might have operated to defeat the recovery of the plaintiffs, and we are nest to consider whether the evidence that was given was' sufficient to support either of these defences, and whether the additional proof that was offered, was properly excluded by the court.

The substance of the first defence is, that the note in suit was made by Wilder, for the accommodation of Smith, and for a special purpose; that it was misapplied by Smith, and that it was transferred to the plaintiffs, with a full knowledge on their part, of its misapplication, merely as a collateral security for the payment of a debt, which they claimed to be due to them from Smith • in few words, that the plaintiffs were neither bond fide holders, nor holders for value. But the testimony of Smith, who was admitted as a witness — whether rightly or not we shall not now consider — fell very far short of establishing, or even of tending to establish, the facts that were necessary to be proved, to make out this defence. He indeed proved that the note was made for his accommodation, and perhaps, that it was diverted by him from the purpose for which it was given, but he did not admit nor intimate that the plaintiffs or their agent, when the note was transferred, knew, or had any reason to suspect, that the transfer was made without right or authority, and he distinctly swore that the note was transferred and received, not as a collateral security for the debt which was then due, but as an absolute payment. And that such was the fact, is rendered manifest by the circumstance that as the amount of the note exceeded the debt, the balance was paid to him by the plaintiffs, in cash. It is therefore certain, that the testimony of Smith, so far from sustaining the defence, raised no question that could with any propriety, have been submitted to the jury. And in relation to this branch of the defence, no other testimony or evidence was given or offered.

It was however contended, on the argument. before us, that even upon the admission that the transfer of the note was intended by the parties to an actual payment of the subsisting debt, still the plaintiffs are not entitled to protection as holders for value — ■ and if not, that the question of notice, of their good or bad faith, becomes immaterial. But since our judgment in White v. The Springfield Bank, (3 Sand. 7,) justified as it is, by the prior decisions of the Supreme Court, in the Bank of Salina v. Babcock, (21 Wend. 499,) Bank of Sandusky v. Scoville, (24 Wend. 115,) and the Bank of St. Albans v. Gilliland, (28 Wend. 311,) the law, at least in this court, must be considered as settled, that the satisfaction of a precedent debt is as truly a valuable consideration for the transfer of a negotiable bill, or note, as the advance in cash of its amount, at the time of the transfer. That in the case before us, the acceptance of the note by the plaintiffs operated to extinguish the debt then due from Smith, we cannot doubt. Erom that time, their sole remedy was on the note itself.

The second defence in the answer is not set up on behalf of both the defendants, but by Smith, answering for himself, alone; and it was by Smith alone, that it was offered to be proved. It is not pretended that Smith was a competent witness on his own behalf, and it is just as certain that, without an amendment of the answer, he could not be admitted as a witness on behalf of Wilder to prove a defence which Wilder himself had failed to interpose. The Judge refused to amend the answer so as to let in the de-fence, and the counsel for- Wilder excepted to the decision — but we are clearly of opinion that this exception, like all that preceded it, must be overruled. As the amendment would have introduced a defence, that in respect to Wilder was absolutely new, it was certainly not an amendment that the Judge under § 169 of the Code, was bound to make, and we exceedingly doubt, whether he had any authority to make it. Section 171, as we construe it, seems to forbid the exercise of such a power. The utmost that can be said is, that the granting of the motion to amend rested in the discretion of the Judge; but, if so, the mode in which his discretion was exercised, was but a proper subject of exception. There can be no error in such an exercise of discretion, that an Appellate Court has power to correct. (15 Wend. 669; 4 Hill, 189; 1 Comst. 290; Brown v. McCure, 5 Sand. 220.) Even had the desired amendment been made, the proof offered, ought still to have been excluded. The offer was to prove that certain articles, which the defendant Smith had bought from the plaintiffs, and for the price of which the note in suit was transferred, were of little or no value, and that the representation of their value made by an agent of the plaintiffs, was incorrect; not that it was intentionally false — not that it was made with an intent to deceive and defraud Smith, as the purchaser — but it is surely needless to cite authorities to show that where there is neither fraud nor warranty on the sale of goods, the maxim of caveat emptor applies, and the purchaser takes upon himself the entire risk of their quality and value. Hence had the truth of the facts that were offered to be proved been admitted in the very terms of the offer, the admission would not have affected the right of the plaintiffs to recover.

A single exception upon which a good deal of stress seems to have been laid, remains to be noticed. It was stated by the witness Butterworth, that the business of the plaintiffs as a corporation had been suspended for more than a year previous to the trial, and it was insisted by the counsel for the defendants, that as the corporation was thereby dissolved, (2 R. S. p. 463 § 38,) the action could no longer be maintained imits corporate name, and that the complaint ought therefore 'to be dismissed. The Judge was of a different opinion, and, we think, very properly denied the motion.

The Judge had no right to found a decision upon a fact not admitted, nor put in issue by the pleadings, and the statement of which, was therefore, irrelevant. The objection that the suit had abated by the dissolution of the corporation, could only have been properly raised by a supplementary answer in the nature of a plea puis darrein continuance, and if the objection was meant to be relied on, such an answer should have been .interposed. Nor is this all. Had such an answer been put in, it would have been set aside upon a demurrer. The action, as the plaintiffs were a subsisting corporation when it was commenced, it is quite certain was not abated by the dissolution that was relied on, even were it admitted that in a collateral suit, such a dissolution could bo alleged. By the Revised Statutes, the directors or managers of every corporation at the time of its dissolution, are made the trustees of its creditors and stockholders, for the settlement of its affairs, (1 R. S. § 9, p. 601,) and the Act of 1832, “ to prevent the abatement of suits, by or against corporations,” expressly provides that the dissolution of a corporation shall not abate any suit in time of its dissolution; but that the same may be continued, in the name of the corporation, or of its trustees. (Laws of 1832, ch. 295; 2 R. S. 2d ed. p. 386, § 192.) This provision doubtless escaped the attention of the learned counsel for the defendants, or the objection that we now overrule, would not have been raised.

There are one or two other exceptions, which, it appears from the case were taken upon the trial, but as they were, in effect, abandoned on the argument before us, we pass them over. They were properly abandoned.

The plaintiffs are entitled to judgment upon the verdict, with costs.

Judgment accordingly.