text:
    Fish, Plaintiff and Respondent, v. De Wolf et al., Defendants and Appellants.
    Where a note, though valid in its inception and collectible by the payee, is transferred by the latter as security for a usurious loan, such transfer is illegal and void, and in a suit by the transferee against the maker, such usury, on being alleged and proved, is a defense.
    (Before Bosworth, Ch. J., and Hoffman and Moncrief, J. J.)
    Heard, April 12;
    decided, May 14th, 1859.
    The questions of law arising on the trial of this action were there ordered to be first heard at the General Term. It was tried before Mr. Justice Woodruff and a jury, on the 9th of February, 1857. It is brought by James D. Fish, as first indorsee of a note for $1,500, made by the defendants,- Thomas L. De Wolf and Daniel Starr, composing the firm of De Wolf, Starr & Co., dated February 1, 1855, payable, as the complaint states, to “the Atlas Insurance Company or order,” twelve months after its date. The complaint also avers that “ the said payee indorsed and delivered the said note to the plaintiff ” before its maturity, and that the plaintiff is the lawful owner and holder of it, and that it is due and unpaid.
    The answer (1st) denies that the Atias - Insurance Company indorsed or delivered the note to the plaintiff, or that he is the lawful owner or holder of it.
    2d. It avers that it was given to the Atlas Company in advance for premiums.1 upon- policies of insurance, to be thereafter issued under an agreement to that effect between the defendants and said Company; -that- policies were afterwards demanded and refused; that the note was without consideration in the possession of the Atlas Company, and was paid to the plaintiff without consideration ; and that -the Company was- insolvent when the note was given, and now is.
    Sd. That it was without consideration in the -possession of the Company, and was passed to the plaintiff at a usurious rate of interest and is void for usury, and that he took it with knowledge of the facts in relation to its origin.
    George H. Tracy, a witness for the plaintiff, testified that he was Secretary of the Atlas Insurance Company, from in February, 1855, until its failure on the 5th of March, 1857. That an injunction was served on the Company on that day, and a receiver of the Company was appointed. That N. H. Osgood was President of the Company “ when this note was transferred;” and that the indorsement upon it, “N. H. Osgood, Prest.-,” is his handwriting. It was then read in evidence, and was payable to “ the Atlas Mutual Insurance Company or order.”
    On cross-examination he said: “ The makers who tnade that note, I suppose, never received anything for it; they did not to my knowledge* * “ I think the Company was solvent at the time the note in,suit was signed; before this was due, the Company was in difficulty for want of immediate means in consequence of a large portion of its assets being locked up as a margin for loans, and it was known in the street;” * * “ Mr. Fish had given the Company subscription notes to the amount of about $3,000; he took out a good many policies of insurance from the Company; the Company were in the habit of borrowing money from him; they did so a number of times; they gave him their notes with subscription notes and premium notes as collateral security; the note in suit was a subscription note; I gave this note to Mr. Fish; the note was given to him as collateral for a loan made by him; the old loans were taken up and new loans made* * “the Atlas Insurance Company agreed to pay Mr. Fish, for the loans which he made to them, more than simple interest; they agreed to pay him for the loan for which he held this note more than simple interest; they paid him as high as 1J per cent a month.”
    When the plaintiff rested, the defendants moved to dismiss the complaint, on the ground, among others, “ that the evidence shows that the note was given as collateral to a usurious loan, and therefore the plaintiff cannot recover. The motion was denied, and the defendants excepted.
    Evidence was given by the defendants that they subscribed, in all, $5,000 upon a subscription of $200,000, taken up in February, 1855, and that the note in suit was given under said sub-' scription; and they also gave evidence tending to show that after the making of the note in suit “it was agreed between the defendants and the Company (payees), while the Company held the note, that the amount of premiums paid by the defendants (on policies obtained from the Company after this note was made), though secured by new notes, should be applied on the subscription notes for $5,000, and those notes retired as premiums to the amount thereof respectively accrued; and that they subsequently paid such premiums to the amount of $1,390, and the jury specially found that such were the facts, and also found a general verdict for the plaintiff of $1,606.17, the amount of the note and interest.
    The Judge was requested to charge the jury (inter alia) that if they “believed that the plaintiff held the note as collateral security to a usurious loan, the plaintiff was not entitled to recover.” He refused to so charge and the defendants excepted.
    Ho evidence was given upon the point whether the Atlas Insurance Company, or the Atlas Mutual Insurance Company, was or was not incorporated; or what was its true name; nor was any given as to the business transacted by it, except such as is above detailed, and some other evidence of the same general nature.
    When the jury had rendered their verdict, the Judge ordered the questions of law arising at the trial to be heard in the first instance at the General Term; that judgment be there first applied for, and that the entry of judgment in the meantime be suspended.

      William Stanley, for appellants,
    Contended that the transfer of the note in suit to the plaintiff, it having been made to secure a usurious loan, was illegal and void, (1 R. S., 772, § 5,) and gave to the plaintiff no title.
    That the transfer was void, because not authorized by a previous resolution of the Board of Directors. (Howland v. Myer, 3 Comst., 290, and Brouwer v. Harbeck, 1 Duer, 114.)

      C. C. Egan, for respondent,
    Insisted that, as the note formed part of the capital of the Company, it had a consideration, under the statute, (1 S. C. R., 158; 1 Comst., 371; 4 id., 51;) and that, being free from usury in its inception, no subsequent transfer of it under a usurious contract could invalidate it in the hands of the indorsee; and that usury is a personal defense, and cannot be set up by a stranger. (Mechanics' Bank v. Edwards, 1 Barb., 278;. Post v. Bank of Utica, 7 Hill, 391; Livingston v. Harris, 11 Wend., 329; Warner v. Gouverneur's Ex., 1 Barb., 39; Hammond v. Hopping, 13 Wend., 505.)
   Hoffman, J.

The first question is, What is the legal character and position of the Atlas Mutual Insurance Company ? Have we, at General Term, on this case, a right to treat it as a corporation? If so, what is its charter? where are we to look for it?

There is not a word of allegation in the pleadings, nor of suggestion in the testimony, of its being an incorporated Company. The complaint and answer do not speak of the Atlas Mutual Insurance Company, but of the Atlas Insurance Company. The former name appears nowhere in the Case, except in the promissory note given in evidence.

If it was of importance to the plaintiffs, or to the defendant, that the fact of an incorporation should appear, it should have been pleaded, or proven; and if proven, perhaps an amendment might be required and allowed. But if no pleading was necessary—if it was simply matter of evidence, which either party might adduce, to sustain his case, we are left without proof; without anything to show the charter or any of its provisions.

As the case is now presented, how is the General Term to know what powers the alleged corporation possessed; what was the authority of its officers; to what provisions of any general statute it was subject?

It is said that the point, that this was not proven to be an incorporated Company, was not raised at the trial; that the action was tried upon the theory that it was one; that it may have been admitted, not only that this was an incorporation, but that its charter was that which is now proffered to us at General Term.

No doubt there are many cases in which a party who does not suggest an objection at the trial, which, if then suggested, could have been met, will be precluded from raising it in the Court above.

Thus, where, upon a bill of .exceptions, two questions were raised at the trial upon powers contained in a will, viz., that the executors had not a power of sale, and that it was badly executed if they had; another point, that the consideration in the deed given under the power was merely nominal, could not be taken on appeal. (Meakings v. Cromwell, 1 Seld., 136.)

So in The Farmers' Loan and Trust Company v. Curtis, (3 Seld., 466,) a deed was executed by one Redfield for himself and as attorney of Jacob Le Roy. The deed was a piece of the evidence in the cause. For the first time, it was objected on the appeal that there was no proof of Redfield being in fact the attorney of Le Roy. The Court would not allow the objection to be considered. It might have been obviated by evidence, if taken at the trial.

In Ingraham v. Baldwin, (12 Barb., 9,) the question as to the validity of a mortgage arising, a point was, that the mortgagor ought to have been shown to have been twenty-five years of age at its date. (2 R. S., 545, § 1.) The point was first raised on the argument of the appeal, and the Court refused to consider it. It could have been obviated at the trial,

In Laimbeer v. The Corporation of New York, (4 Sandf. S. C. R., 109,) upon a question of the validity of an assessment, an objection was taken on the appeal that the law required that the lots should be described by street numbers. It was answered, that the objection had not been taken at the trial, when it might have been shown that there were no street numbers.'

See, also, Sharp v. Whipple, (1 Bosw. R., 557,) in which the general rule is stated.

Now, in these cases, there is not an entire want of proof of a particular fact. A presumption of the existence of the fact, as if it was legally proven, may be made from what does exist. The omission to object at the trial justifies this presumption. The fact of an actual consideration; the fact of a sufficient power of attorney; the fact of-the mortgagor being twenty-five years of age; and the fact of there being no street numbers, were reasonable and fair assumptions'from what was proven in each case. But how is it possible to say, that this Company was incorporated? How can we say, that such and such are the provisions of its charter ?

The theory of the trial may as certainly have been that of a partnership, or association, under this title, as of a corporation. There is no word in pleading, testimony, rulings, or charge, which is irreconcilable with this view.

1 shall, then, consider the case on the ground of this being a mutual association for the purpose of insuring, without any corporate privilege, and of whose internal regulations we are left almost wholly ignorant. We are informed that it had a President and Secretary, and a capital partly, at least, composed of premium notes given in advance.

1. The note was a subscription note to the capital of the Company, to be held as such. The defendants had given notes to the amount of $5,000, including the one in suit. The jury have found an agreement that premiums, even if paid by new notes, only, should be applied on the subscription notes for $5,000, and such notes be retired for the amount so paid. . They find, also, that the amount of premiums paid under this agreement was $1,390.

It is not shown where the other notes, part of the $5,000 subscription notes, were, at the time of the trial. It was not shown that they were not outstanding. There is nothing to indicate, upon the facts or the law, that the plaintiff or the Company itself has not as full a right to have the premiums appropriated to some of the other notes, as the defendants have to insist upon their application to the note in suit. I think this point must be disposed of in favor of the plaintiff, on the verdict.

2. The next question is, whether the note was available in the hands of the Company, and was held by it on a sufficient consideration, so that the association, or one representing it, could have sued.

The instrument is a perfect negotiable note, importing a consideration on its face, given to a Company, or Association, not shown to be unauthorized to take it; and defendants have not shown that there was not a valid or adequate consideration for it. This they were bound fully to have proven against a holder before maturity. On the theory now proceeded upon, the point that the note was given to a corporation, and that a holder, must see to the title of that corporation, cannot arise. We have a Company, holding a-negotiable note, with every presumption that it had a right to take and a right to transfer, with the legal presumption of a consideration, and that presumption not overthrown.

3. The next question of importance is as to the title of the plaintiff to sustain this action. The Judge was requested to charge that the plaintiff had not shown a legal title to the note, or right to sue thereon. This he refused to do, and an exception was taken.

We have, in the view now taken, the case of an association or partnership, with a President and Secretary, of a promissory note given to the association, in its assumed joint style or name, and indorsed over to the plaintiff by the signature of its President, with delivery.

The general right of one partner to accept or indorse cannot be disputed. (Collyer on Part., 401; Chitty on Bills, 42; see Davison v. Robertson, 3 Dow P. C., 229; and the case of Fleming v. McWair, House of Lords, July 16th, 1812, there mentioned.)

Mr. Collyer says, (§ 1137,) “As between the Company, (speaking of a joint stock company,) it seems clear that a bill negotiated in the name of the Company by any one of the members will, in the hands of a bona fide indorsee for value, be available against the whole body of proprietors, provided there is nothing on the face of the bill to show that it was drawn or accepted in an unauthorized manner.”

There is a separate class of cases in which, members have been sought to be charged personally through the acceptance of one named as an officer or director. (Bramah v. Roberts, 1 Bingh. N. Cases, 469; Dickinson v. Valpy, 10 Barn. & Cres., 128.) Authority expressly given must generally be shown. But I apprehend that when a note is indorsed over for value, when the money goes to the use of the association, when the President indorsing has the note in possession and delivers it, a presumption of membership and power is sufficiently raised.

4. The next question we shall consider is of considerable moment. The Judge was requested to charge that if the jury believed the plaintiff held the note as collateral security to a usurious loan, the plaintiff was not entitled to recover. A refusal so to charge was excepted to.

The answer set up the defense that the note was negotiated and transferred by the Company at a usurious rate of interestthat it was discounted and purchased by the plaintiff at or about the rate of eighteen per cent per annum, and was void for usury.

The proof tends to establish loans, in general, by the plaintiff to the Company at usurious rates; and that the loan for which he took this note as collateral, was upon usurious interest.

I think that under the rule in Catlin v. Gunter, (1 Kern., 368,) the evidence of the usury, in the transaction between the plaintiff and the Company, was properly in the case, and could have been submitted to the-jury.

' But it is insisted that these defendants cannot set up as a defense to their note, which was good in its inception, usury in' a loan made to the payees of the note, for which it was transferred as security merely.

The old case of Bush v. Livingston decided that a lender of money upon usury, who took an assigiiment of a mortgage as security which was perfectly valid between the parties, was not barred from sustaining a bill of foreclosure. (2 Caine’s Cases in Error, 66.)

This doctrine was distinctly affirmed in Pearsall V. Kingsland. (3 Ed. Ch. R., 195.)

But in these cases, being both in Chancery, the Court allowed only the recovery of the amount actually advanced by the lender, with legal interest.

In Wells v. Chapman, (4 Sandf. Ch. R., 312,) this point was much pressed. The Vice-Chancellor so far recognized it as to hold that the good mortgage was not so affected by usury and illegality in its transfer to the Life and Eire Insurance Company, as to prevent its being restored to full force, when the original pledgors discharged the debt, and took it back.

When the case was before the Supreme Court on appeal, (13 Barb., 562,) the Court recognized the rule of Bush v. Livingston and Pearsall v. Kingsland, to the fullest extent. (See also Warner v Gouverneur's Executors, 1 Barb., 39.)

There is also a class of cases in which it is held that if a security for money is originally free from usury, no subsequent agreement between the parties, by which usury is taken upon it, will render it void, and defeat an action. (Ferrall v. Shaen, 1 Saund., 295, and notes; Nichols v. Lee, 3 Anst., 940; ex parte, Jennings, 1 Mad. R., 331.)

Yet in Bell v. Lent, (24 Wend., 230,) the language of the Court is: “ There was no sale of the notes, which distinguishes the case from Cram v. Hendriclcs. The money was advanced by way of loan, upon usurious interest, and the notes were transferred simply as collateral securities. ' The collateral paper must abide the fate of the principal debt for which it was given; that being affected with usury, the whole is void as against these defendants.”

The notes were made by one Eaullmer, not a party to the suit. They were indorsed by Lent, by the firm of Eddy & Chubb, and by McIntyre. These parties were sued, except Chubb, who was dead. The notes were sent to Hew York to procure them to be discounted on account of Eddy & Chubb, and of McIntyre, and were so discounted at a usurious rate. Thus, as to Eddy and McIntyre at any rate, the usury was between the lender and the party sued upon the notes. Lent, however, was not affected by this consideration.

In Dean v. M. and F. Howell, (Lalor’s Supp. to Hill & Denio, 39,) the defendants made a note for $3,000, in favor of D. R. Minor, who indorsed it. Minor borrowed $2,000 on his own check, and gave the note as security, through a broker. The note was a lent note, and the broker informed the lender of this. The Court says that the lender took the note, knowing it was void in its inception.

The case of Gaither v. The Farmers and Mechanics' Bank, (1 Peters’ U. S. R., 87,) must be admitted to be a direct authority to the point, that the lender on usury,- who has received a valid promissory noté as collateral to his loan, cannot sustain an action upon such note. The maker is not relieved from paying the note entirely. He is only relieved from paying it to that holder. The case was governed by the law of Maryland, and the statute of that State is not different from our own.

The case of Harrison v. Hannel, (5 Taunt., 780,) is referred to by the Supreme Court, and is strong upon the same point. • The good security may not be recovered upon by the usurious holder, because it is given for enforcing a usurious contract.

Dewitt v. Brisbane, (16 N. Y. R., 512,) applies the same principle, with great force, to' the case of a transfer of a good security upon a contract which was in violation of the restraining act. The party to the violation of the' law cannot acquire a legal or equitable right to enforce payment of the valid security, transferred upon the illegal transaction.

The line of cases referred to, such as The Mechanics' Bank v. Edwards, (1 Barb. R., 272,) is whére usury existed in the instrument proceeded upon, and particular persons were not allowed to set it up.

The authorities I have first cited were all in a court of equity, and may well be placed upon its peculiar doctrine as to usury. I consider the rule to be, that the usurer cannot sue at law jipon a valid note given to him as collateral merely, when he could not sustain an action against the principal for the debt.

From the statement of the learned Judge who tried the cause, after referring to his minutes, it appears that the case, as the parties have made it, presents the evidence as to usury far stronger, than he had noted it. In his view there was not enough to go to the jury upon the point. The case, as agreed upon, must control our action, and we think the evidence entitled the party to have the question submitted.

On this ground, I think, there must be a new trial.

It cannot escape observation, that when the.'fact of incorporation is established on the new trial, some questions not now discussed will arise, especially the important one as to the operation of the statute of 1850, upon the question of usury.

Bosworth, Oh. J., and Moncrief, J., without considering the other questions discussed, concurred in granting a new trial on the ground that the transfer to the plaintiff was made to secure a usurious loan.

Judgment reversed and new trial granted, with costs to abide -the event.


source: Caselaw Access Project

author: Moncrief, J. Hoffman, J.

license: Public Domain

text:
    Samuel G. Ogden, Jr., Plaintiff and Respondent, v. Charles Andre, Christian Andre and George Andre, Defendants and Appellants.
    L A person who, in good faith, lent money to the International Insurance ■ Company, on the transfer of its subscription notes as collateral security, • amounting in the aggregate to over $1,000, without notice of any fraud affecting the origin of such notes, or that they were transferred without any previous resolution of the Board of Directors of such Company, ia entitled to recover upon them, although they may have been procured from the maker by fraud, and although there may have been no such resolution authorizing the transfer.
    2. The fact that the plaintiff took the transfer directly from the Company, is not, per se, constructive notice of the non-existence of such a resolution.
    3. Nor is it a defense that the collaterals, when thus transferred, were not indorsed by the then President of the Company, they having been actually-indorsed previously for the purpose of.making them negotiable, by the. then President, and he being the proper officer to make such indorsements.
    4. Whe.e the defense is that the Company, at the time of such transfer, was insolvent, the Judge may, in his discretion, require some evidence of notice thereof to the indorsee, or that he took the notes in bad faith, to be first given; and it is not error to exclude proof of such insolvency, when the evidence given not only fails to justify the inference of bad faith, or notice of such insolvency, but, on the contrary, shows good faith, and an absence of any such notice or knowledge.
    (Before Bosworth, Ch. J., and Hoffman and Moncrief, J. J.)
    Heard, April 12;
    decided, May 21, 1859.

      This is an appeal by the defendants from a judgment against them, entered upon a verdict rendered upon a trial had before Mr. Justice Slosson and a jury, on the 27th of May, 1858.
    The plaintiff sues as indorsee of a note, which, with the indorsements thereon, reads as follows, viz.:
    “ $1,000. Hew Yore, Dec. 1st, 1855.
    “ Twelve months .after date, we promise to pay the International Insurance Company, or order, for value received, one thousand dollars.
    (Signed) “Andre Brothers.”
    Indorsed: “For International Insurance Company, Alanson Marsh, President. Pay Phenix Bank, S. Gr. Ogden, Jr.”
    The complaint states that the defendants, on the 1st of December, 1855, being partners, composing the firm of Andre & Brothers, made the note in question and delivered it to the payees ; that afterwards, and before its maturity, “ the said International Insurance Company duly indorsed” the same; that it “was thereupon delivered to the plaintiffs;” that it is past due, and wholly unpaid, and prays judgment for the amount of the note, with interest from December 4, 1856.
    The answer of the defendants admits that they made and delivered the note to said Insurance Company, but avers that it was given to the Company “as a memorandum for premiums of insurance in said Company, to be earned by said Company for insurance therein, to be effected by the defendants when they should desire, or, if they should desire, during the period of the year before the maturity of said note, and that the amount of said premiums should be credited upon said note as the said insurance should be made, and for the amount of the premiums therefor;” that at the time the note was made and delivered, the Company represented to the defendants that they were solvent and duly organized, with a large surplus, and were in good condition, and “that they only wanted said note as a memorandum of insurance;” that if the whole of the note should not be earned at its maturity, the Company would surrender it to the defendants, on being paid the premium upon the amount of insurance actually effected; that, relying upon said representations, the defendants made and delivered the note; that, as matter of fact, the Company was insolvent when said representations were made and the said note was given, and was “not a duly organized Company, but a corrupt and fraudulent association, and the officers thereof, with their associates and the persons engaged in said Company, had combined and confederated together to defraud the community, and they well knew that they were unable to pay any losses,” and did not expect or intend to pay any when said, note was obtained; that soon after the note was given the Company failed, and was closed up, on account of its insolvency and the fraudulent manner of its organization; that the premium on the whole insurance effected by the defendants with said Company, amounts to only $212.12, which sum the defendants offer to pay, with costs, on the note being surrendered to them.
    It avers that the plaintiff is not a holder of the note in good faith and for a valuable consideration.
    For “ a further and separate answer,” it denies that said Company “ever indorsed or delivered the said note to the plaintiff;” but avers “ that the said note was, without any authority and fraudulently, indorsed and delivered by the President of said Company to the plaintiff as collateral security for a preexisting debt of the said President.”
    It also denies “that the plaintiff is the lawful owner and holder of said note.”
    At the trial, “ the charter of the International Insurance Company,” as the case states, was read in evidence, but it is not printed as a part of the case.
    It was proved that Charles W. Ogden was Vice-President of said Company from October 29, 1855, to March, 1857; and that .Alanson Marsh was President from September 15th, 1855, to February 2d, 1856, when Moses Starbuck succeeded him as President.
    Charles W. Ogden, a witness for the plaintiff, was asked, “ by what officer of the Company were the notes of the Company indorsed ?”
    The defendants objected to this evidence, and to evidence that Marsh, the President, indorsed the note, unless it was first shown that he “ had special authority from the Company to transfer the note, and that such transfer was authorized by resolution of the Board of. Directors.” The objection was overruled and the defendants excepted. • The witness answered, “By the President.” He then proved the indorsement upon the note, and it was read in evidence.
    It was further proved that the note, with others of a like description and similarly indorsed, amounting in all to $18,000 or $19,000, was transferred to Samuel G. Ogden, father of the plaintiff, as security for a loan of $15,000, made by him to the Company, and paid to the Company at the time of the transfer of the collaterals.
    That prior to such loan and transfer, and previous to February 6, 1856, this note was lodged as collateral with Krollpfeiffer & Borott, while Marsh was President, as security for money obtained from them, and was then indorsed by Marsh as President; that it was taken up by the Company on the 6th of April, 1856, and subsequently transferred (as above stated) to S. G. Ogden, by Starbuck, who was at that time President. That there was no resolution of the Board, of Directors authorizing the transfer to S. G. Ogden. That the defendants, after they made the note in question, took an open policy from said Company, the premium on which was $1,001.25; and that “ under that policy there was $200 or $300 earned, marked off and charged against this note that the defendants never paid any money on it.
    When this evidence had been given the plaintiff rested, and the defendants moved for a nonsuit, on the grounds: First. That the transfer of the note in suit was unauthorized by a previous resolution of the Board of Directors of the Company. Second. That the note was not indorsed by the Company, nor by the President of the Company in office at-the time of the transfer to S. G. Ogden. The motion was denied and the defendants excepted.
    The defendants offered in evidence a judgment of the Supreme Court “in proceedings taken by the Attorney-General of this State, declaring said International Insurance Company insolvent, and dissolving the same, which judgment was entered on the.... day of............,18...” „ ,

      The evidence was objected to as irrelevant, and excluded, and the defendants excepted. It was subsequently admitted “ that Mr. Scudder was appointed Receiver of the International Insurance Company, November 1st, 1856, by an order of the Supreme Court, in proceedings instituted by the Attorney-General.”
    Charles Andre, one of the defendants, testified, that before the note in suit was made, Mr. Del Banco came to the' defendants’ office, and said “ this Company had a cash capital of $100,000; that they were going to enlarge it by subscription notes to the amount of $500,000, and asked me to be a party to those subscriptions ; we signed a book that Mr. Del Banco had in his possession containing the terms of the subscription; he said that he was not then an officer of the Company, but as soon as those subscriptions were taken, he would be made Secretary.”
    “We subscribed $1,000, telling him that we had taken out some policies in other companies, and that we probably would not use that amount for some time to come; Mr. Del Banco then said that if we should not use the premiums, and the note became due, then oh paying what amount we might have taken, and if no premiums had been earned, the note would be returned without payment; the Company sent us that note and we signed it, believing that all the notes had been given.”
    On cross-examination, the subscription book signed by the witness was identified by him, and was read in evidence, as follows, viz.:
    “ We, the undersigned, hereby subscribe the several sums set _ opposite our respective names as an additional capital stock of the International Insurance Company, said subscriptions to be paid for in our notes at twelve months, and to be insured out in premiums by us, upon condition—
    “ 1. That this subscription shall be binding when the sums subscribed amount to at least one hundred thousand dollars, approved by the Board of Trustees.
    “ 2. That Edward Richardson shall be President, and Chas. W. Ogden Vice-President, and A. B. Van Olinda Secretary of said Company.
    “3. The said Company shall pay us a commission of five per cent for advancing our said notes upon the payment thereof.
    “ New York, October 9th, 1855.”

      It appeared that Del Banco was subsequently appointed Secretary of the Company, and was afterwards removed.
    David E. Wheeler, one of the Commissioners appointed by the Comptroller, in “ 1856, to examine into the condition of all the Insurance Companies in the city," gave evidence tending to show that the condition of said Company “was bad;” that “it had a large quantity of' worthless securities, and a large amount of debts, with nothing to pay them with;” that “there was a large amount of notes as assets, the makers and indorsers of which could not be found.”
    Morris Hollander gave evidence tending to show that Del Banco requested him, in December, 1855, to give a subscription note to said Company, and represented it to be a first-rate Company, with a cash capital of $200,000.
    Alanson Marsh testified that, during his presidency, the Company had enough securities to pay, and did pay, its losses. “There were, probably, $50,000 of notes when I came in; I did not see the first nominal subscriptions; I saw the $50,000 of notes.” He was then asked these questions, (found at folios 46 and 48 of the Case,) viz.:
    “ Q. What became of the $50.000 of notes?”
    “ Q. How much money had the Company when you became President, September 15, 1855?”
    “ Q. Was the $50,000 taken from the Company by its officers, shortly after you became President, without paying the Company any valuable consideration therefor ?”
    These questions, as they were severally put, were objected to and excluded, and the defendants excepted.
    He further testified that, in December, 1855, the Company had, of premium notes, some $80,000 or $90,000, which were considered good.
    Charles W. Ogden testified thus: “I communicated to S. Gr. Ogden the result of my knowledge as to the condition of the Company; I told him the Company was doing a good business; had many of the best subscribers, and was in need of money on the subscription notes to pay losses; he agreed to advance the amount of money; I was present at the negotiation; it was conducted by Starbuck; I told S. Gr. Ogden that this note of defendants was a subscription note.”

      The evidence being closed, the Judge charged the jury as follows :
    “ If you- shall find that this note was transferred to Ogden, Sr., for money advanced at the time, and without notice of the fraudulent representations alleged to have been made to the defendants, to induce them to make the note, the plaintiff is entitled to recover, notwithstanding you may find that such representations were made, and were false.
    “If you shall find that such representations were not false, or were substantially true, the plaintiff is entitled to a verdict.
    “ The elder Ogden having been shown to have advanced $15,000 on the pledge of this and other securities, the burden of showing notice of the fraud, if any, .rests on the defendants.
    “ This note formed part of the capital stock of the Company, and the defendants are liable for the full amount of the note, though only $212 of it has been earned, unless you find the fraud before referred to, and the elder Ogden’s knowledge of it, when he made his advance and received the note.
    “If the elder Ogden is not shown to have been a holder without notice, and if the fraud existed, the present plaintiff cannot recover, there being no evidence that he paid anything on the transfer of the note to him.”
    The counsel for defendants then excepted to the charge of the court, so far as it relates to notice of the fraud to S. Gk Ogden, senior.
    He also excepted to the charge that the plaintiff’s recovery is not to be limited to the amount of the premiums earned, but must be, if at all, for the whole amount of the note and interest.
    He also excepted to each and every proposition in the charge, except the last of said propositions.
    He then requested the court to charge the jury as follows:
    1. That if the note in suit was transferred by the officers of the Company in contemplation of insolvency, the plaintiff cannot recover.
    2. That Ogden, senior, at the time he received the note, being informed that the note was a subscription note, is chargeable with notice of the terms of the subscription.
    8. That the transfer of the notes, (the one in suit and the others,) amounting in the aggregate to more than $1,000, (about $20,000,) was invalid for not being authorized by a resolution of the Board of Directors.
    4. That Ogden; senior, receiving the notes directly from the officers of the’ Company, is chargeable with notice of the fact that the transfer was unauthorized by resolution of Directors.
    5. That if Ogden, senior, knew of the insolvent condition of the Company; or had knowledge sufficient to put him on inquiry, the transfer to him was void, and the plaintiff cannot recover.
    6. That the proof offered by the plaintiff is insufficient to show a transfer from the Company to Ogden. 1. There is no proof of authority of the President to indorse. 2. There is no evidence of a resolution authorizing such an indorsement as is made on the note, or such a transfer.
    7. That the elder Ogden had notice sufficient to put him upon inquiry into the origin and history of the note.
    The Court refused to charge according to either of said requests, to which refusal defendant’s counsel excepted.
    The jury found a verdict in favor of the plaintiff for $1,103.40, the amount of the note and interest.
    Judgment having been entered on the verdict, the defendants appealed from it to the General Term.

      P. Y. Cutler, for appellants.
    The International Insurance Company was first chartered under an act to incorporate the Kings County Mutual Insurance Company, passed 15th April, 1844. (Laws of 1844, ch. 156, p. 229.)
    The title of the Company was changed to the “ International,” by act of 11th April, 1855. (Laws of 1855, ch. 295, p. 505.)
    In 1847, the act of 1844, granting the first charter, was amended. (Laws of 1847, vol. 1, p. 109.)
    I. This Company never had a legal existence.
    II. The note was taken in a mode and for purposes not authorized by the charter of the Company, and was an attempt to evade the statute. The act was at least ultra vires. Vide Utica Insurance cases. (Utica Ins. Co. v. Scott, 19 Johns., 1.)
    III. The International Insurance Company is within the statutes as to moneyed corporations. (1 R. S., 589, pt. 1. ch. 18, tit. 2, arts. 1-8; Gillet v. Moody, 8 Comst., 479; Talmage v.
      Pell, 3 Seld., 328; Supervisors of Niagara v. The People, 7 Hill 504; S. C., 4 id., 20; 1 R. S., 598, § 61; Gillet v. Phillips, 3 Kern., 114.)
    1. It was subject to all the general statutes of the State applicable to such corporations, whether passed before or since the General Insurance Law of 1853, except so far as such statutes may be inconsistent with the legislation as to this particular class of moneyed corporations. This has been repeatedly adjudged by the Court of Appeals. (See above cases, and Sagory v. Dubois, 3 Sandf. Ch. R., 488; Leavitt v. Tylee, 1 id., 207; Brouwer, Receiver v. Harbeck, 5 Seld., 589; Gillet v. Phillips, 3 Kern., 114.)
    2. It was subject to the general statutes, entitled, “regulations to prevent the insolvency of moneyed corporations,” and to secure the right of the creditors and stockholders. (1 R. S., 589, 598, §§ 51, 61, took effect January 1, 1828; Gillet v. Moody, 3 Comst., 479; Talmage v. Pell, 3 Seld., 328; Gillet v. Phillips, 3 Kern., 114; Brouwer, Receiver, v. Harbeck, 5 Seld., 589; Leavitt v. Yates, 4 Ed. Ch. R., 134; Leavitt v. Tylee, 1 Sandf. Ch. R., 207.)
    3. It was within the general statute, entitled, “ Of proceedings against corporations in equity, which authorizes an injunction to restrain the exercise of powers not granted, and proceedings for dissolution of insolvent moneyed corporations.” (2 R. S., 777, took effect January 1, 1830; id., § 38; Boisgerard v. The New York Banking Company, affirmed by the Chancellor, 2 Sandf. Ch, R., 28; Sagory v. Dubois, 3 id., 466, 485; Gillet v. Moody, 3 Comst., 479; Tracy v. Talmage, in Chancery, before the Chancellor. The case in which the Receiver was appointed for the North Am. Trust and Bank. Co.)
    4. It was within the general statute, entitled, “ Of the general powers, privileges and liabilities of corporations;” the third section of which prohibits, in express terms, the exercise of any corporate powers except such as shall be expressly granted, or shall be necessary to the exercise of the express power. (See §§ 33 and 34; 1 R. S., 599; took effect January 1, 1828; Talmage V. Pell, 3 Seld., 328.)
    IY. The transfer of the two notes to Ogden is absolutely void, because not authorized by a previous resolution of the Board of Directors. (1 R. S., 591, § 8; Gillet v. Moody, 3 Comst., 479;
      Gillet v. Phillips, 3 Kern., 114; Blunt v. Hanna, Opinion, Vice-Chan.; Sandf. in Pamphlet; Johnson v. Bush, 3 Barb. Ch. R., 209; Talmage v. Pell, 3 Seld., 328; Lessee of Clarke v. Courtney, 5 Peters, 319; Van Ness v. The Bank of the United States, 13 id., 17, 21.)
    1. This was a statute corporation, and was capable of exerting its faculties only in the manner which the law authorizes. (Head v. The Prov. Ins. Co., 2 Cranch, 127; N. Y. Fire Ins. Co. v. Ely, 2 Cow., 678; Phœnix Bank v. Curtis, 4 id., 437; Bank of Augusta v. Earle, 13 Peters; Bard v. Poole, 2 Kern., 497, 501; 2 Kent, 290; Williams v. Chester, &c., 5 Eng. L. & Eq. R., 497; Vielie v. Osgood, Paige, J., 8 Barb., 133; Voorhees v. The Presbyterian Church, &c., id., 148, 149.)
    And by the third section of the act it is provided that all the corporate powers shall be exercised by a Board of Trustees. (Act of 1844, see Sess. Laws, p. 229, § 3.)
    2. Where a power is created or its exercise is regulated by statute the authority must be strictly pursued in all respects or the attempted execution will be void. (1 Story’s Eq. J., §§ 96, 177; Bright v. Boyd, 1 Story R., 478; Vielie v. Osgood, 8 Barb., 133; Voorhees v. Presbyterian Church, id., 149; Atkins v. Kinnan, 20 Wend., 241; Owings v. Hull, 9 Peters, 607, 623; Williams v. Peyton, 4 Wheat., 79; Thatcher v. Powell, 6 id., 109; Ronkendorff v. Taylor, 4 Peters, 349; Jackson v. Shepard, 7 Cow., 88; Jackson v. Esty, 7 Wend., 148.)
    3. This principle applies to every individual or body whose powers are given or regulated by statute. (Cow. & Hill’s Notes to Phil. Ev., pp. 1288, 1289, 1290; Const. of 1846, art. 1, §§ 6, 7; Sharp v. Johnson, 4 Hill; Sharp v. Speir, id., 76; Denning v. Smith, 3 Johns. Ch., 332, 344; Sherwood v. Reade, 7 Hill, 431; Powell v. Tuttle, 3 Comst., 396; Hawley v. Bennett, 5 Paige R., 104; Arnot v. McClure, 4 Denio, 41; Miller v. Hull, id., 104; Jackson v. Clark, 7 Johns., 217; Fitch v. The Commissioners of Highways, 22 Wend., 132.)
    4. And the like principle in substance applies to conventional powers. (Fitch v. The Commissioners of Highways, 22 Wend., 132; 1 Eq. J., § 97; 2 Denio, 61; Ewin’s Appeal, 16 Penn. St. R., 266; Doolittle v. Lewis, 7 Johns. Ch. R., 45; 1 Sugden on Powers, 6 Lond. ed.; in Law Library, vol. 15, pp. 264, 268, 334, 341.)

      Y. It is obvious that the directors did not and could not delegate their powers to any officer of the corporation. (1 Sugden on Powers, 340, 341, 221, 225; Gilles v. Bailey, 1 Foster’s R., 150; Call v. Wades, 16 Vesey, 27; Pearson v. Jamison, 1 McLean’s R., 197; Graham v. Gibbeson, 10 Bing., 263; Hawkins v. Kemp, 3 East., 410; Powell v. Tuttle, 3 Comst., 396; Thompson v. Schemerhorn, 2 Seld., 92.)
    YI. The plaintiff is not within the saving clause of the 8th section, for he is not a purchaser for a valuable consideration and without notice.
    In the absence of a resolution, the officers have no authority to act in such a manner, and those who deal with the officers, without seeing that they have been duly authorized, act at the peril of acquiring no title, if there is, in fact, no resolution. (Blunt v. Hanna, opinion of Vice-Chancellor Sandford; Doolittle v. Lewis, 7 Johns. R., 45, 48; Williams v. Peyton, 4 Wheat., 77, 79, 80; Cow. & Hill’s Notes to Phill. Ev., 1288; Denning v. Smith, 3 Johns. Ch. R., 344; Wyman v. Hal. & Aug. Bank, 14 Mass. R., 58, 63; Salem Bank v. Gloucester Bank, 17 id., 28, 29.)
    VII. The transfer of the notes was void, because made by the Company when insolvent, or in contemplation of insolvency, with the intent of giving a preference to a particular creditor over other creditors of the Company, and the receiver is entitled to the property, for he represents both creditors and stockholders of the Company. (1 R. S., 4 ed., 115, § 9; 1 R. S., pt. 1, ch. 18, tit. 2, art. 1, p. 591, § 9; see also 1175, § 4; Gillet v. Moody, 3 Comst., 479.)
    The Company was clearly insolvent when these assignments were made, and always had been so. (Wheeler’s ev., and all the evidence.) It-cannot be pretended that insolvency was not contemplated when this transaction occurred. As all men are presumed to intend the natural result of their own acts, it must be deemed that the officers of the Company by whom the transfer was made intended to create a preference in favor of a particular creditor. Insolvency actually existed.
    Vni. The judgment is against law and evidence, and should be set aside with costs.
    The several exceptions to the rulings of his Honor the Judge, were well taken.

      Geo. W. Stevens, for respondent.
    I. The Insurance Company was authorized by its charter to transfer the notes received by it for the payment of losses or otherwise. (Laws of 1844, p. 231, § 11.)
    II. No previous resolution of the Board of Trustees authorizing the transfer of the note in suit was necessary. The silence of the Company amounted to a ratification of the acts of its officers (Howland v. Myer, 3 Comst., 290; Curtis v. Leavitt, 15 N. Y. R., 15; White v. Haight, 16 N. Y. R., 310.)
    III. The father of the plaintiff having advanced his money to the Company and received this note, (with others,) as security for his advances, was a holder in good faith, and. for a valuable consideration, and his transferee, (the plaintiff,) has good title to the note. (Curtis v. Leavitt, 15 N. Y. R., 15.)
    IY. The defendants having dealt directly with the Insurance Company, are estopped from denying the validity of its organization as a corporation. (Palmer v. Lawrence, 3 Sand., 161; McFarlan v. Triton Ins. Co., 4 Denio, 392.)
    Y. There is no evidence that at the time of the transfer of the notes to the elder Ogden, the Company was insolvent, or contemplated insolvency,- or that the transfer was made with the intent to give him the preference over any other creditor of the corporation.
   Moncrief, J.

It is proved, and there is no evidence tending to create any doubt as to the fact, that S. Gr. Ogden lent and advanced to the International Insurance Company $15,000 on the security of the note in suit, and of other notes. The money was lent, on an application made in behalf of the Company for it, and by its officers. The money lent was received by the Company, and there is no pretense that the .loan has been repaid.

Whatever representations may have been made by Del Banco to the defendants to induce them to subscribe, and however false and fraudulent they may have been, there is not the slightest ■ evidence that-S. Gr. Ogden had any notice or knowledge of them, or'the slightest reason to suppose they had been made.

On the contrary, he was told at the time of the application and loan, that “the Company was doing a good business; had many of the best subscribers, and was in need of money on the subscription notes -to pay losses; he agreed to advance the amount of money.” The negotiation in behalf of the Company was conducted by its President, in the presence of its Vice-President, and the money lent was paid for the Company, to its Secretary.

The evidence offered at folios 46-48, was doubtless offered to show, that the condition of the Company at the time the note was given, was such, that Del Banco’s representations must have been both false and fraudulent. But it could not have tended to show, that S. Gr. Ogden knew or should have suspected that false representations were made to induce the giving of the notes.

Immediately following these offers and exceptions; testimony was given by the defendants, apparently with a view to show such notice to S. Gr. Ogden, as would charge the notes in his hands with the consequences of the fraud. This implies that the Judge, in his discretion as to the order of proofs, called for some evidence on the question of notice, as a condition, to allowing the defendants to show the Company’s operations and condition, for the purpose of establishing the fraudulent character of Del Banco’s representations.

The evidence thus elicited, (and which is in no way impaired by any other evidence given or ’offered,) established, that S. Gr. Ogden was not only a holder for value, but in entire good faith, without the slightest reason to suspect that any representations had been made to the makers of the note to induce them to give it.

There was no offer to show that S. GL Ogden had any reason to suppose there was no resolution of the Board of Trustees authorizing the transfer.

The fact that S.. Gr. Ogden received the note from the officers of the Company, did not charge him with such notice, and the Court did not err in refusing to so charge. All dealings with a company are' done with its officers.

Such a resolution is not, under all circumstances, indispensable to a valid transfer. In Howland v. Myer, (3 Comst., 290,) the plaintiff dealt directly with the officers of the Company, and that case decided the precise point, that the absence of such a resolution would not defeat a recovery.

The Company transacted this kind of business in this manner : This note had been previously transferred to Krollpfeiffer & Borott, under similar circumstances, while Marsh was President. The Company took it np, and subsequently transferred it to the plaintiff; and neither the defendants nor the Company can. now object that it was negotiated with the indorsement of Marsh as President, instead of that of Starbuck, to give it negotiability. The indorsement was written while Marsh was President.

The note in suit, in respect to creditors of the Company, and in respect to persons taking it from the Company, in good faith, and in the usual course of business, is payable absolutely and in full. (White v. Haight, 16 N. Y. R., 324.) There is no error in the parts of the charge excepted to.

The first request to charge was properly declined. There is nothing tending to show that S. Gr. Ogden suspected the Company was insolvent, or contemplated reaching that condition.

The second request was also properly declined. The fact that a note is a subscription note, does not justify the inference that it was obtained by fraud, or was made on any conditions.

The third and fourth requests need no observations beyond those already made.

There was no evidence justifying such an instruction as the fifth request called for. -

The views already presented show that the Judge should not have charged in conformity-to the sixth request, and that the seventh does not state a tenable proposition.

The evidence contained in the case is meagre, and whatever doubts'may be raised by a casual reading of some of the exceptions, we think it is established, without contradiction or doubt, that S. Gr. Ogden was a holder for value, paid to the Company itself, in good faith, without the slightest reason to suspect that the Company was not in a prosperous condition, or that any misrepresentations had been made to induce the defendants to give the note, or that the officers who transferred it to him were not acting under such by-laws and resolutions as were necessary to formal accuracy, and the creation of full and perfect authority to do the acts which they performed.

An insurance company, whose capital consists almost entirely of notes, having a long time to run, and which is called upon from time to time to pay losses, must, from the necessity of the case, procure some of its notes to be discounted, or obtain temporary loans on their credit. One mode is as unobjectionable as the other m principle, and also in fact, if the money is procured at the same rates.

A resolution of the Company, adjusting a loss and directing its proper officer to pay it, would imply to a business man, without more specific instructions, a direction to obtain a discount or a loan.

In reference to such a transaction, the fact that no resolution was passed authorizing the transfer or discount of any specific notes, should not defeat the title of one who, in good faith, discounts it for, or loans money on its credit to the Company.

And unless we are not only at liberty, but are bound to disregard the decision in Howland v. Myer, (supra,) we must permit such a holder to recover. The Company, having received the $15,000 could not reclaim the note from Ogden without refunding the money.

And, as between the plaintiff and the defendants, the former, on the general principles of commercial law, is entitled to recover.

The judgment should be affirmed.

Bos worth, Ch. J., concurred in this opinion.

Hoffman, J.

The charter of the International Insurance Company, which was produced in evidence, and is referred to by counsel on both sides, dates back to the year 1844, (eh. 156;) was amended in 1847, (ch. 113;) and the name was changed from The Kings County Mutual Insurance Company, to the present title, in 1855 (ch. 295). By the last, act, the designation “ of Brooklyn,” as its locality, was stricken out, and the word “ New York” inserted. In other particulars these amending acts are unimportant.

The Company received by the original act the general powers of a corporation given by the 3d title of the 18th chapter of part 3d of the Revised Statutes; and also authority to make insurances on dwellings, &c., against fire; and marine' insurances upon vessels, &c.

■ Upon receiving applications for insurances to the amount of $100,000, the Company was to be organized. But no policy should be issued until _ the sum of $25,000 had been received, either for premiums or on the certificates which might be issued under the 12th section of the act, or from the avails of notes authorized' to be taken in advance for premiums, in and by the 11th section. (Ch. 156, § 11, Laws of 1844.)

By that 11th section, the Company, for the better security of its dealers, may receive notes for premiums in advance, of persons intending to receive its policies, and may negotiate such notes, for the purpose of paying claims or otherwise, in the course of business. On such portions of the said notes as might exceed the amount of premiums paid by the signers thereof, (at the period of the annual statement afterwards prescribed;) and on new notes taken in advance thereafter, - a compensation might be allowed to the signers not exceeding five per cent per annum, and be paid from time to time.

The system pointed out in the 12th section, of certificates issued for money received, need not be considered in the present case.

The history of the legislation of our State, as to what is termed insuring upon the mutual principle, is given in detail by Denio, Ch. J., in White v. Haight. (16 N. Y. R., 310.) The special charters granted with similar general features, and some particular modifications, down to the act of 1842 incorporating The Atlantic Mutual Insurance Company, are referred to, so far as to show the general regulation of the scheme. That act introduced a new feature, the one contained in the 11th section of the act, as to the present Company, and before stated at length. It was the 12th section in the charter of 1842. The learned Judge says: “The notes given under this 12th section have frequently been before the Courts, and it is perfectly well settled in the courts of original jurisdiction, and in this Court, that they are payable absolutely, and may be collected without any allegation of losses, and without an assessment.”

• 1. The first, and a very important question "is, whether the note was legally transferred and negotiated to Ogden within the provision mentioned.

In Howland v. Myer, (3 Comst., 290,) it was held that the statute did not restrict the Company to a negotiation for the purposes of payment merely. A Company might discount the note, and so apply its avails .in discharge of losses. It might transfer a note to the claimant of a loss. In a word, any bona fide settlement of a presumed loss, contingent or absolute, made with the dealers of the Company in the usual course of business, was authorized.-

In The Central Bank of Brooklyn v. Lang, (1 Bosw., 202,) the proof was of a delivery of the note sued upon, with several other notes, to the plaintiffs, who discounted them, and the proceeds were paid to the Insurance Company which had received them, to be applied to their general business purposes.

The proof here is of an actual loan by Ogden of' $15,000, to the Company, on a transfer of this and other notes; that he was informed the notes were subscription notes, and that a discount- was wanted to enable the Company to meet its losses. I think the proof warrants us in holding that Ogden took the notes ignorant of any intended misappropriation, and was authorized to consider'that the transfer was for a legitimate purpose.

The next point of importance relates to the authority of the President, Marsh, to indorse the note, so as to transfer the title of the Company to the plaintiff through S. Gr. Ogden, the elder.

The complaint alleges .an indorsement by the Company. The answer puts this allegation distinctly in issue. The testimony is, that the notes of the Company -were indorsed by the President. All the notes given to Ogden were indorsed by him. The note in question had been previously indorsed by Marsh, and lodged with Krollpfeiffer and Borott for money received by them, and had been taken up by the Company before the transfer to Ogden.

In The Central Bank of Brooklyn v. Lang, (ut supra,) the complaint averred the making.of a note in favor of the Company, its indorsement- by the Company, and an offer of it, with other notes to the plaintiffs, who discounted them in the regular course of business. These allegations, by not being denied, were admitted by the answer. The note was indorsed by the Vice-President.

In The Marine Bank v. Clements, (3 Bosw., 600,) the note was precisely in the form of the note in the present case, except being payable at the.Bank of Commerce. It was to the same Company, and was indorsed by Marsh, the President. The allegation in the complaint of an indorsement by the Company was expressly put in issue by the answer, and it was therein averred, that the note was indorsed, without a resolution of the Board, by the President, when the Company was insolvent, and to give a preference to the transferree, a creditor.

Ho resolution of the Board was proven, no by-law conferring authority on the President, no evidence that any notes belonging to the Company had ever been negotiated - and indorsed by the President, or that this had ever been done with the knowledge of the Directors, was produced. '

It was held, that the title of the Company had not been divested. It could only be by a transfer by some person authorized to indorse it in the name óf the Company, or who had been held out by the Company as .so authorized. This could be evidenced by his acts, and the usual practice of the Company. His office of President by itself showed no such power.

In Howland v. Myer, (ut supra,) both usage of the Company and its by-law in the case, were held sufficient to show authority in the President to indorse the note.

See also Partridge v. Badger. (25 Barb., 146.) I think that the evidence in the present does sufficiently )prove a usage, for -the President to indorse and negotiate the notes, sanctioned by the Company. •

There was no evidence in the case, and none offered to show that Ogden had’ reason to suppose there was no resolution of the Board for the transfer. The fact of his dealing with the officers is not enough to charge him with such notice, and the Court did not err in refusing so to charge.

3. Ho objection founded upon the original, irregular or unlawful or fraudulent organization of the Company, can' now avail the defendants. They recognized it, subscribed to its stock, dealt with it, gave the present note to it by its name, and that note has gone into the hands of a holder for value without notice proven to have been possessed by him of any such matters. (Palmer v. Lawrence, 3 Sandf. S. C. R., 161.)

4. The learned counsel of the defendants insists, that the transfer of the note was void under the 8th section of the act “ to prevent the insolvency of moneyed corporations,” because it was a transfer of effects exceeding in value $1,000, and was not authorized by a previous resolution of the Board of Directors, (1 R. S., 591, § 8,) and that the plaintiff is not within the exception contained in such section, not being a purchaser for a valuable consideration without notice.

Justice Comstock, in Curtis v. Leavitt, (15 N. Y. R., at p. 46,) says, that some of his brethren were of opinion that the holders of the securities in that case were purchasers within the act. They were pledgees of the bonds secured by a transfer of corporate assets. He says that he does not dissent from those views. Justice Brown deems it needless to pass upon it, but plainly leans in its favor. .Justice Shankland supports it, (p. 138,) and Justice Paige is extremely dear and decided upon the point (p. 192). In Howland v. Myer the plaintiff took the title from the President on account of his claim for a loss.

In Palmer v. Yates, (3 Sandf. S. C. R., 137,) it was held, that any person who, for what the law holds a valuable consideration, has acquired a title, whether legal or equitable, by an assignment or transfer from a moneyed corporation, is to be -deemed a purchaser within the meaning of the act, and this whether the assignment is made absolutely or as a collateral security.

It appears to me to be a well warranted proposition, that a party who advances money for the use of a corporation of this description and receives from it as collateral security notes taken and held as this note was, is a purchaser for valuable’ consideration within the exception in the 8th section, and is protected, unless it is affirmatively proven that he had notice of a want of a previous resolution. (See also Leavitt v. Blatchford, 17 N. Y. R., 521.)

As to that notice, Mr. Justice Paige considers that it should be as clear .and certain as that which is necessary to break in upon the registry acts. (Curtis v. Leavitt, 15 N. Y. R., 192.)

In Palmer v. Curtis, (ut supra,) it was held that there was no implication of knowledge, or duty to inquire, in an ordinary purchaser, although there might be in a director or officer. The omission to inquire was not sufficient. There must be, as a general rule, actual notice of the want of a resolution.

There is no evidence in this case sufficient to establish that Ogden had any notice of the want of a resolution.

It is not necessary to consider the important suggestion of Justice Gardiner, in Howland v. Myer, that if the 8th section is in conflict with the provisions of the charter, it must yield.

5. The next point is that the transfer was within the 9th section of the statute avoiding such transfer, when made in contemplation of. insolvency, giving a preference to creditors. (1 R. S., 591, § 9_

_ By section 61st of article 3d, (1 R. S. 598,) this Company was a moneyed corporation within the statute. By section 17th of its charter, sections 19 to 25, inclusive, were declared inapplicable to it. .

But Mr. Ogden, the party from whom the plaintiff got his title, did not occupy the position of a preexisting creditor. He created a debt from the Company to himself directly, by advancing' his money on the faith and pledge of these notes. (Leavitt v. Curtis, ut supra.)

6. Another point raised is as to the effect of the representations of Del Banco which induced the defendants to subscribe, and which it is alleged were false and fraudulent.

The Judge charged that if Ogden received the note for money advanced at the time, and without notice, then, although the representations were fraudulent and false and influenced the defendants, the plaintiff could recover.

The Jury had no evidence before them on which to found a verdict of Ogden’s knowledge of the fraudulent statements having been made. Whether then, they concluded that the defendants had been misled or not they were equally warranted in finding their verdict, Ogden being found ignorant of the false statements, and the charge of the Judge on this point we think was right.

Questions were asked by the defendants’ counsel tending to show an abstraction of a large amount of assets of the Company by its officers for their own use (folios 46, 48).. The effect of such proof would be to support the allegation of the false statements of Del' Banco, or to show the actual insolvency or rottenness of the Company. B.ut if Ogden did not know of the statements, and did not know of the insolvency, he could not. be affected. As to the latter, the Company was represented to him to be in a good condition, and nothing forces knowledge of' its actual state upon him.

The judgment must be affirmed.

Judgment affirmed.


author: By the Court—Bosworth, Ch. J.

text:
    McCullough, Plaintiff and Respondent, v. Colby et al, Appellants.
    1. Where an action is brought by a judgment creditor against the debtor and his grantee of real estate, to set aside the deed as fraudulent and void against creditors, the complaint cannot be amended so as to allege that after the service of the summons and complaint upon the debtor (the grantor), an execution was issued upon the judgment, although it. was issued before the summons and complaint were served on the grantee.
    2. Nor can that fact, when it occurs at such a stage of the action, be made a part of the case by supplemental complaint.
    3. When all the facts stated in a complaint, assuming them all to be true, will not entitle a plaintiff to any relief, a fact essential to the cause of action and occurring after the service of the summons and complaint on one of the defendants, cannot be incorporated into, the complaint by amending it, nor be made a part of the case by a supplemental complaint.
    (Before Bosworth, Ch. J., and Hoffman, Slosson, Woodruff, Pierrepont and Moncrief, J. J.)
    Heard, May 14;
    decided, May 28, 1859.
    This is an appeal from an order allowing a supplemental complaint to be filed, and vacating a previous order allowing the original complaint to be amended.
    The action is brought by the plaintiff as a judgment creditor of John L. Colby by judgment recovered March 27, 1857, to set aside a deed of land executed by John L. to Mary. Ann Colby, on the 24th'of Uovember, 1855, as fraudulent and void as against the creditors of John L.
    The original summons and complaint, (the latter being verified April 2, 1857,) named John L. Colby, Mary Ann Colby, George S. Fox and Joseph Walker, executors, &c., as defendants.
    Fox and Walker were made parties because they, as executors of Joseph Leggett, deceased, held a mortgage of this property executed by the said Mary Ann on the 23d of June, 1856.
    All of the defendants, except Mary Ann Colby, were served with the summons and complaint on the 4th of April, 1857, and said Mary Ann was served with copies thereof on the 6th of May, 1857.
    The said John L. put in a separate answer on the 22d of April, and the said Mary Ann also put in a separate answer on the 23d of May, 1857.
    The complaint did not aver that any execution had been issued on the judgment.
    The action came on to be tried on the 24th of March, 1859, and the omission of this allegation being suggested to be a fatal defect, the plaintiff, by order, was allowed to amend, and did amend his complaint, by alleging simply that an execution was issued on the judgment on the 11th of April, 1857.
    An answer was interposed to such amendment, admitting that an execution had been issued on said judgment on said 11th of _ April, and averring that this action was commenced prior to that date.
    Subsequently an order was made allowing the plaintiff to file a supplemental complaint stating the same matter, as had been inserted as aforesaid by way of an amendment of the original com•plaint, and vacating the order allowing the original complaint to be amended.
    From that order the present appeal is taken. The grounds urged in support of the order are stated in the opinion of the Court.

      William Curtis Noyes, for appellants.

      E. W. Stoughton, for respondent.
   By the Court—Bosworth, Ch. J.

This appeal should not be determined on the assumption that John L. Colby is not only not a necessary party, but that, the rights of the parties may be regarded as if he was not in fact a party.

Whether a necessary party or not, it is not denied that he is a proper party. Mor can it be denied that he may be charged with the costs of the action, (if the plaintiff succeeds,) as a party to the fraud charged in the complaint.

There is, then, a suit, in which the plaintiff has issued a summons against the persons named in it as defendants. He has declared against all of them as defendants. That complaint was verified on the 2d of April, 1857, and the summons and a copy of that complaint were served on John L. Colby on the 4th of that month, and on Mary Ann Colby on the 6th of May, 1857.

If, on the facts stated in the complaint, no cause of action exists against either defendant, and if no relief can be granted against either of-them on those facts, then it is well settled that facts occurring after suit brought cannot, either by amendment or by supplemental complaint, be made a part of the plaintiff’s case, nor will they enable him to maintain the.present action.

It is conceded, that if the facts stated in the complaint do not constitute a cause of action, no cause of action existed in favor of the plaintiff against either defendant,- when the summons and complaint were served on John L. Colby. The further facts, which, with those stated in the complaint, are essential, in this view, to constitute a cause of action against either defendant, occurred on the 11th of April, 1857. These facts cannot be inserted in the complaint, by an amendment, so as to affect John L. Colby. Facts occurring after suit brought cannot, under any circumstances, be incorporated into a complaint by way of amendment, nor can they be brought before the Court by supplemental complaint, when the original complaint -states no cause of action. Mo- party can recover in an action which was commenced when the cause of action had not accrued.

It is contended, however, that the action was not commenced as against Mary Ann Colby until the 6th of May, 1857; that John L. Colby is not a necessary party; and that as to her, the present appeal should be decided, as if he was not ip. fact a party. To this view, it may be answered,

1st. That John L. Colby is an actual party, and is a proper, if not a necessary party. The action had been at issue as to him nearly two years, when the order appealed from was made, and that order leaves him still an actual party to the action,

2d. Such a theory converts the action into as many several actions as there may be defendants who were served on different days; at all events, into two several actions, although commenced and still pending as a single action, and although brought to convict John L. and Mary Ann Colby of a joint fraud, and to obtain against each and both of them the relief, to which proof of that fact would entitle the plaintiff. A part of the relief that may be granted is a judgment against John L. Colby for the costs of the action. "

3d. When a complaint against several persons, as defendants, has been served on one of them, and especially when it has -been served on a defendant who is charged in it as being one of the principals in a fraudulent transaction, which it is the sole object of the action to avoid, that is the complaint of the plaintiff (until it is amended) against all the defendants. Pacts which occur after such a complaint has been so served, are facts “ occurring after the former complaint,” within the meaning of these words, as used in section 177 [152] of the Code. They cannot be set up by a supplemental complaint, if the former complaint would not, (assuming all the facts alleged in it to be true,) entitle the plaintiff to any relief against either defendant.

4th. Section 99 of the Code only declares when an action is commenced against each defendant, so as to preclude his setting up the statute of limitations as a defense. Within the meaning and object of this provision, the present action was not commenced against Mary Ann Colby until the 6th of May, 1857. The action then commenced against her was not one in which she was the sole defendant, but was one in which she and John L. Colby and others were defendants, and one in'which the plaintiff’s complaint existed as a pleading regularly made in it; and as a pleading which had been made as early as the 2d of April, 1857, and which, from that time until some time in. March, 1859, was the only complaint in the action, and the only pleading therein on his part.

A complaint may be filed before the summons is served. In such a case, the summons must state where the complaint is filed. (Code, § 130.) Had it been actually filed, when the summons was served on John L. Colby, we think it must have been conceded, that from the time of such service, it was a pleading of the plaintiff in the action duly filed of record; and that facts occurring subsequently thereto could not be incorporated into the complaint by amendment, or be brought before the Court by supplemental complaint, when the complaint filed stated no cause of action; any more than after bill filed, and the service of a subpoena to appear and an answer, on one of several defendants, the bill could be amended or a supplemental bill could be filed, stating facts which occurred after the bill was filed, when upon the bill itself no relief could be granted.

So after complaint filed, in an action like the present, a notice of the object of the action may be filed, to affect subsequent purchasers of the property, who might purchase pendente lite. Such a notice, to be effective, must state the names of the parties to the action. (Code, § 132.) If one had been filed, stating Mary Ann Colby to be the only defendant, it probably would not be effective for any purpose.

We think it quite clear that the facts originally inserted in the complaint, by way of amendment, could not be made the subject of such an amendment. They did not exist when the summons and complaint were served on all of the defendants, except Mary Ann Colby. As to them, these facts cannot be said to be facts which existed when the former complaint was made, and of which the plaintiff was then ignorant. As against those defendants, they cannot be alleged by way of supplemental complaint, because the complaint itself does not state facts enough to entitle the plaintiff to any relief. And it is 'only when a complaint states facts entitling a plaintiff to some relief, that facts subsequently occurring and material to the case, (and material because they affect the nature or extent of the relief to which the plaintiff, but for them, would be entitled,) can be set up by a supplemental complaint.

The facts stated in the supplemental complaint occurred after the former complaint,” and therefore the plaintiff could not set them up in this action as against Mary Ann Colby. The complaint, from the time of its service on John L. Colby, was as absolutely a pleading in the action against her as against him.

For the purpose of determining whether a cause of action existed when the action was commenced, it must be deemed to have been commenced on the 4th of April, 1857. If, on the facts then existing, no relief can be had against Mary Ann Colby, then no relief can be had against her in this action by reason of any facts which have occurred subsequently.

These views make it necessary to reverse the order appealed from, and to vacate the order allowing the complaint to be amended.

In making this decision, we must not be understood as expressing the opinion that this action cannot be sustained on proof of the facts stated in the complaint.

If it can be, the matter of the supplemental complaint is wholly immaterial to the plaintiff’s case, and is wholly irrelevant to the case made, and cannot in any manner affect his right to the relief sought, or the extent of the relief which it would be the duty of the Court to grant, on proof of the facts stated in the complaint.

So much of the order appealed from as allows a supplemental complaint to be filed must be reversed, and so much of it as vacated the order allowing the complaint to be amended, is affirmed.

Ordered accordingly.

Hoffman, J., dissented.


author: Bosworth, Ch. J.

text:
    John Moffatt v. Van Doren et al.

    1. In an action to recover possession of a pension, certificate issued to the plaintiff, it is no defense, either legal or equitable, that the plaintiff left such certificate with the defendants as security for goods thereafter sold and delivered by them to him, relying on such security, and that there is a balance due to them for such goods.
    3. Such facts do not create a lien in defendants’ favor upon the certificate, nor constitute a right to any relief in this action.
    3. Such facts, therefore, do not constitute a defense, or a counterclaim as defined by the Code.
    (At Special Term, June 10, 1859,
    before Bosworth, Ch, J.)
    This is a demurrer to the defendants’ answer. The case made by the complaint is, that a pension certificate has been duly granted and issued to the plaintiff by the government of the United States, pursuant to the acts of Congress in that behalf; that it is in the possession of the defendants, who, on demand made, refused to deliver to the plaintiff, and the judgment is prayed that they deliver it to the plaintiff, and pay damages for its detention.
    The answer states, as a defense, that the defendants sold and delivered goods to the plaintiff at his request, for which there was due, before this suit was commenced, a balance of $100.57; that such goods were sold and delivered on the security of such certificate, it being left with them by the plaintiff as such security, and it prays judgment against the plaintiff for such balance, and that they retain such certificate until the plaintiff pays the same, or the defendants have realized it from payments to be made upon said certificate.

      W. H. Browne, for plaintiff.

      N. P. Waring, for defendants.
   Bosworth, Ch. J.

The facts alleged in the answer constitute no defense to the plaintiff’s action. Assuming all of them to be true, the plaintiff is entitled uo the relief prayed for. -The alleged pledge, of the pension certificate was wholly void by act of Congress, and gave the defendants no lien thereon. (Payne v. Woodhull, 6 Duer, 169.)

Do they constitute a counterclaim? The action is one for equitable relief, and is not one arising on contract. íf the facts stated constitute a. counterclaim, it must be for the reason that they make such a case as is defined by subdivision 1 of section 150 of the Code.

Do they constitute a cause of action arising out of the transaction “ set forth in the complaint as the foundation of the plaintiff’s claim?”

The whole transaction set forth in the complaint as the foundation of the plaintiff’s claim, is, the grant to the plaintiff of the pension certificate, and the possession and wrongful detention of it by the defendants.

Proof of a grant of the certificate to the plaintiff) that it is in the possession of the defendants, and that, upon a demand made upon them to deliver it to the plaintiff, they refused to do so, not only entitles the plaintiff to recover, but makes a ease which renders it impossible, in the nature of things, for the defendants to-prove any facts which can operate as a bar to the action, or modify in any respect the plaintiff’s right to the whole relief sought.

• All this is set out in the complaint, except the particular facts constituting the alleged wrongful detention. The answer admits them all to be true, and then states the matters which (as the defendants aver) constitute the alleged wrongful detention. Those matters make a case of wrongful detention, and therefore, upon tile complaint, answer and demurrer, the plaintiff is entitled to the whole of the precise relief prayed for; and there are no facts stated . in- the answer which can affect, in any manner, the nature or extent of the relief to which the plaintiff would be otherwise entitled.

In the Xenia Branch Bank v. Lee, (2 Bosw., 694, and 7 Abb. Pr. R., 372,) proof óf the plaintiff’s claim, as alleged in the complaint, would disprove the alleged counterclaimand proof of the alleged counterclaim would disprove the plaintiff’s alleged cause of-action.

The transaction detailed in the complaint, put the paper title of the bills of exchange in question in the defendant.

The defendant’s counterclaim (in that case) literally arose out of the transaction detailed in the complaint. In other words, he claimed title to the bills, and sought to charge the plaintiffs as indorsers of them, by reason of the several indorsements and transfers of the bills detailed in the complaint.

The allegation in the complaint, that the defendant took them with notice of the plaintiff’s title, and of his own immediate indorser’s breach of duty, and as collateral security for a precedent debt, the answer denied. But whether he thus took them, or took them in good faith, without the notice imputed, and for value, were the matters to be determined to ascertain what, in truth, was the precise transaction which the complaint assumed to detail with accuracy, as to its several particulars.

As they should be determined the one way or the other, the plaintiffs or the defendant would be entitled to recover, and the right of either to recover, as thus established, would rest upon the transaction which the complaint purported to describe, and which it professed to set forth, as the foundation of the plaintiff’s claim.

In the present case, the only cause of action in favor of the defendants against the plaintiff, which can arise upon the facts stated in the answer, is for goods sold and delivered, and the utmost relief the defendants can have, is a judgment for the balance due to them. All the facts essential to the establishing of this cause of action are, the sale and delivery of goods by the defendants to the plaintiff, at his request, upon a credit which had expired before this suit was commenced, and that there was then a balance due therefor of $100.57, which still remains due and unpaid.

All else which the answer states, is irrelevant to this cause of action, because it in no way tends to prove it. This cause of action is not and cannot be affected by the consideration that the goods were sold on the security of this certificate, or by the consideration that the certificate was left as security after the goods had been sold and delivered, or that they had been sold and delivered without any security of any kind.

All the details stated in the answer, besides those mentioned as essential to all the 'cause of action the defendants have, are doubtless stated upon the theory, that all the facts alleged, (if admitted or proved to be true,) would entitle the defendants to all the affirmative- relief which their answer demands. But con' ceding that it is settled by Payne v. Woodhull, (supra,) that the most they are entitled to is a judgment in personam, for the balance due, then it must be admitted that' the averments as to the agreement for pledging the certificate as security, and selling goods upon the security of it, are irrelevant, and in no sense form any part of the facts essential to or which constitute the defendant’s cause of action.

They are not set forth in the complaint as any part of the transaction in which the plaintiff’s claim is founded. No one of them need be proved to establish the plaintiff’s case. Proving a part or all of them cannot add to or detract from the strength of the plaintiff’s claim.

It is not true, therefore, that the only and whole cause of action which the allegations of the answer (if true) establish in favor of the defendants against the plaintiff, arises wholly or in part out of any transaction which is set forth in the complaint.

Nor is it true that proof of any one fact or incident which is necessary to establish it, need be given to prove the plaintiff’s case.

All the claim and cause of action which the defendants have, is for goods sold and delivered on a credit which had expired before this suit was commenced.

The plaintiff’s whole claim rests, and in the complaint is alleged to rest on the facts; that a pension certificate has been granted to him under an act of Congress, which is in the defendants’ possession; and that they wrongfully detained it from the plaintiff. -j

I conclude, therefore, that the only cause of action which the answer describes, does not arise out of the transaction set forth in the complaint, as the foundation of the plaintiff’s claim.

Nor is it a cause of action “ connected with the subject of the action.” The subject of the action is the pension certificate.

The defendants’ cause of action is in no way connected with that. It is in no way dependent upon or affected by it; nor does it create any lien upon or right to it, or present any ground for relieving the defendants from any liability which the facts stated in the complaint, (if uncontradicted,) would impose upon them:

I do not think the Legislature intended or imagined that anything could be set up as a counterclaim under subdivision 1 of section 150, which, when established, would not, either at law or in equity, affect in any way the plaintiff’s right to the whole relief which the facts stated in his complaint would entitle him to demand.

I think it was the object of that section to enable a party defendant to have all the causes of action in his favor against the plaintiff, growing out of a transaction set forth as the foundation of the plaintiff’s claim determined, in one action, whether those claims on behalf of the defendant under the preexisting system, were claims to equitable relief, or at law or in equity constituted a partial defense or total bar.

But if the cause of action on the part of the defendants, when established, could not affect the plaintiff’s right to have a judgment, granting to him affirmatively all the relief to which, on proof of the facts stated in his complaint, he would be entitled, I do not think it was intended by that subdivision to allow such a claim to be set up as a counterclaim. (Gleason v. Moen, 2 Duer, 642, 643.)

. But it is possible that human transactions may present a case in which a defendant may have a counterclaim, according to the definition of it given by subdivision 1 of section 150, and that such counterclaim, when established, will not, according to the present rules of law, or of equity jurisprudence, affect the affirmative relief to which the facts stated in a complaint, (if proved as set forth,) would entitle the plaintiff.

However that may be, I think the answer neither states a defense legal or equitable, nor sets up a cause of action in favor of the defendants against the plaintiff, arising “ out of the transaction set forth in the complaint as the foundation of the plaintiff’s claim,” within the meaning of subdivision 1 of section 150 of the Code.

Judgment will, therefore, be entered in favor of the plaintiff against the defendants, upon the demurrer.

Ordered accordingly.


text:
    Marsh, Receiver, Plaintiff and Respondent, v. I. B. Hussey et al., Appellants.
    1. Where a receiver of the property of a judgment debtor has received notes -made and indorsed by third persons as being the property of such debtor, and subsequently, as such receiver, brings a suit on such notes, and one of the defendants, who answers separately, obtains a verdict, such receiver is not personally liable to pay the costs of such defendant, unless the Court orders him to pay them for mismanagement or bad faith in such action.
    2, Where such defendant issues an execution to collect the costs of the individual property of the receiver, when the Court has made no order directing him to pay them personally, it will be set aside as irr’egular.
    (Before Bosworth, Ch. J., Hoffman, Slosson and Moncrief, J. J.)
    Heard, June 11th;
    decided, June 25, 1859.
    Ah appeal "by the plaintiff from an order denying a motion made by him to set aside an execution for irregularity.
    William Marsh, the plaintiff, prior to commencing this action, was appointed by a Judge of this Court a receiver of the property and effects of one F. C. W. Wedekind. He was so appointed on proceedings supplementary to execution, in an action in which one Benjamin Marsh was plaintiff, and said Wedekind was defendant. Certain promissory notes made by “ I. B. Hussey & Co.,” alleged to consist of the defendants, “ Isaac B. Hussey and David Clark, had,” by indorsement of the payee thereof, come to the possession of Wedekind, and they were delivered by the latter to the plaintiff as such Receiver.
    In April, 1856, the plaintiff, as such Receiver, sired Isaac B. Hussey and David Clark as the makers of said notes, and also made the first indorsers, parties defendants. The defendant, David Clark, separately answered the complaint, and at the trial obtained a verdict.
    The moving affidavit states, winter alia, that the defendant Clark, “ on the 30th of October, 1858, recovered a judgment against this deponent, as such Receiver as aforesaid, for $80, costs of said action,” and on the 2d of November, 1858, without any order of the Court, issued an execution, directing the amount of the judgment to be collected from the individual property of the plaintiff; that the plaintiff, as such Receiver, never had any property or effects, except the notes on which this suit is brought; that before said execution was issued, the defendants’ attorneys demanded of him payment of the judgment, which he refused to pay, and stated, as the ground of such refusal, the facts above recited. Bosworth, Ch. J., before whom the motion to set the said execution aside was made, denied it, and assigned the fob lowing reasons, viz.:
    “ The plaintiff is not an 1 executor,’ 1 administrator,’ ‘ trustee of an express trust,’ nor 1 a person expressly authorized by the statute ’ to bring suits.

      “ He is not protected by section 317 of the Code from the consequences which section 305 visits upon a plaintiff who brings an action for the recovery of money, (§ 304, sub. 4,) and has a verdict pass against him.
    “ Before the Code, a Receiver, who sued at law without previous leave of the Court, paid costs as a matter of course. Sections 304 (sub. 4) and 305 leave him, in this respect, precisely as the preexisting law did.”
    From the order denying that motion, the plaintiff appealed to the General Term.

      A. K. Hadley, for the appellant,
    Cited 3 Seld., 294; 2 id., 236; 5 id., 142, as holding that the plaintiff is a trustee of an express trust; and Laws of 1845, (pp. 90, 91, § 2,) in support of the proposition that he is “ a person expressly authorized by statute” to bring an action.
    • To show that the execution was irregular, he cited the Code, § 317; 6 Hill, 386; 12 How. Pr. R., 301; id., 305; 9 id., 344; and 5 Duer, 648.
    G. T. Jenks, for respondent.
   By the Court—Bosworth, Ch. J.

The second section of chapter 112 of the Laws of 1845, (p. 91,) authorizes a Receiver to sue in his own name for any debt, claim or demand transferred to him, or to the possession or control of which he is entitled as such Receiver. The plaintiff being a Receiver, and being expressly authorized by statute to sue in his own name, the notes' in question, he is not personally liable to the defendants for their costs of' the action, .unless the Court directs the same,to,be paid by him personally, “for mismanagement or bad faith in such action.” (Code, § 317.) The Court has not so-ordered. ■ The execution, therefore, was irregularly issued. The order appealed from must be reversed, and the .execution be set aside.

Ordered accordingly.