Lawrenceville Cement Co. v. Parker — 32 N.Y. St. Rep. 234

Majority

p. 234

The Lawrenceville Cement Co., Resp’t, v. Samuel Webber Parker, App’lt.

(City Court of New York, General Term

Filed June 3, 1890.)

Headnote

Bills and notes — Discount by corporation.

In an action upon promissory notes one of the defenses was that plaintiff was not a banking corporation and had discounted the notes. Defendant was the only witness. The n~tes were made to one S., who was plaintiff's president, who gave its checks to his "order therefor, and there was no proof that the corporation authorized or ratified his act. The court found that S., without authority, misappropriated the corporate moneys and made reparation by delivering the notes to plaintiff. Held, that as the transaction admitted of two interpretations, it was for the court to determine which was correct; that it was not bound to believe defendant, as he was interested, and that a case was not made out sufficiently clear to warrant a finding that the statute applied and the notes were void.

Appeal from judgment rendered at special term, by the court, without a jury.

B. Doran Killian and M. H. Cardozo, for app’lt; Arnoux, Hitch & Woodford, for resp’t.

This is an appeal from judgments rendered at trial term, in four actions, the defenses being similar.

The first defense is usury, but no corrupt agreement was proved, and the difference between the interest exacted and the legal rate was so slight that the error may well be attributed to mistake in calculation, rather than to intention or to criminal misconduct. The real defense is that the plaintiff is not a banking corporation and discounted the notes in suit. The answer does not refer to the statute, but it is evidently intended that by force of the statute the discount was invalid.

The difficulty we encounter in respect to this defense is twofold. First, the defendant was the only witness, and being directly interested in the result, the trial judge was not bound to believe him. Dext, there is no legal evidence showing a discount of the notes by the plaintiff. The transaction was had by the defendant on the one hand and David Scott, the payee of the note, on the other.

True, Scott was the president of the corporation and gave the defendant its checks, but they were signed by him alone, and there is no direct evidence that the corporation authorized, sanctioned or approved of his act, and the act being an illegal one, the presumption would naturally be against such authority or approval. Scott’s knowledge is not imputable to the plaintiff. See Atlantic State Bank v. Savery, 82 N. Y., 291 . The conduct of Scott, the payee, admits of two interpretations; one that he did the act for the corporation under what he supposed to be his authority as such ; next, that it was not a corporate act, but an individual act of his own, (the notes not

p. 235

being payable to the corporation, but to his own individual order, and bearing his individual endorsements on which he was individually liable), and that he, without authority from the corporation, misappropriated its moneys by giving them to the defendant, in which case the corporation might have sued him for the misappropriation or might have traced the funds so misappropriated by the trustee into the hands of the defendant, or into any security to which they could be identified. Such is tile fact as found by the trial judge, and as the transaction admits of two interpretations it was for the trial court to determine which was correct. The trial judge also finds that Scott subsequently made reparation for the wrong, by delivering the notes over to the plaintiff. The facts admit of this construction. The checks were also payable to Scott’s order, so that the documentary proofs show an individual transaction between Scott and the defendant. " It was neither alleged nor proved that the transaction was to evade the statute, or that the plaintiff was privy to any such intent. The law favors an innocent rather than a wrongful construction of the acts of parties. It does not avor forfeitures, and equity often relieves from them.

The defendant seeks by technical pleas to defeat the collection of honest obligations to pay, and is entitled to no especial favor from the court in aid of his design. The defense is devoid of merit, and has no equity to commend it As we remarked before, the defendant was the only witness, and being interested, the trial judge was not bound to accept his interpretation of the transaction through which-he sought to avoid the payment of money he ought to have restored, and that promptly, at maturity. This is particularly so in view of the fact that Scott, the payee, is dead. The court of appeals has shown a disposition to reheve from the penalties of the statute where it can consistently be done. See Rome Savings Bank v. Krug, 102 N. Y., at p. 335 ; 1 N. Y. State Rep., 694. The evidence in the present instance fails to make a case sufficiently clear to warrant us in holding that the statute is applicable, and that the notes are void. Upon the entire record, we find that no injustice was done, the result is sufficiently sustained by the proofs, and the judgments must be affirmed, with costs.

McG-own and Fitzsimons, JJ., concur.