Brower v. Brooklyn Trust Co. — 50 N.Y. St. Rep. 630

Majority

p. 630

George V. Brower, Receiver, App'lt, v. The Brooklyn Trust Co. et al., Resp'ts, Impl'd with Joseph D. Baucus et al., App'lts.

(Supreme Court, General Term, Second Department,

Filed December 12, 1892.)

Headnote

Cokpobations—Mortgage.

Where the advances to secure which the mortgage was given were made to the company on the faith of a promise by an officer of such company to secure them by such mortgage, the mortgage, though made when the company was actually insolvent, and known to be so, is not, within the meaning of the statute, made “ in contemplation of insolvency.”

Appeals from judgment entered on decision of the court, and especially from so much thereof as dismisses the complaint as to defendant, Husted.

This action was brought by the plaintiff, as receiver of the Ridgewood Ice Company, to set aside three mortgages, viz.: One for $140,000 made by it to the Brooklyn Trust Company, as trustee, etc., to secure a series of 140 bonds of $1,000 each; one to William A. Husted for $126,800, with interest at six per cent, payable half yearly, and bearing date October 4, 1890; and one for $167,085 to James R. Downer, as trustee, etc., to secure a large number of the creditors of the company.

The mortgage to Husted is assailed on the ground that it was made because or in anticipation of the company’s insolvency, and, therefore, void under the prohibition of the statute relating to corporations and the disposition of their property when insolvent or in contemplation of it.

The allegations of the plaintiff with reference to the Husted mortgage are met by the answer of Husted, in which he sets forth that the mortgage to him was made in pursuance of agreements made by the company with him, and with Samuel D. Coykendall, president of the Cornell Steamboat Company, respectively, under which moneys amounting to upwards of $160,000 were loaned to the company in consideration of which the company agreed, before the money was loaned, to give a mortgage upon its property as security.

Husted further alleged that these various loans were reduced by payments, until there remained unpaid, of the amounts loaned by him, the sum of $29,000, and of the amounts loaned by Coykendall, the sum of $79,100, and that Coykendall transferred the balance due him to Hasted, and that the mortgage was given to secure the moneys actually due.

J. T. Marean, for app’lt,

Brower; Edgar T. Brackett, for app’lts,

Baucus and Yoyer; Henry Daily, Jr., for resp’t,

Husted; James G. Bergen, for resp’t, Brooidyn Trust Co.

The main question presented by the appeals is as to the validity of the Husted mortgage. It was found by the trial court, upon evidence amply justifying such finding, that the advances, to secure which the mortgage was given, were made to the Ridgewood Ice Company upon the faith of a promise by an officer of the company to secure them by such mortgage. The

p. 631

authority of such officer to bind the corporation cannot be questioned, the corporation, and indirectly its creditors, having had the benefit of the advances.

These facts bring the case within the authority of Paulding v. The Chrome Steel Co., 94 N. Y., 334 , that such a mortgage, though made when the corporation was actually insolvent and known to be so, is not, within the meaning of the statute, made “ in contemplation of insolvency.” Ho sound distinction can be made between the case cited and the case at bar.

There may be doubt as to the question raised by the failure of the Brooklyn Trust Company to file a true copy of its mortgage within the year, yet we cannot see that such failure resulted in any harm to the appellants.

We, therefore, think the judgment should be affirmed.

Dykman, J., concurs; Barnard, P. J., not sitting.