Scott et al. v. Johnson.

now made. To have set these letters out in the complaint would have been pleading matters of evidence.

The same remarks apply to the admission of the conversation of the witness with the defendants, upon the same subject of the discharge of the rosin.

The exceptions as to the inquiry, what would be a reasonable time for discharging the rosin, are clearly untenable. Those as to the expense of keeping the rosin and schooner are equally so. The judgment must be affirmed. Judgment affirmed.

WILLIAM B. SCOTT et al., Plaintiffs, v. JONATHAN T. JOHNSON, Defendant.

1. An Insurance Company which, by the terms of its charter, is authorized,. for the better security of dealers, to receive notes for premiums in advance from those who intend to receive its policies, and to negotiate such notes for the purpose of paying claims or otherwise in the course of its business, has power to transfer such notes as security for the repayment of a loan of money made to the Company, and received and applied to the payment of losses, expenses, &c., in the ordinary conduct of its business.' 2. When it is proved that it is the uniform practice of such a Company to transfer notes, negotiated in its business, by an indorsement in this form, "For the Company, A. B., President," such proof is prima facie evidence of authority in the President to indorse notes held by the Company, by way of transfer; and such indorsement is sufficient to confer the title on one who receives a note from the Company in good faith, and advances to them money thereon.

3. A person who lent money to such Company, in good faith, on the transfer to him, as collateral security, of subscription notes given for premiums in advance, amounting to over $1,000, and without any notice that there had been no previous resolution of the Board of Directors authorizing the transfer, is entitled to recover thereon against the makers, although no such resolution had been passed.

4. Where there is no allegation in the answer under which usury between the Company in such ease and the lender can be available as a defense, it is not error to reject evidence of the rate of interest charged on the loan. If

1 Holbrook v. Basset, ante, p. 147.

Scott et al. v. Johnson.

proof that the lender charged more than seven per cent per annum is not admissible to establish usury, it is not relevant for any purpose: it has no bearing on the question whether the plaintiff is a bona fide holder in any other aspect.

5. Whether, under a statute which forbids a corporation to interpose the defense of usury, a transaction, otherwise void for usury, is not entirely valid? and whether a third person can, for the purpose of affecting the title of the holder of a promissory note, allege and prove that he took it from a corporation and holds it under a usurious contract? Quære.

6. It seems, that, under the statute last mentioned, if a maker of a note has no defense thereto in the hands of the corporation, he cannot, when sued thereon by an indorsee, allege and prove usury between the corporation and such indorsee. The title of the indorsee, being good as against the corporation, is good as against the maker.

(Before HOFFMAN, WOODRUFF, and PIERREPONT, J. J.)

Heard May 5th; decided, July 28th, 1859.

ACTION by the plaintiff, as indorsee of a promissory note made by the defendant, for $756, dated January 2, 1856, payable to the order of the International Insurance Company, and alleged in the complaint to have been indorsed to the plaintiffs by the payee, with a further averment that the plaintiffs are now the lawful holders and owners thereof.

The answer "denies that the payees of the note indorsed the same, as alleged in the complaint," and denies that the plaintiffs are the lawful holders and owners thereof, or that the defendant is indebted to them thereon, but says that "the International Insurance Company, mentioned therein, is the owner of the note, and alone entitled to sue thereon, inasmuch as, he says, the said note was indorsed and delivered to the plaintiffs as collateral security for a loan of a sum exceeding $2,000, made by the plaintiffs to the said Company;" that the said Company is a moneyed corporation, &c., &c.; that, at the same time with the indorsement and delivery of the said note, other notes, amounting to more than $7,000, were, by the same transaction, and as collateral security for the same loan, indorsed and transferred to said plaintiffs; that the indorsement, transfer and delivery of all the notes aforesaid was without any previous resolution of the Board of Directors authorizing the same, and was null and void; of all which the plaintiffs had notice at the time of such indorsement and delivery.

Scott et al. v. Jolinson.

The action was tried on the 16th day of February, 1859, before Mr. Justice PIERREPONT and a jury.

The 11th section of the charter of the International Insurance Company authorized the Company, "for the better security of its dealers, to receive notes for premiums, in advance, of persons intending to receive its policies, and to negotiate such notes for the purpose of paying claims, or otherwise, in the course of its business." (Sess. Laws, 1844, p. 231; id., 1855, p. 505.)

The evidence showed that the note in suit was given to that Company by the defendant for premiums in advance, and that, at some time prior to June, 1856, it was indorsed for the Company by the President, in these words: "For the International Ins. Co. M. Starbuck, Prest. ;" and, together with other notes, (amounting, in all, to $8,215,) was delivered to the plaintiffs as security for the repayment of money loaned to the Company by the plaintiffs, and which money "was received by the Company, and was applied to its ordinary business, the payment of loans, expenses, &c. ;" and, on the 30th day of June, the loan so made was reduced by the Company to $2,800, and the note of the Company, executed by Ogden, their Vice-President, was given to the plaintiffs therefor, and the notes were still left in the hands of the plaintiffs to secure the payment.

It was shown that the negotiation and indorsement of notes by the President or Vice-President was according to the usage of the Company; that that was the way in which all their business was done, and that no resolution of the Board of Directors was passed authorizing this or any of the transfers of notes by the Company, with this qualification, that on the 3d of May, 1852, after a report had been made to the Board of Directors showing the disposition by the officers of various notes which had been received for premiums in advance, a resolution was passed approving and ratifying such disposition, and authorizing the officers "to pay away or negotiate such notes held by the Company, in the further settlement of claims for losses and the debts of the Company;" and the 1st section of the by-laws, adopted December 3d, 1845, was read in evidence, as follows: "Sec. 1. It shall be the duty of the President or VicePresident to preside at all meetings of the Board of Trustees, and to perform whatever belongs to the executive department of

Scott et al. v. Johnson.

the Board, and they or either of them shall have authority to make insurances and sign the policies and contracts of the Com pany, and transact all its ordinary concerns, and be, ex officio, members of all committees, except those relating to the examination of accounts."

In the progress of the trial, the defendant's counsel inquired of a witness, "What was the rate of interest upon the loan made to the Company" (i. e., by the plaintiffs,) "upon these notes?" The plaintiffs' objection to the question was sustained, and the defendant excepted.

The defendant's counsel also offered in evidence a resolution of the Board of Trustees of the Company, passed June 27, 1856, reciting that the President (Starbuck) had violated the duties of his office by the issue of certificates of stock unauthorized by the Board, and has also issued promissory notes of the Company without a previous resolution, and resolving that he be suspended in his functions as President, and that Charles W. Ogden (the then Vice-President) act as President till the further order of the Board.

On objection from the plaintiffs, the evidence was excluded, and the defendant excepted.

When the parties rested, the defendant's counsel moved to dismiss the complaint, on the grounds

That no authority was shown in the President to indorse the note. That there was no previous resolution of the Board of Trustees, and,

That the face of the paper gave notice to the person taking it. Which motion was opposed by plaintiffs' counsel.

Before the motion was disposed of, the defendant's counsel admitted, as a part of the case, that the plaintiffs advanced the money in good faith when they took the note, and that they had no actual notice of the want of a resolution of the Board of Trustees, or other notice, except what might be derived from the nature of the transaction.

It was also stated by the counsel on both sides, that in their judgment there was no question of fact for the jury to pass upon. And the counsel on each side then asked that the Court should instruct the jury that they were respectively entitled to

a verdict.

Scott et al. v. Johnson.

And thereupon the said Justice directed the jury to find a verdict for the defendant. To which direction the plaintiffs then and there excepted. The jury thereupon found a verdict for the defendant.

And the said Justice directed the exceptions to be first heard at the General Term, counsel on both sides stipulating, and the Court directing, that judgment be there entered for the defendant, or the verdict be set aside and judgment entered for the plaintiffs for the amount of the note and interest and costs, or a new trial ordered, as the Court may be advised; and in the meantime that the entry of the judgment be suspended.

George C. Goddard, for plaintiffs.

I. The 8th section of the first article of the act in relation to moneyed corporations, (1 R. S., 591,) does not apply to the case. As by the section itself it is declared not to apply, first, to the issuing of promissory notes by the officers of the Company in the transaction of its ordinary business; nor, second, to transfers for value without notice.

1. This case is within the first exception. (Brouwer v. Harbeck, 1 Duer, 114; reversed, 5 Seld., 589; but not on this point, on which it was impliedly affirmed.)

2. It was also within the second exception. (Howland v. Myer, 3 Comst., 290, affirming 2 Sandf., 180.)

II. The 11th section of the charter authorized the transaction. This dispensed with a previous resolution. (Howland v. Myer, 3 Comst., 293; Brouwer v. Harbeck, 5 Seld., 591; 1 Duer, 114.) III. The transfer of the note by the indorsement of the President was valid.

1. The 3d section of the charter (Laws of 1844, p. 229,) provides that "all the corporate powers of the said Company shall be exercised by a Board of Trustees and such officers and agents as they may appoint."

2. The uniform usage of the Company sanctioned it. (Hoyt v. Thompson, 1 Seld., 333, reversing the decision of this Court, but not on this point; Wood v. The Auburn and Rochester R. R. Co., 4 Seld., 167; Paley on Agency, Dunlap's ed., 162; Angel & Ames on Corp., 240, &c.; Conover v. Mutual Ins. Co. of Albany, 1 Comst., 290, 292; Brouwer v. Harbeck, 1 Duer, 114.)