Houghton v Dodge et al.

not without restoring him to the position he was in when the settlement was made.

Proof, uncontradicted and unexplained, that "the Company used the note which Avery gave for the balance of the account;" that "they paid it to the Globe Insurance Company, in payment of a debt which they owed to the Globe Company," imports that such transfer was made in a manner authorized by law and the charter and by-laws of the Company. The amount of the note so transferred is $4,361. If a previous resolution of the Board of Directors was essential to a legal and valid transfer of it, the passage of such a resolution authorizing the transfer must be presumed upon such evidence as is above stated. If the Board of Directors passed such a resolution, then, inasmuch as it appears that some of the Directors knew for what the note was given at the time it was made, and considering the evidence tending to show that all of them probably knew the nature and particulars of the settlement made with Avery, the act of the Company in transferring the note is such a ratification of such settlement that these defendants cannot succeed on the mere ground that it was a nullity as between Avery and the Company. As the case is now presented, that is their only defense; and if that defense is not established, they have no defense.

It must be borne in mind that no evidence was given tending to show that any person has preferred any claim against the defendants as makers of the note in question, and that their whole and only defense is that the note in suit "was taken from the International Insurance Company by the unauthorized act of one of the officers thereof, who converted the same to his own use, and that the property therein has never passed to the plaintiff or to any other person."

The evidence given not only fails to establish the alleged fact on which the defense is rested, but, on the contrary, it proves an ownership of the note by Avery on the 21st of April, 1856, prima facie valid.

A suit, instituted by the Receiver of the International Insurance Company, on the 31st of October, 1856, (the time this suit was brought,) to recover the possession of this note from Avery, (if he had then held it,) on the ground that it belonged to the Company, could not be maintained on the evidence given

Houghton v. Dodge et al.

in this action, if there were no other evidence in support of such action.

The case of Houghton v. McAuliff et al., (decided in February, 1859,) is unlike the present in this respect. In that case there was no evidence that the Company had ever negotiated the note received from Avery, or had done any act by which they had treated or recognized it as the property of the Company, or as having been accepted with the sanction or by the authority of the Company.

The note, although not indorsed by the Company, could be sold to Avery and made his property; and although not indorsed so that an action would lie, at common law, in his name or in the name of a subsequent holder, yet any such holder, who was the actual owner, could sue upon it, in his own name, under the Code. (§ 111.)

It cannot be denied that it is competent for such a Company to sue any person who has wrongfully converted a note which belongs to it. Nor can it be denied that such a suit, followed by a judgment in favor of the Company and payment of the judg ment, would vest in the person thus converting it, (after judgment and payment of the judgment,) exclusive property in the note as owner of it.

If he were to sue the maker subsequently, it cannot be possible that the maker could set up, as a defense, that it had been transferred to such plaintiff without the authority of a previous resolution of the Board of Trustees authorizing the transfer.

It was not intended by 1st Revised Statutes, (p. 591, §8,) to incapacitate a moneyed corporation from settling claims for a conversion of or injury to its property, as natural persons may do; or through the action of such committees or officers as the Company might select for that purpose; or in any manner which, by the rules of the common law, would be obligatory and conclusive upon both parties.

The time of the transfer by the International Insurance Company to the Globe Company of Avery's note of the 21st of April, 1856, is not stated. The inference from the testimony given is, that the transfer was made before the maturity of the note, as the evidence is that it was transferred "in payment of a debt which they owed to the Globe Company." The testimony is that

Houghton v. Dodge et al.

the International Insurance Company transferred it; and the only presumption admissible is, that the transfer was regular and in all respects according to law, and valid. The inference must also be, as the contrary was not alleged, that the note was paid at maturity.

It is difficult to conceive of any act of ratification more explicit and decisive, short of a formal resolution of the Board of Trustees, in terms approving of and confirming the settlement.

We think that the negotiation of this note by the Company, according to law and its charter and by-laws, with a knowledge of the circumstances under which, and of the particulars of the settlement as part of which, it was given and accepted, perfected Avery's ownership of it.

At all events, it establishes, prima facie, that the title to the note was in Avery on and after the settlement between him and the Company; and more evidence is necessary than was given to prove the fact that the Company was never divested of its title to such note.

The title of P. J. Avery to the note being, as between him and the Company, prima facie, absolute and perfect, the title of the present plaintiff is apparently complete.

There is, certainly, no such defect of title as will enable the defendants to succeed on that ground alone. As the case is now presented, the only defense that can be pretended is that the title to the note is still in the Company, or in the Receiver of its property and effects, if one has been appointed. That defense not having been proved, the dismissal of the complaint was erro

neous.

We reverse the judgment, on the grounds that, upon the evidence given, it must be deemed to be proved that the Company negotiated the note received from Avery, with a notice of the terms upon which it was given and accepted, and thereby ratified the settlement made between its officers and Avery, and vested in him a title to the note in suit, prima facie valid; and that no evidence was given to impair the prima facie title thus established. Judgment reversed and new trial granted, with costs to abide the event.

Butterworth, Receiver, &c., v. Peck et al.

JOHN F. BUTTERWORTH, Receiver of the Island City Bank, Plaintiff and Respondent, v. ZACHARY PECK and NATHANIEL TERPENNY, Defendants and Appellants.

1. The drawing of a check on a Bank by one who keeps an account in it, and has, at the time, moneys to the same or a larger amount to his credit on its books, and a delivery of the check to the person named in it as payee, do not, of themselves, operate as an assignment to such payee of the title to any of the moneys thus standing to the credit of the drawer of the check.

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

Heard, November 1; decided, November 12, 1859.

THIS is an appeal by Zachary Peck and Nathaniel Terpenny, (the defendants,) from a judgment in favor of John F. Butterworth, Receiver of the Island City Bank, (the plaintiff,) entered on a verdict rendered on a trial had before Mr. Justice WOODRUFF and a jury, March 10, 1859.

The action is on a note for $1,000, dated July 16, 1857, made by Peck, and payable to the order of Terpenny three months after its date.

The Bank discounted the note for Terpenny, and $280 of its proceeds were standing to Terpenny's credit on the books of the Bank, when it become insolvent-he being a stockholder of the Bank, and keeping an account in it. It was admitted to have become insolvent on or before the 25th of September, 1857, and that Butterworth was then appointed a Receiver of its effects.

The note was made without consideration, and solely to accommodate Terpenny. Before the maturity of the note, the Bank declared a dividend of $70 in favor of Terpenny, and this sum and the $280 were standing to his credit on the books of the Bank when the note matured. On the 2d of September, 1857, Terpenny drew his two several checks on said Bank, and delivered them to Peck-one being for the $280, and the other for the $70; and at the same time indorsed and delivered to Peck a check of the same date, drawn on said Bank by one Thomas J. Mooney to Terpenny's order, for $700. The last named check was drawn against funds on deposit to Mooney's credit in said Bank.

Butterworth, Receiver, &c., v. Peck et al.

Peck presented these three checks to the Bank on the 2d or 3d of September, 1857, for payment, and payment was refused. At the maturity of the note, he offered them at the Bank of the Republic, where the note in suit then was, in payment of said note; and made a like offer of them to the Receiver before this action was commenced, and both offers were declined. The defendants offered these three checks in evidence: the Judge admitted the checks for $280 and $70; and the plaintiff excepted. The Judge excluded the check for $700; and the defendants excepted. The Judge charged the jury that the checks for $280 and $70 were properly chargeable against the note," but that the check for $700 was not, and that it could not be allowed as a set-off, or counterclaim that they should render a verdict for the plaintiff for the amount of the note and interest, less the two checks for $280 and $70. The defendants excepted to so much of the charge as relates to the Mooney check: the plaintiff did not except to any part of it. The jury rendered a verdict for the plaintiff for $712.44; and, from the judgment entered on that verdict, the present appeal is taken. No question arose upon the pleadings.

G. Clark, for appellants,

Insisted that the drawing of the check by Mooney in favor of Terpenny operated as an assignment to Terpenny of that amount of Mooney's funds held by the Bank, and cited 3 J. C., 264; id., 5; 6 Cow., 484, 485; 3 Kent Com., 104, note a; 2 Story's R., 502, 516, 517; 1 Barb. R., 454; 1 E. D. Smith, 273; 1 Hill, 583-585; 1 Ves., 280, 332; 9 Cow., 414.

C. A. Peabody, for respondent,

Contended that a check drawn on a person having funds of, or being indebted to the drawer, does not, alone, transfer them to the payee of the check; and cited and commented on 5 Duer, 574; 26 Penn. R., 85; 11 Paige, 612; 3 Comst., 93; id., 243; 3 J. C., 5.

BY THE COURT-HOFFMAN, J. The only question presented to the Court relates to the check of $700, drawn by Mooney in favor of Terpenny upon the Bank, and transferred to Peck. Is this check, or the amount expressed in it, a proper set-off, or counterclaim, against the note sued upon?