Davis v. West Saratoga Building Union, No. 3

Stewart, J., delivered the opinion of the Court. The note, upon which the appellee in this case was sued, purports to be a negotiable instrument, signed by certain persons, professing to be the officers of the West Saratoga Building Union, No. 3, and payable to Heck, who endorsed the same, and it is alleged was passed to the appellant, the plaintiff below, for a valuable consideration before maturity. There was proof tending to show that the parties who signed the instrument, were the president, treasurer and secretary of the corporation, and that they had before issued notes of the same sort, one of which the appellant had received, and which was paid. The note in question, it appears, was drawn with a view of raising money to meet an antecedent obligation, which the company had incurred for one of its members, to whom it had loaned money and taken a mortgage to secure the re-payment.

It is maintained by the appellee, that as a corporation it ■was not authorized by its charter to issue the promissory note in question, and that the officers of the company, who issued the note, transcended their powers in doing so; and secondly, that the note was entrusted to Brocker, with the date left blank, to prevent its negotiability, merely for the purpose of ²⁹³ ascertaining if the money could be obtained upon the note, and to make report to the officers to that effect, but that he was not authorized to transfer the note to the appellant or other party. If these officers of the company had the power to issue the note, and did do so, and placed it in the hands of Brocker, with special instructions as to the use to be made of it, and the note was transferred by Brocker to the appellant, before its maturity, for a valuable consideration, who received it bona fide, without knowledge upon his part of the restrictions imposed upon the party by the makers of the note, he is entitled to recover thereon, as an innocent holder who had purchased the note for value, although the officers of the company may have been deceived and defrauded by the party to whom they had confided the note. “ A bona fide holder for value, without notice, is entitled to recover on any negotiable instrument, which he has received before it became due, notwithstanding any defect or infirmity in the title of the person from whom he derived it, as for example, even though such person may have acquired it by fraud, or even by theft, or by robbery. Story on Prom. Notes, secs. 191, 192.

The corporation in question, according to its certificate, bearing date 15th of May, 1868, required by the 37th sec. of ch. 471 of the Act of 1868, became incorporated, under the general law for that purpose, under the name of West Saratoga Building Union, No. 3, “ for the accumulation of a fund by the savings of the members thereof, sufficient to enable them to purchase for themselves, respectively, real or leasehold property, and generally for the purpose of a building association, and subject in all particulars to the limitations relating to corporations, which are contained in the general laws of the State.” Under sec. 18 of ch. 471, of this general Act for incorporations, we take it, this particular corporation, would be embraced with class 5, for the formation of homestead or ²⁹⁴ building associations. The 2d section of this law, restricts all incorporations thereunder, except for banking purposes, from issuing any note or other evidence of a debt, to be used as currency. The purport of this provision, was to prohibit all corporations, except the banks, from issuing paper for circulation as currency, and not to restrict them from giving promissory notes, as evidence of debt, where they were otherwise authorized. The sections from 44 to 50, inclusive, define the general powers of the corporations, created under this law, and prescribe the general regulations thereof, except in the eases, where there may be special provisions, applicable to particular corporations.

Amongst the powers conferred, the 48th section, authorizes the corporations to acquire by purchase, or in any other manner, and to hold, use and dispose of, any property, real, personal or mixed, in or out of the State, which may be necessary and proper to enable them to fulfil the purposes of their incorporation, and generally to do every other act or thing, not inconsistent with law, which may be necessary or proper to promote the objects and purposes of the corporation. The 51st section, prohibits corporations, from exercising any corporate powers, except such as are conferred by law and such as are necessary to the exercise of the