Charles M. Schreyer, Appellant, v. J. S. Bailey & Company, Respondent

Charles M. Schreyer, Appellant, v. J. S. Bailey & Company, Respondent. Liability of a corporation on notes executed by its president in its name—effect of their being executed under appm'ent authority, although the president uses the avails thereof for his own purposes. Where the president and treasurer of a corporation, who has been invested by the corporation with apparent, if not actual, authority to execute promissory notes in the name of the corporation, executes such a note to a bona fide payee, who pays full value therefor, the fact that the president of the corporation made the note with the intention of using the avails thereof for his own advantage and benefit and actually did so use such avails, will not relieve the corporation from liability upon the note. Appeal by the plaintiff, Charles M. Sohreyer, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Westchester on the 20th day of June, 1903, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 9th day of July, 1903, denying the plaintiff’s motion for a new trial made upon the minutes. . Henry A. Forster [Edward Swann with him on the brief], for the appellant. Frederick M. Czaki, for the respondent. [MAJORITY — Per Curiam :] Per Curiam : The action is upon a $15,000 promissory note of the defendant corporation, which has been transferred to the plaintiff by George Hotchkiss, the payee. The note was made by J. S. Bailey, the defendant’s president and treasurer, in the name of the company, and it is undisputed that the $15,000 was paid by Hotchkiss in checks to the company’s order. The main defense was that the money was borrowed by Bailey for his own purposes and was used by him to pay his individual indebtedness to the company. It was clearly established that Bailey ivas invested by the ■ company with apparent if not actual authority to issue the note, or at least there was abundant evidence, to justify a jury in reaching that conclusion. In directing a verdict for the defendant the learned trial court said: “ The proof in this case is that the corporation did not have the benefit of the money. It was a corporation note. It is perfectly clear what these transactions were. Mr. Bailey issued a corporation note for his own advantage and benefit, -and the proceeds of it came into the corporation simultaneously with his instructions to pass it to his personal credit, and néver rested but for a moment to the credit of the treasury of the corporation.” The payee of the note, Hotchkiss, testified positively that he had no knowledge at the time of the' loan that any part of the money was, or was to be, used by Bailey for his own purposes, and we do not think the case contains sufficient evidence to support a finding to the contrary. As an innocent bona fide holder of an authorized note he could collect it from the company although the proceeds were used without his knowledge in the manner stated by the learned trial court. It follows that the judgment and order should be reversed. All concurred. Judgment and order reversed and new trial granted, costs to ‘ abide the event. 1;