
    The Tradesmen’s National Bank, Resp’t, v. The Manhattan Lumber Co., App’lt.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed May 13, 1892.)
    
    Corporations—President cannot supersede express resolution of BOARD OF DIRECTORS.
    A corporation which held notes of defendant, by express resolution of its board of directors, caused them to be deposited with plaintiff’s cashier, to be held by him subject to the joint order of the president and treasurer of the payee. Held, that the board of directors of the payee having acted and plaintiff having notice of such action, it was bound by it and could not acquire any title to the notes except by compliance with its resolution; and that a subsequent attempted pledge by the president alone was nugatory and conferred no title under which plaintiff could maintain an action on said notes.
    Appeal from judgment entered on report of referee.
    
      L. C. Waehner, for app’lt; W. W. Niles, for resp’t.
   Van Brunt, P. J.

This action is brought upon various promissory notes, all of which are dated April 4, 1888, and made by the appellant, the Manhattan Lumber Co., to the order of the Trimble Mill & Lumber Co., aggregating the amount of $30,000.

The defense raised the question of the title of the plaintiff to the notes in question.

It appears from the findings contained in the referee’s report that the defendant made the several promissory notes set forth in the complaint, which were duly delivered to the Trimble Mill & Lumber Co., the payee therein named, for value, and before maturity of any of the notes ; and that on the 13th of April, 1888, before such maturity, the directors of the Trimble Mill & Lumber Co., the owner of the notes, passed a resolution that the same should be delivered to O. F. Berry as custodian, subject to the joint order of Samuel Gr. Adams, Esq.; president, and George R. Trimble, treasurer of the Trimble Mill & Lumber Co. In pursuance of .this resolution, the notes were delivered by the treasurer of the defendant to said Berry, who was at that time the cashier of the plaintiff, and had notice of the passage of the resolution, whereupon said Berry gave to said treasurer a receipt in the words and figures following: “ Received April 13th, 1888, of William N. Brpwn, treasurer of the Manhattan Lumber Co., the following described notes of said company, each payable to the order of the Trimble Mill & Lumber Co., and dated April 4thr 1888 ” (then follows a description of seventy-six notes, aggregating $30,000), “ the same to be held by him, subject to the order of the Trimble Mill & Lumber Co., jointly signed by said Samuel G. Adams, president, and George R. Trimble, treasurer.”

The referee further finds, that prior to the time said notes were so deposited with said Berry, the said Trimble Mill & Lumber Co. had procured to be discounted at the plaintiff’s bank the paper of said company, amounting to three or four thousand dollars, which paper had not matured at the time said notes were so deposited. This finding is disputed by the appellant, but in the view we take of the questions which arise upon this appeal, it is not necessary to consider this point.

The referee further finds that said notes were so deposited with said Berry to be held by him in escrow as collateral security for the payment of any indebtedness of the Trimble Mill & Lumber Co. to the plaintiff, of which deposit the plaintiff had notice. The evidence of such deposit as security is the paper hereinafter mentioned, dated April 13,1888.

Afterwards on the 20th April, 1888, Samuel G. Adams and Geo. R. Trimble, as treasurer of the Trimble Companj'-, made, executed and delivered to the said Berry an instrument in writing in the words and figures following:

“To O. F. Berry, Fsq.:
“Dear Sir—You will please take notice that the notes deposited with you made by the .Manhattan Lumber Co. have been pledged to Mr. Sol. Kohn, attorney, etc., to secure payment of the judgment obtained by him against the Trimble Company, Limited, in favor of Mr. George H. Lewis and Mrs. Anne Trimble. This pledge is, however, subordinate to the rights of the Tradesmen’s National Bank.
“Dated N. Y, April 20, 1888.
“ Samuel G. Adams,T. M. & L. Co., Limited.
“ George R. Trimble, Treas., T. M. & L. Co., Limited.”

At some time subsequent, the said Samuel G. Adams under date of April 13th, as president, executed and delivered to the plaintiff an instrument in writing in the words and figures following :

“ For value received we hereby pledge the within described notes except Nos. 1 to 12 inclusive to secure any and all indebt■edness of the Trimble Mill & Lumber Co. to the Tradesmen’s National Bank.
“Dated April 13th, 1888.
“Samuel Gf. Adams, President.”

This instrument, Trimble, the treasurer, refused to sign.

The notes were never endorsed by the Trimble Co., the payee thereof, nor by any of its officers. And the referee found that the said Trimble Mill & Lumber Co. did not give any order jointly signed by Adams, president, and Trimble, treasurer, to said Berry for any disposition of said notes.

The referee gave judgment for the full amount of the notes, and from the judgment thereupon entered this appeal is taken.

It is urged by the appellant that the plaintiff has shown no title whatever to the notes in question.

There is no doubt but what the valid transfer of a chose in action may be made by paroi, and the fact that the notes were never endorsed by the payee is not necessarily fatal to a recovery pro- , vided the plaintiff is able to show that the same have been otherwise transferred.

In the case at bar it is to be observed that Berry was the cashier of the plaintiff, and was fully aware of all the circumstances under which the notes were placed in his hands. By a resolution of the board of directors of the owner of the notes, it was resolved that the notes should be delivered to Berry as custodian, subject to the joint order of Samuel Gf. Adams, president, and George E. Trimble, treasurer of the owner; and Berry gave a receipt for the notes certifying that he held the same subject to the order of the payee jointly signed by Adams & Trimble. But subsequent to the.deposit of these notes as aforesaid, the president of the payee assumed to pledge all of the notes except the first twelve to the plaintiff to secure any and all indebtedness of the payee to the plaintiff. And this the referee holds to be a valid pledge of the notes. No joint order was given by the president and treasurer as provided in the resolution under which,the notes were placed in the hands of the cashier of the plaintiff; but simply upon the pledge of the president alone it is claimed that the title to the notes in question was transferred to the plaintiff.

We have yet to learn that the president of a corporation has the power to repeal the resolutions of its board of directors. Whatever might have been his powers had not the plaintiff been aware of the circumstances under which the notes came into the possession of its cashier, he being aware of the restriction which the resolution of the board of - directors had placed upon the disposition of these notes, it could acquire no title either from the president or the treasurer separately, and could acquire title only by the fulfillment of the conditions which the cashier of the plaintiff had himself recognized in his receipt for the notes. But it is claimed upon the part of the respondent that it is quite immaterial how a party holding a note in escrow holds it if the corporation or its officers have procured it from him and delivered it to another to be held as collateral, and this is especially so when it is a mere question of whether the surrender by the party holding in escrow was to be made upon a written or verbal request.

This proposition has no application to the facts in the case at bar. The board of directors had disposed of the notes. The plaintiff knew of such disposition, and of the restrictions placed upon their negotiation, and the officers of the corporation were bound by such limitations which were placed upon such disposition, and if the corporation, the payee, required that the title should be conveyed by a joint order in writing, such requirement could be waived only by the same authority which imposed the restriction. Therefore, the attempted pledge of the president of this corporation was entirely without effect and void.

If it be claimed that the letter to the cashier, of April 20th, stating that the pledge to Kohn was suboi dinate to the rights of the plaintiff, and signed by the president and treasurer, was a compliance with the resolution of the board of directors, it is sufficient to say that it is apparent that such was not the intention of the parties signing the letter in question. It was not intended to. confer any rights whatever upon the plaintiff, but simply to notify the plaintiff of rights which had been acquired by the alleged pledgee. And besides it appears that the reservation of the rights of the plaintiff in the paper above mentioned related to the intended giving of an order to be signed by Adams & Trimble, which order never was given; and at the time of the writing of the instrument of April 20th it was well understood that the plaintiff had no right m the notes at all.

The terms of the deposit made the notes subject to the order of the Trimble Mill & Lumber Co., jointly signed by the president and treasurer. The letter above mentioned contains no such order, and therefore cannot be appealed to to establish a title.

But it is said that the president requested suit to be brought upon them, and the president and general manager intended to give the bank an order signed by them.

What they intended to do is immaterial, as intentions never confer title. We do not see upon the conceded facts how the plaintiff shows any title whatever to the notes, and the whole case seems to have been disposed of precisely as it would have been had there been no resolution of the board of -directors upon this subject.

As already stated, the board of directors having acted upon this question and the plaintiff having notice of the action, it was bound by it, and could not acquire any title except by compliance with the resolution of the board of directors.

It seems to us, therefore, that the referee erred in holding that the plaintiff had title to the notes; and the judgment should, therefore, be reversed and a new trial ordered, with costs to appellant to abide the event

O’Brien and Andrews, JJ., concur.  