
    Caryl, survivor, &c. v. McElrath.
    Where a mutual insurance company was permitted to organize as a corporation, on the commissioners appointed for that purpose receiving applications for insurance to be approved by them to a certain amount, the premiums on the same being paid or secured; it was held that the applications might be general, e. g. for $50,000, on merchandise from any seaport in the United States to Liverpool, and that they need not specify the particulars of any voyage or shipment; and the company having organized on such applications, it was held to have been duly organized.
    Whether one who has dealt with a company as a body corporate, can set up defects in its organization to show that it never became a corporation 1 Quere.
    
    The president of an insurance company is the proper officer to indorse negotiable securities payable to the company, in order to transfer them.
    In order to deprive the transferee from a moneyed corporation of the benefit of a negotiable security transferred, on the ground that it exceeded one thousand dollars in value, and was transferred without any previous resolution of the board of directors, it must be shown that he was not a purchaser of the security in good faith, or that he had notice of the fact that there was no such resolution of the board of directors. The burden of proving that he had notice, rests upon the party impeaching the transfer.
    (Before Oaklet, Ch. J., and Vandekpobl and Sandfoed, J. J.)
    Sept. 19 ;
    Sept. 29, 1849.
    Assumpsit on a promissory note for $2,526, made by the defendant, payable to The Alliance Mutual Insurance Company, on order, at twelve months. The note was indorsed “ Alliance Mutual Insurance Company, Jas. D. P. Ogden, president.”
    The defendant read in evidence the charter of the company, and proved that the commissioners appointed to organize it, met on the 26th April, 1843, and received applications for insurance to the amount of $595,000, and notes for premiums thereon to $40,000; all of which, the commissioners approved, and thereupon adopted a resolution to the effect, that the company was thereby declared to be organized according to the terms of the charter. They afterwards notified and superintended the election of trustees of the company. The company proceeded to carry on the business of insurance, and continued until 1841, when it failed, and a receiver was appointed in July of that year. The form of the application for insurance made to the commissioners was as follows:
    
      44 Insurance is wanted by Brown, Brothers & Oo., for account of whom it may concern,
    loss, if any, payable to them
    For $50,000 on merchandize
    and is insured at or
    from any seaport in the TJ. S. to Liverpool.
    by vessel or vessels as interest may
    appear
    Premium
    Binding President.”
    (Signed), “ Brown, Brothers & Oo. applicant.
    44 Kew York, April 26,1843.”
    These applications were, when received, entered by the commissioners in a book prepared for that purpose. It was admitted that the minutes of the board of trustees did not show any resolution authorizing the transfer or negotiation of the note in suit.
    A verdict was taken for the plaintiffs, subject to the opinion of the court.
    
      W. If. JSvwrts, for the plaintiff, relied on Brouwer v. Appleby, 1 Sand. S. G. R. 168, and note; and Aspinwall v. Meyer, Mss. 
    
    
      W. Kent, for the defendant.
    1. The so called company was never legally organized; and having never complied with the preliminary requisitions of its charter, viz. those contained in § 3, which required the commissioners therein named to receive applications for insurance, and approve those amounting to $500,000, the premiums on which have actually been paid, or secured to be paid, never had a legal existence, and could not, as a corporation, receive and transfer a negotiable promissory note. This was a condition precedent to the company becoming a body corporate. The applications for insurance were a mere nullity, and the notes given of no validity.
    
      2. The plaintiff does not stand in the position of a boná fide holder. He dealt with parties pretending to be a legal corporation, under a specific statute of the legislature. He is therefore chargeable with notice of the requirements' of the statute, and bound to see that the pretended company has a legal existence before he deals with it. (Halstead v. The Mayor, &c. of New York, in the supreme court, May, 1849; 5 N. Y. Leg. Obs. 74.)
    3. The transfer of the note by J. D. P. Ogden, assuming to be president of the company, having been made without any resolution of the board of directors, was void by the statute. (1 R. S. 593, § 8; Ibid. 597, Art. 3.)
    
      
       Since reported in 2 Sand. S. C. R. 180.
    
   By the Court. Oakley, Ch. J.

The third section of the act incorporating this company, (Laws of 1843, ch. 94,) made it the duty of the commissioners named in the act, to open a book to receive applications for insurances; and, after receiving such applications, to be approved by them, amounting to five hundred thousand dollars, the premium on which should have been actually paid in, or secured to be paid, they might close the book, and the company might be organized. They were then to superintend the first election of not less than twenty-four trustees of the company.

It is contended by the defendant that the company never became organized, because this third section of the statute was not complied with; and that this was a condition precedent, without which the company could have no legal existence, and, therefore, it could not receive a note, or transfer it when received. It is said, the applications for insurance should have contained all that the insured furnishes for making a policy: that is, it should have set forth all the particulars of the risk intended to be insured against.

As to this point, the application for insurance is a very different thing from the contract of insurance to which it leads. It is a mere proposition, and only needs to state the objects on which insurance is sought, wfithout specifying the particulars. With the applications, the parties gave their notes for a corresponding amount of premiums. They then had a right to demand regular policies of insurance for risks within their applications, and the company was bound to issue them. The propositions of this kind exceeded the sum limited in the charter, on all of which approved notes were given to secure the premiums. We think the organization of the company was complete in every respect.

If we had doubted this, we should probably have held, that the company, having claimed to be organized, and having acted as a corporation, the question of its corporate existence is to be tested by the government, and not by individuals who have dealt with it as a valid corporation.

As to the objection made upon the form of the transfer of the note, the president of the company was, no doubt, the proper officer to indorse it and convert it into money. We so held virtually, last year, in the case of Aspinwall v. Meyer, on a note indorsed by the same president in behalf of this company.

There is nothing in the case to show that the plaintiff was not a bond fide purchaser without notice, within the meaning of the section of the revised statutes, prohibiting certain transfers of securities by corporations, without a previous resolution of their boards or directors. (1 R. S. 591, § 8.) The burden of proving such notice is on the party alleging it. It is unnecessary, therefore, to consider the point made upon that provision.

Judgment for the plaintiff. 
      
      
         See Palmer v. Yates, ante, page 137.
     