Park Bank v. Remsen
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158 U.S. 337 (1895)
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U.S. Supreme Court
Park Bank v. Remsen, 158 U.S. 337 (1895)
Park Bank v. Remsen
Argued April 29, 1895
Decided May 20, 1895
158 U.S. 337
The rulings of the Court of Appeals of New York, unanimously made, that the warehouse company did not become indebted to the plaintiff by reason of its endorsement of the notes which form the basis of this action, as the company was an accommodation endorser, of which fact the plaintiff was chargeable with notice, and that the liability of Remsen as trustee of the company was not primary, but secondary and dependent altogether upon a statute of that state of a penal character, ought to be recognized in every court as at least most persuasive, although the case in which the ruling was made has not yet gone to final judgment.
This Court has held in Chase v. Curtis, 113 U. S. 452, that that statute of New York is penal in character, and must be construed with strictness against those sought to be subjected to its liabilities.
In the absence of any controlling decision, this Court is unwilling to hold that a provision of a general statute imposing a personal liability upon trustees or other officers of a corporation is incorporated into a special charter by a clause therein declaring that the corporation shall possess all the general powers and privileges and be subject to all the liabilities conferred and imposed upon corporations organized under such general act.
This case was tried by the court without a jury, and from the findings the following facts appear: the German-American Mutual Warehousing and Security Company (hereafter called the warehouse company) was a corporation of the State of New York, incorporated by c. 701, Laws N.Y. 1872, vol. 2, p. 1673. Section 9 of this chapter provides that
"The corporation hereby created shall possess all the general powers and privileges, and be subject to all the liabilities conferred and imposed upon corporations organized under and in pursuance of an act entitled 'An act to authorize the formation of corporations for manufacturing, mining, mechanical, or chemical purposes,' passed February seventeenth, eighteen hundred and forty-eight, and the several acts extending and amending the same."
It never made or published any of the reports required by section 12 of the act of 1848, which directed every company within the first twenty days of each year to make and publish in some newspaper a report signed by the president and a majority of the trustees, and verified by the oath of the president or secretary, and showing the total capital stock, the proportion actually paid in, and the amount of existing debts. Robert Squires was president, and William Remsen, the defendants' testator, a director and trustee of the company. Squires, Taylor & Co. were a firm doing business in the City of New York. It was composed of Robert C. Squires (a son of the president of the warehouse company), Charles E. Taylor, and Burnett Forbes. In 1878, this firm made two promissory notes, each to the order of themselves, which notes were endorsed by themselves in blank, and after such endorsement were also endorsed by the warehouse company, the endorsement being made by the president of the company and without the knowledge of Remsen or the other directors. These notes were discounted by the plaintiff. They were not paid at maturity, and, notice having been duly given, the plaintiff commenced an action in the Superior Court of the City of New York against the warehouse company as endorser. It recovered a judgment against the company which was affirmed by the general term. 53 Jones & Spencer 367. The company appealed to the Court of Appeals of the state, and on October 8, 1889, that court reversed the judgment. 116 N.Y. 281. It held that the warehouse company was not liable on the ground that it was an accommodation endorser, and that the plaintiff was chargeable with notice of the character of the endorsement, because the notes were presented for discount by the makers, who received the avails thereof.
Section 12 of the Act of 1848, c. 12, hereinbefore referred to, provides that for failure to file the reports specified therein, the trustees
"shall be jointly and severally liable for all the debts of the company then existing, and for all that shall be contracted before such report shall be made."
N.Y.Rev.Stats. 8th ed., vol. 3, p. 1957.