This action was brought to recover the sum of one thousand dollars which the plaintiff claims belonged to the corporation and was improperly paid to the defendant. The defendant was formerly a director in the Life Union, but resigned on the first day of October, 1891. He was the holder of a one-thousand-dollar note issued by the Life Union corporation for the purpose of purchasing the business of the Flour City Association, which was not a binding obligation upon the Life Union. (McClure v.Law, 161 N.Y. 78; McClure v. Levy, 147 N.Y. 215.) After his resignation, one Moody, on behalf of the president of the corporation, entered into an agreement with one Levy and another, by which the sum of fifteen thousand dollars was paid for a transfer of the management, control and property of the corporation to Levy and his friends. Out of this fund it is claimed that the defendant was paid one thousand dollars to surrender his note against the corporation; that he parted with no value; that it was money belonging to the corporation, and that the receiver could follow it into his hands and recover it back. The defendant was *Page 84 not a director, and it is not claimed that he had anything to do with the procuring of the resignation of the old board of directors and the election of Levy and his friends, or that he knew anything about that transaction. Baldwin, one of the old directors, and Law, the president, paid him one thousand dollars for his note against the company; he did not receive it as a trustee or by virtue of his former relation to the corporation.
We think it cannot be said, upon the record before us, that the defendant parted with no value for the money paid him. It is true that the note held by him was not a binding obligation upon the Life Union, but it appears that money had been advanced to the Flour City Association, or one of the officers, and it may be that a right of action existed to recover back the money so paid. While we recognize the principle contended for by the appellant, that the owner of money and property, traced into the hands of third persons who are not bona fide holders, may, in some instances, recover it back, still, we think that principle does not extend to the facts presented in this case.
The order should be affirmed, with costs, and judgment absolute ordered for the defendant upon the stipulation.
All concur, except PARKER, Ch. J., not sitting.
Order affirmed, etc.