By the arrangement of the 14th of December, 1847, the Messrs. Harbeck, the defendants in this cause, at the request of the company, discounted the notes in their own possession and those in possession of C. G. Belden, and at the request of the company paid out of the proceeds to the Beldens the $2500 loaned by them, with $120 compensation for the use of the money allowed by the company, their own loan of $2000 and the loss on the brig George of $3010, and gave the company the balance, $113, in cash, which completed *Page 596 the transaction. The receiver insists that the transfer to the defendants of the effects above mentioned was not authorized by a previous resolution of the board of directors, and was void by the provisions of 1 R.S., 591, § 8.
This question was determined in Howland v. Myer (3Comst., 293), in which it was held that any bona fide settlement of a presumed loss, contingent or absolute, made by the company with the insured, in the usual course of business, was authorized by the statute under which the corporation in that and in the present case was organized. The company, as we have seen, procured the notes in question to be discounted in the usual course of business, and directed the proceeds to be applied in payment of their debts. By the 12th section of the act referred to (Laws of 1843, 71), they were authorized to negotiate their premium notes for the purpose of paying claims, or otherwise, in the course of their business. They have done no more, therefore, than they were authorized to do by the express provisions of their charter. It might as well be claimed that payment of its own notes by a bank of issue to an amount exceeding $1000 was prohibited. The exception in the 8th section is not stronger in their favor than the direct authority contained in the 12th section of the act above mentioned is in favor of the payment of which complaint is made in this case.
There is no error in the ruling of the chief justice, that to invalidate the transfer under the 9th section of the act to prevent the insolvency of moneyed corporations, the plaintiff must prove either open or avowed insolvency of the company, or actual insolvency with knowledge thereof by the defendant. It must be recollected that the defendants were dealing with the company in the usual course of its business. They had insured, and sustained a loss, the amount of which had been adjusted, and they were, therefore, creditors entitled to their pay. In receiving payment, if they had done nothing else, it *Page 597 would be singular if their right to retain the money should depend upon the exact financial state of the corporation at the time; as to whether their assets equaled, or fell short of or exceeded their liabilities. The absurdity of such a requirement, when the character of these corporations is considered, the peculiarity of their capital and its constant changes and fluctuations, is apparent. There must be an intent to give a preference. (§ 9.) The spirit of the law requires that this intent should be manifested in some way besides the performance of acts which it was the very purpose of the legislature that these corporations should perform, and for which they were created. It seems to me that no one who dealt with the company upon the footing of a customer, ought to be charged with notice of the insolvency of the corporation, unless it was open and notorious, or unless a knowledge of its circumstances was brought home to him.
But, in the second place, the defendants were not the mere recipients of a debt, but purchasers of the notes, or rather of the remaining interest of the corporation in them, for a full consideration, part in cash and part in the discharge of a subsisting claim against the company. The purpose of the insurance company was not to give a preference, but to redeem their property and raise money. The payment in this case was incidental, and by no means the principal object to be effected by the negotiation. To invalidate a transfer under the 9th section, there must be a design to pay or secure one debt or class of debts to the probable exclusion of others. There is not a shadow of proof in the whole case that any such purpose was conceived by the company or suspected by the defendants. The ruling of the learned judge was, therefore, sufficiently favorable to the plaintiff. Actual insolvency was not sufficient, because this might exist without the knowledge of the defendants, and without any intent to give a preference on the part of the company. The least that should be *Page 598 required was that notice of the insolvency should be brought home to the defendants in the manner suggested. The nonsuit was, consequently, right; for there was no evidence of open or secret insolvency brought home to the defendants, nor any facts from which it could properly be inferred by a jury.
The judgment of the superior court should be affirmed.
EDWARDS, J., also dissented.
RUGGLES, J., did not hear the argument.
Judgment reversed.