The defendant is a domestic trust company. It was incorporated under the name of the Trust Company of the Republic on the 29th day of March, 1902, and its name was changed on the 12th day of October, 1903. . The action is brought to recover damages for the breach of a contract in writing, bearing date the 28th day of August, 1902, and purporting to have been made by and. between the Trust Company of the Republic, as party of the first part, and the plaintiff as party of the second part. The agreement acknowledges the consideration of one dollar moving to the plaintiff from the trust company and “other good and valuable considerations,” and then provides as follows :
“Whereas, a selling syndicate, of which Thomas C. Clarke is named as Manager, has been formed to arrange for such sales and for other purposes, under an agreement providing for the deposit of all of said securities, except those of the party hereto of the second part with the party hereto of the first part for such purposes, both *440.parties hereto will in good faith co-operate with the said syndicate in furthering such object, and this agreement is intended to be an aid to same. . '
“ 2. The party of the second part agrees that he will deposit with the party of the first part all of his bonds and.shares of preferred and common stock of the United . States Shipbuilding Company under the terms and conditions of this agreement as hereinafter set forth. .
“ 3. The party of the first part will use and dispose of said securities of- the party of the second part as in its judgment is necessary to further the purposes of said syndicate, and in so doing will do whatever is necessary to insure equal benefits to the party hereto of the second part pro rata to his holdings of said securities that are enjoyed at any time by the vendors who shall be or become parties to the agreement with said syndicate in connection with the Sale and disposition of said securities or the proceeds of sale of same; and it hereby guarantees to the party of the second part the sale of all of his said securities on or before August 25tli, 1903, whether through the efforts of said syndicate or otherwise, and the party of the first part agrees to account to the party of the second ' part, on or before the 25th day of August, 1903, and that the prices thereof shall be on a basis which will realize to the -party of the second part not less than 95 per cent of the par value of the bonds and 68 per cent- of the par value of the said preferred stock and 25 per- cent of the par value of the said common stock, less brokerage expenses, as hereinafter stated, and the party of the first part hereby agrees to pay to the party of the second part, the interest on the bonds as and when received from the United States Shipbuilding Company during the period of this agreement; and in case of their sale or -any of them during the period of this agreement and if under such circumstances it elects to retain the proceeds of the sale of the same under the provisions hereof until the final accounting hereunder, the party of the first part agrees to pay to the party of the second part the accrued interest on such bonds as may be sold up to the dates of théir sale, and also interest on the proceeds of the sale of same, at the same fate that the bonds would have earned if same had not been deposited under the terms of this agreement, said payments of interest to be made January 1st and July. 1st, *4411903, if this agreement is not sooner terminated, but at its termination at any time payment is to be made in full. . •
“ i. The party of the first part is hereby accorded the exclusive right to sell the 'said securities of the party of the second part during the period of this agreement.
“ 5. The party of the first part shall have authority from time to time, and at any time, to pay the usual brokerage and brokers’ expenses, if any, in connection with the sale of said securities of the party of the second part.
“ 6. Said party of the first part shall not be liable for any error of judgment or for any mistake of law or fact, nor shall it be liable for any act or omission while endeavoring .in good faith to carry out the purposes hereof according to its judgment, but such exemption of liability shall not affect its liability named in Clause 3 hereof. Ho obligation or liability in addition to those herein expressed shall be implied against the said party of the first part; it being the spirit and intent of this agreement that said securities are deposited as named under a guaranty of sale, at not less than the minimum figures hereinbefore mentioned, and all proceeds of sales are .to be accounted for at the figures at which such sales shall be made, and the same with all incidental net profits in connection with the same.
“ 7. This agreement and all it contains shall become null and void on August 25, 1903, or at any time prior thereto coincident with the sale, of and settlement for all of the said securities of the party of the second part or the.termination of the said syndicate by the fulfillment of its agreement with the other vendors and underwriters of the said securities.”
The agreement is signed “ Trust Company of the Republic, by James Duane Livingston, vice-president,” and the seal of the company is attached and is attested by W. Babcock, both as secretary and as witness. He was not - in fact secretary, but was assistant secretary. The plaintiff duly tendered the securities specified in the contract to Livingston, the vice-president of the trust company, and by his direction retained them until such time as they might be called for by the trust company. They were neither called for nor sold' by the trust company on or prior to the 25th day of August, 1903. The plaintiff, by his original complaint, sought to recover *442the minimum price for which, by the agreement, the trust company obligated itself to sell the-securities. On an appeal by the defendant from an interlocutory judgment sustaining plaintiff’s demurrers to various affirmative defenses set forth in its amended answer,-this court held that the defendant did not obligate itself by the agreement. to pay the plaintiff a certain sum of money, but that, the defendant became thereby the selling agent of the plaintiff of the securities mentioned in the agreement, under a covenant that, if it were given the exclusive right to sell the securities .during the period named, they would realize a sum equal to the minimum figures specified in the contract, and that title remainéd in the plaintiff and, without his consent* the defendant could not become the purchaser. (Gause v. Commonwealth Trust Co., 100 App. Div. 427.) In deciding that appeal, the late Presiding Justice Van. Brunt, writing for the court, gaid : “ The cause of action, if any, alleged, was not a breach of a covenant to pay a certain sum of"' money, but to perform a certain duty, namely, to sell these securities, and a covenant that they would realize a certain sum at least. There were no allegations whatever contained in this complaint • tending tj show that by reason of the breach of this covenant of sale, the plaintiff has suffered any damage whatever. It seems to us, therefore, that there, being ho covenant to pay the sum mentioned in the complaint, and it being the duty of . the defendant to sell these securities and to account for the proceeds to the plaintiff, which it covenanted would realize at least a certain sum, whatever right of action the plaintiff, has is .for a breach of these covenants. We think that the complaint-was insufficient, and for that reason the demurrers should have been overruled.” The plaintiff thereafter amended -the complaint and alleged a cause of action on the contract to recover for the difference between the value of the securities on the 25th day of August, 1903, and the price for which the defendant obligated itself to sell them. The defendant demurred to the amended complaint. The demurrer was overruled and on appeal this court held that the construction of the contract on the former appeal was the law of the case, so far as this court was concerned, and that plaintiff was entitled, to recover upon the theory of the amended complaint. (111 App. Div. 530.) The answer of the defendant, among other things, put in issue the *443malting of the contract and set up, among other defenses, that it was ultra vires and that a parol collateral agreement was made to the effect that the contract upon which the action is based was not to become operative unless all the other vendors to whom reference is made in the agreement, signed the syndicate agreement therein ' mentioned. In support of the defense of a parol collateral agreement, testimony was given by Livingston, the vice-president of the defendant, which, however, was controverted by the testimony of the plaintiff. The defendant offered no evidence on the question of damages. At the close of the evidence by consent of the parties the ¿ourt was authorized to assess the damages in the event that the plaintiff should be entitled to recover, and pending motions by each party for a direction of a verdict, the court submitted two questions to the jury. One was as to whether the officers who signed or directed the signing of the agreement upon which the action is founded were authorized by the defendant to execute it as its corporate act and to affix the corporate seal thereto, and the other was-as to whether the alleged parol collateral agreement was made. The jury answered the first question in the affirmative and the second in the negative. The court thereafter assessed the damages at $362,882, and then granted the defendant’s motion to dismiss the complaint. The special finding of the jury that no parol collateral agreement was made is fairly sustained by the evidence, and the.plaintiff upon this appeal is entitled to the benefit of the special verdict. (Code Civ. Proc. § 1181.)
The decision of this appeal involves the consideration of three questions: First, whether the officers who signed the. contract were authorized to execute it; second, if so, whether it was ultra vires, and third, whether the defendant is estopped from questioning the validity of the contract.
I am of opinion that there is no evidence legitimately tending ■ to show that the execution of the contract was authorized by the defendant and requiring the submission of that question to the jury and that the court properly disregarded the special finding of the jury that the execution of the contract was authorized. The learned trial justice wrote a careful and instructive -opinion in support of his determination to dismiss the complaint (55 Misc. Rep. 110), but the importance of the questions requires that we should express *444our views more at' length. The undisputed evidence shows that there was no resolution of the board of directors authorizing the execution of the contract. Section 161 of the Banking Law (Laws of 1892, chap. 689, as aind. by Laws of 1901, chap. 510*) provides that “ The affairs of every such corporation (which includes a ■ trust company) shall be managed and its corporate powers exercised by a board of directors.” Section 27 of the Stock Corporation Law' (Laws of 1890, chap. 564, as amd. by Laws of 1892, chap. 6S8) provides that “ the directors of a stock corporation .may appoint from their number a president. and may appoint a secretary, treasurer and other .officers, agents and employes, who shall respectively have such powers and perform such duties, in the management of the property "and affairs of thb corporation, subject to the control of the directors, as may be prescribed.by them or in the by-laws.” Section 5 of article 3 of the by-laws of the defendant provides that the president shall “ exercise such general direction- * * * as its interests and security may require; ” and section 6 of the same article confers authority upon him to affix the corporate seal to certain specified instruments prepared or approved by the counsel or attorney of the company; but it is clear that it does not include such a contract as this, and moreover this -, contract was hot prepared by the counsel or attorney of the" company. By section 1 of article 4 of the by-laws the vice-presidents • are required to perform the duties assigned to them by the executive committee or by the president. It is not claimed that the assistant secretary had any independent authority. The. board of directors .consisted of twenty-five members, but at the time in question there was one vacancy. Article 8 of the by-laws provides fcr an executive committee, to consist of the president, and six other directors to be elected by the board, and that a, majority should constitute a quorum in the absence of the president, but three . should, constitute a quorum when he is present. Section 2 of that article provides as follows: “ The executive committee shall exercise all the powers of the board of directors, when the board' is not in session, except the power to fill a vacancy in the board. The assent of the executive committee shall be required for all investments that shall be made of the funds of the company in stocks, personal *445securities and bonds and. mortgages, and for the disposal of the same, and of the funds of all special trusts. * * * The executive committee may in its discretion authorize the president generally to make investments in such securities as are authorized by the charter of the company, and to dispose of such securities without previously consulting, as to details, with the committee; but all such transactions shall be reported to the committee at its next meeting.” Section 4 of the same article provides that the execm tive committee shall meet at the main office every Tuesday and at other times on call of the president. Article 9, section 1, provides that there shall be a regular meeting of the board of directors at the main office of the company on the third Tuesday in every month “ to which a report shall be made by the president of the finances, affairs and business of the'company.” Section 2 of article 15 provides that the seal of the company shall be in the custody of the president “ and shall not be affixed tó any deed, conveyance or instrument other than those enumerated in Article III, Section 6 of these by-laws, unless by the authority of the hoard or the executive committee, and whenever affixed to any paper it shall be attested by the secretary.” There is no evidence that any authority was conferred upon the president by action of the board of directors or of the executive committee. Authority to make a lease for the. main office of the defendant at Ho. 346 Broadway was conferred on the officers of the defendant by the directors at its first meeting, and it also appears by the minutes of the meeting of the executive committee, held on the'9th day of September, 1902, at which the president and two directors were present, that “ a resolution -was adopted authorizing the president to make or guarantee loans in the company’s name when necessary.” It is not claimed that this resolution, if adopted, conferred authority to make the contract in question, which took place as of a prior date. If adopted, it was evidently intended to relate to certain loans that had been made to or guaran-' teed by the'company on or about the lltli day of August, 1902, which will be considered presently. One of the directors present testified that the resolution was not adopted. Another was dead and Dresser, the president, testified that ho had no recollection of it; but he admitted that he had testified on the trial of a. former action that he had authority to borrow certain moneys and with *446respect thereto was given full power to do what he pleased, and that this resolution was adopted to confirm such authority. The resolution, however, on its face, does not relate to past transactions. The contract in question was negotiated between the plaintiff and Vice-President- Livingston, who had charge of the branch office of the defendant at No. 71 William street, and he acted-in making the-contract under the direction of the president. At the time the negotiations were had and the contract was- signed, both, Dresser and Livingston were directors. of the shipbuilding company, and Livingston was vice-president as well... There were interviews and there was correspondence between the plaintiff and Living-ton leading up to. the making of the contract which was signed in its final form on the 26tli day of September, 1902, as of August twenty-eighth ; but an agreement had been reached between them, reduced to writing and signed,, tó substantially the same effect, on the date of the agreement, August 28, 1902. This correspondence was had and kept at the William street branch office; and Livingston testified that he retained the company’s duplicates of the contracts and placed them in the vault in that office, but that he never communicated any information concerning this contract or the fact that it had been executed, to-the-board of directors or -the executive committee or to any members thereof, - excepting Dresser. Dresser testified that he never informed tlie board of directors or executive committee or any member thereof with respect to the negotiation for or the execution of this- contract. Ten -of the twentyffour directors testified that they never heard .of this contract or of any negotiations with respect to it until ón' dr after the 3d day of June, 1903, when a letter was received by the newly-elected president of the company from the attorney for the plaintiff with respect to depositing the securities under a plan for the-reorganization of the shipbuilding company. It appears that on the sixteenth day of the .'same month, after investigation, with respect to this contract,, the defendant formally repudiated it and so notified the plaintiff. Both Dresser and Livingston were then out of office, and although Livingston testified that he left the contracts in the. vault, it appears that a careful examination was made and- they were hot found. Three of the other directors were dead at.the time, of the trial, and seven others were non-residents. Of the remaining four resident *447directors, one was ill and'it does not appear that the other three took such an active interest in the affairs of the company as to give them any special knowledge on this subject.
. There is no force in the claim that the board of directors or the executive committee, in effect, failed to exercise their functions and left the-management of the company, at the times in question, in the hands óf the president. It appears that the board of directors met regularly in the year 1902 down to the twenty-second day of July. The meeting in August was adjourned for lack of a quorum, but a meeting was held on the sixteenth day of September. The executive committee met regularly in the year 1902 down to the fourth day of June, and thereafter the executive committee met on' June seventeenth, June twenty-fourth, July eighth, July- twenty-second, September ninth and September sixteenth. On the tenth of June a quorum was not present, and it does not appear that there was any attempt to meet on the other dates for regular meetings. This was during the vacation season, and there is nothing to show that the directors liad knowledge of any business of the company requiring either a meeting of the board of directors or of the executive committee at the times when meetings were not held. There is nothing in the defendant’s connection with the United States Shipbuilding Company which was organized in June, 1902, from which it could be inferred that implied authority was conferred Upon Dresser or Livingston to make the contract with the plaintiff. The Mercantile Trust Company of Hew York was one of -the principal promoters of the shipbuilding company. Prior to the incorporation of the shipbuilding company, which was in June, 1902, there were negotiations'between Dresser and Livingston and the Mercantile Trust Company, by which it was understood that on the incorporation of the shipbuilding company the defendant should act:
“a. As issuing bankers and perform all the duties incidental thereto.
“ b. Advertise prospectus.
“ c. Deceive all subscriptions.
“d. Pay the necessary cash to the trustees to clear the titles and commitments thereto.
“e. Deliver all bonds and shares to the subscribers.
*448“ f. Registrar and Transfer Agent of the shares of the Company.” 'The Mercantile Trust Company was to act as trustee for the bonds of the shipbuilding company, and to perform certain" other duties "in connection with its affairs after its incorporation.
Thereafter, at the meeting of the board of directors of the defendant, held .on the 17th day of June, 1902, Dresser .made a report “on the U. S. Shipbuilding consolidation.”- He testifies that he informed the hoard in substance of his negotiations in this matter and that the proposition was to have the defendant act as -the transfer agént of the stock,, as a bank of deposit for the shipbuilding company, to act as the house of issue of the securities that had been or could be submitted to the public for sale, and, in effect, that this-was acquiesced in. It appears that the plan of organization of the shipbuilding company contemplated subscriptions here in America, for $3,000,000 of the $9,000,000 of bonds of the shipbuilding company,-to be issued in the first instance for-the purchase of the constituent plants that were to be transferred to the shipbuilding company, and for expenses and a working capital. Dresser undertook with the Mercantile Company to obtain subscribers for the $3,000,000 of bonds among the customers of the defendant. Three directors of the defendant became subscribers under the underwriting agreemen.kwhich was between the Mercantile. Trust Company and tiie subscribers for bonds, but it does not appear that the defendant was a party thereto or was interested therein. Dresser succeeded in obtaining subscribers for that amount, and afterwards, on a failure of -the plan for obtaining subscriptions for the remainder of the issue in Europe, he obtained subscriptions for about $1,700,000 more. The options which the promoters of the shipbuilding company -had for the purchase -of the : plants to be transferred to it expired on the 11th day of August, 1902. Some of these options ran to Lewis Nixon, and others tb Dresser. On or about the 7th day of August, 1902, Dresser was ready-to pay over the subscriptions which he-had obtained; but on account of the failure of the plans to float the securities abroad lie was induced to undertake to obtain subscribers for upwards of $3,000,000 more in order to insure the consummation of the plan. To enable him to accomplish this the Mercantile Trust Company delivered, to him the securities, and it appears that they were used *449■with guaranties made bv Dresser in the name of the defendant as collateral to notes made by him and Mixon and discounted at banks and trust companies with some of which defendant.had relations] and it would seem that he also procured the discount of two notes of this defendant aggregating $750,000, using some of these securities as collateral. ' He thus succeeded in raising the necessary amount, which apparently was deposited with the defendant, for on August eleventh its checks were used in the disbursement thereof to the vendors of the constituent plants. On the 14th of June, 1902, an advertisement was published in the Mew York Evening Post and simultaneously in various other newspapers throughout the country for subscriptions to the public issue of these bonds and the name of the defendant appeared thereon as “ Transfer Agents ” and “ Bankers,’.’ and it was stated therein that the defendant was authorized to receive applications for the bonds, and that it reserved' the right to reject any or all bids, and- at the foot of the advertisement was a notice to apply to the defendant and Harris, Gates & Co., bankers, for additional information. According to the testimony of Dresser, he reported to the board of directors and to the executive committee from time to time concerning the progress of the shipbuilding company matters, but it does not appear that he assumed to do anything that would in any manner involve the defendant financially in the enterprise until about the 11th day of August, 1902, and it appears by his testimony that he did not inform any of the members of the board of directors of his action with respect to borrowing funds in the name of the defendant or on his and Mixon’s individual notes or the guaranties thereof. While there is some evidence tending to show that in one or two instances these guaranties were signed “ by wliat purported to be a majority of the executive committee ” no such guaranty in writing was produced and it is fairly to be inferred from the evidence that all of these guaranties were signed either by Dresser or Livingston or by other persons acting under Dresser’s direction, and none of whom were directors of the defendant. It appears that early in October some of the other directors acquired information with respect to these loans and guaranties, through the banking department or otherwise,' and that the banking department insisted that the defendant should *450rid itself of these obligations in connection with the shipbuilding securities. The matter was then taken up by the directors and although they did not recognize Dresser’s authority for what had been done in raising funds in the name of the defendant they apparently deemed it advisable to assume the responsibility and with that end in view the so-called Sheldon syndicate agreement was executed oh the 29th day of October, 1902, which contemplated - raising money by subscription to be used in paying off the notes thus executed by Dresser and ¡Nixon and the' defendant and certain other obligations of the defendant for which some of these securities were pledged and reimbursing the subscribers by 'a sale of the securities, and in the event of inability to self them, turning the securities over to the subscribers. Prior to this date,' the defendant had taken hone of the securities of the shipbuilding company as a “ house of issue,” but on this date title to the securities was formally transferred to the defendant for the purpose .of transferring the securities to the managers of the Sheldon syndicate agreement with a view to .carrying out the plan of that agreement, which was done. - Funds were thus raised with which the notes and obligations in . question were paid and the securities released.
The learned counsel for the appellant contends that these transactions show a recognition of the authority of Dresser to deal in the matter of shipbuilding securities without limitation or restraint. ' I am of opinion that they do not. They of course show a ratification of the particular acts involved but they do not aid the plaintiff. . The contract upon which the plaintiff seeks tó recover is quite different. hfo'knowledge that any directors possessed could have fed a reasonable man to believe that the making of such an agreement as that made with the plaintiff would be incident to the business relations which' were outlined by Dresser to the board of directors of thé defendant as intended to be established between the defendant and the shipbuilding company. At the time the agreement with the plaintiff was • made, the' defendant owned none of the shipbuilding securities. At most, assuming it to have' authorized all of Dresser’s other acts in connection therewith, it was interested in those securities only to the extent that it held them as collateral. It may be that its interest .was such that with a view to maintaining the market price of the securities, it would have been competent for *451the board of directors to have authorized this agreement. It is, however, unnecessary to decide that question, for it is quite clear, I think, not only that it never authorized the agreement, but that the plaintiff was not justified in assuming that the execution of that agreement was within the general authority of the president of the defendant or of- those who signed. Even if it were competent for the defendant to make the agreement, it was apparently so foreign to the business of the defendant and of such an extraordinary nature, that the plaintiff was put upon notice as to the authority of those executing the agreement.
The seal of the defendant was attached to the agreement and that constituted prima facie evidence'that the agreement was signed by authority (Quackenboss v. Globe & R. F. Ins. Co., 177 N. Y. 71), but as already indicated, the evidence introduced by tile -defendant completely overcame that presumption. Parties dealing with a business corporation as distinguished from religious and other corporations may rely on the apparent authority of the officers (Karsch v. Pottier & Stymus Mfg., etc., Co., 82 App. Div. 230), but in the absence of evidence upon which estoppel may be predicated as-by holding out as authorized or a course of dealing, the question in all cases still is whether the contract was authorized, and when it appears that it ivas not and that there has been no estoppel, that becomes a complete defense: The rights of stockholders must not be entirely overlooked. Stockholders are powerless to protect their interests by electing competent- directors if the officers thus elected or appointed by the directors may without the knowledge or consent of the latter secretly make important contracts, like this, which are not within their apparent scope or authority for they are not within the ordinary business of the corporation. The. defense that the contract was Unauthorized must, therefore, be sustained as matter of law.
The plaintiff doubtless supposed that the contract was authorized. It appears that, he remained ready to perform, and he invokes estoppel against repudiation of the contract by the defendant; The defendant in fact received no benefit from the contract. -It is urged, however, that it derived the benefit contemplated of having plaintiff’s securities kept off the market. The difficulty with that contention is that it was an unconscious or involuntary benefit at *452most because the defendant as a corporation had no knowledge of the making of the contract. The only ground for making the contract or explanation of the conduct of Dresser, and Livingston in keeping it secret from the company, indicated by the record is their interest in the success of the shipbuilding company .and fear that it would not be authorized or ratified by the defendant. The case of Vought v. Eastern Building & Loan Assn. (172 N. Y. 508) is not in-point. There the corporation, after actually and knowingly receiving the benefit of the contract was held estopped from pleading that the contract was ultra vires.
It follows, therefore, that the judgment should be affirmed, with costs.
Patterson, P. J., and-Scott, J.,. concurred; Ingraham and Clarke, JJ., dissented.
Since amd by Laws of 1904, chap. 607.— [Rep. •