The complaint alleges that the Consumers’ Park Brewing Company of Brooklyn, N. Y., was in 1902 and 1903 a foreign •corporation organized under the laws of West Virginia; that plaintiff was a stockholder thereof; that on or about November 28, 1902, plaintiff, at the special instance and request of said corporation, paid to it the sum of $3,000 for bonds of the said company of the face value of $3,000; that said company, by its president, represented that the said bonds were at that time not in its possession but were in the possession of the Frank Eaub estate, and there was litigation with reference thereto; and said company gave to this plaintiff thirty shares of its capital stock to be held as collateral security and as a substitute for the said bonds. ' It was agreed at that time that the said stock should be transferred on the books of the company to plaintiff, and that he should receive the dividends thereon, but that as soon as the company came into possession of the *587said bonds the plaintiff was to be given the possession of and the title to said bonds of the face value of $3,000 as aforesaid, and he was to transfer back to the said company said thirty shares of stock. It was further agreed that if for any reason, after the litigation with reference to the said bonds with the Frank Raub estate was completed, the said bonds were not transferred to this plaintiff when demanded, the plaintiff should receive back from the company the said sum of $3,000 with interest, less the dividends paid to this plaintiff on the said stock. It further alleged that on October 7, 1903, at the special instance and request of the company, the plaintiff paid to it $1,700 for bonds of the said company of the face value of $2,000, with similar allegations; that the defendant is a corporation organized September 26, 1904, under the laws of the State of New York, and took over the assets and assumed the liabilities of the former company; that the plaintiff surrendered the above-mentioned fifty shares of the former company to the defendant and received from it a like amount óf its capital stock; that said shares are held by the plaintiff in place of the fifty shares surrendered; that on or about the 1st of May, 1909, this defendant came into possession of the said bonds as aforesaid, and that the plaintiff has demanded of this defendant the said bonds, but that the plaintiff’s demand has been refused; that plaintiff hereby offers to transfer and surrender up to the defendant the said fifty shares of capital stock; that the defendant is justly indebted to the plaintiff in the sum of $4,700 with interest, for which he demands judgment.
The answer denies the transaction and agreement alleged, and admits that in or about November, 1907, the defendant corporation came into possession of the bonds in question; it refuses the offer to transfer as set forth in paragraph 10 of the complaint; and for separate and distinct defenses it alleges that plaintiff purchased the said stock and ever since has had possession and exercised ownership over the' same, has voted the same at special and stockholders’ meetings, and has collected the dividends earned and accrued thereon.
The plaintiff testified that he kept a restaurant and a saloon, and that he bought his beer of the company for ten years; that about the time of the organization he bought ten shares of stock; *588that Herman Raub was president of the company from about 1900 to 1907; that Raub came to his place in November, 1902, and asked him to buy some more stock. “ I said no, as I had some already and would not. buy any more. He then said, ‘ well, you take those stocks and we will exchange them for you for bonds as soon as we get them from the Prank Raub estate, or else give you your money back.’ I then said ‘very well, if that is the case Í will take them for security or as collateral until I get the bonds.’ I then drew a check and gave him the check and he gave me the stock * *. . He said ‘ you hold these stocks until I get the bonds from the Prank Raub estate and I will then exchange them for you for bonds or- give you your money back; * * * that was thirty shares of stock. * * * I got a certificate in my name. Mr. Raub handed me the stock at the same time, then and there, in my place of business. * *■ * He also had another officer of the company present, the secretary, Mr. Trieb.” The check was dated November 25, 1902, to the order of the company for $3,000. The second transaction was in 1903 at the company’s office in Brooklyn. “Mr. Raub again asked me whether I would not buy any more stock. I said ‘no.’ He said, ‘you take those stocks the same as you did before and we will exchange them for you for bonds or give you your money back.’ I then said, ‘ Mr. Raub, I haven’t got $2,000,1 only got $1,700.’ He said, ‘ very well, we need the money and you take these stocks for security and we will give you the $2,000 worth of bonds.’ He said, ‘we will make the same arrangement as we made previously to this about the other stock.’ I said, ‘then, very well, I will take them.’” His check for $1,700 was dated October 7, 1903.
The original brewing company was a West Virginia corporation. It became a New York corporation. The stockholders turned in their stock and received an equal number of shares in the new company, the plaintiff receiving one certificate for sixty shares. “Q. What did you say to Mr. Trieb, the secretary, when he handed you one certificate for the sixty shares ? * * * A. I said to Mr. Trieb ‘ this is a mistake, * * * I only own ten shares of stock, the other is as collateral security for those bonds that I am to get from the company, from the *589Prank Eaub estate, or get the money back.’ Mr. Trieb then said, You better take them as I don’t want to destroy the certificates, and we can fix that up when we make the exchange for the bonds.’ ” This conversation took place in the brewing company’s office in Brooklyn. “I became a director of the company, and I was a director of the company when the bonds of the Frank Eaub estate were returned to the company.” The defendant conceded that $100,000 par value of the bonds of the company reached the treasury of the company somewhere along in 1907; these being bonds that the Frank Eaub estate held as collateral for a loan of $40,000.
Plaintiff continued: “When I learned that the bonds had been returned to the company from the Frank Eaub estate I asked Mr. Ludeman, then the president of the Consumers’ Park.Brewing Company, to exchange those stocks for the bonds which I was promised, or else to give me my money back. Mr. Ludeman said: ‘I cannot do that for you in this case; we have nothing to do with Mr. Eaub’s doings.’” He testified as to a further conversation with Ludeman: “I said * * * I must get my bonds or my money, either one or the other; I am only looking for what belongs to me; I don’t want anything from this company only what belongs to me, what I own.’ He said: ‘ I cannot do anything for you; * * * I did not make the arrangement with you; it was Mr. Eaub. ’ I said: Mr. Eaub done all the business transactions for the company, and this was a business transaction the same as any other, and I am not looking for anything only what is my belongings.’ Mr. Ludeman said: * * * ‘ we have to see our counsellor in regard to that, and whatever his decision is we will go by.’ ” After Mr. Westermayr, the counsel, came back from Europe, “ they told me that Mr. Westermayr said there was nothing-doing in the case; that they should not give me the bonds. * * * I am willing to transfer fifty shares' of the capital stock of the Consumers’ Park Brewing Company at any time to the brewery in return for the bonds or my money.”
The defendant put in evidence the by-laws of the West Virginia corporation. Under the duties of the president it was provided: “He shall be ex-officio a member of all standing committees, and shall exercise the general duties of business *590and management usually vested in the office of President of a company.” It was also provided that he should see that all orders and resolutions were carried into effect, execute all contracts and agreements authorized by the board of directors conjointly with the treasurer.
Plaintiff, on cross-examination, testified: “As a director of the old company, Mr. Baub did at a meeting of the directors of the old board present to that board the matter of my arrangement with him for bonds to be substituted for-stocks. After I took the first thirty shares of stock, exclusive of the ten shares that I held previously, Mr. Baub reported that matter in my presence to the Board of Directors, when he offered the stock to the directors, he made the same offer as he made to me. He said that if every director would take $5,000 of the stock— they were In need of money—and if each one takes that .stock for collateral security until they get the bonds from the Frank Baub estate, that they will get the bonds or their money back. That was not after my transaction was completed; that was -after the thirty share transaction was completed. In other words, I had already received my thirty shares before Mr. Baub made this statement that I have now testified to.”
Herman Baub testified: “ I asked him whether he wanted to . buy some more stock. [This conversation was at plaintiff’s place of business in November, 1902.] He stated that he did not care to buy any just now. * * * He then said that he. would buy bonds. I told him; ‘We have not any bonds just now. Of course, you know yourself that $100,000 is tied up with the Frank Baub estate. (That is my brother’s estate.) Tied up for collateral security of $40,000.’- I then told him, * •* * ‘If you take $5,000 worth of the stock now and if we get the bonds back, why, I will exchange them for you.’ He said, ‘ Well, what security would I have?’ I said, ‘You can take my word for it.’ _ * * * I then went there again and he said to me that he would take $3,000, he couldn’t make $5,000 available just now. * * * Q; What did you say to him when you gave him the certificate for the thirty shares? * * * A- He asked me before he gave me the check whether this was understood according to our last conversation, meaning that when we got *591the bonds back that he would get them exchanged. I told him we would do so; the company would do it. Well, I spoke as president; this was not as an individual, always as president. * * * He asked for the bonds between the time that. I received $1,700 altogether from him and my leaving the brewery as president. He asked pretty nearly at every directors’ meeting, What is the case about the bonds; did you get them, or is there any prospect ? ’ I told him no. * * * I reported the various actions, but there was never any vote taken; they did not dispute it. * * I desire to be understood as testifying that I informed the board of directors of these negotiations from time to time as they occurred. * * * I first reported the Haule transaction to the board of directors * * * just at the time when I had made the transaction. I explained, I said that Mr. Haule took $3,000, and there was a list going around where every director signed that he would take $5,000 worth of the bonds. I spoke to the board of directors for the first time about this right after the transaction, in 1902. * * * There was never any resolution adopted by the board of directors, either of the old company or of the new company authorizing me to make an arrangement for the sale of the stock on the terms proposed to Mr. Haule. After the first transaction of thirty shares there was no resolution adopted ratifying my action. * * * There never was any resolution adopted with regard to the second transaction and ratifying my arrangement respecting the same. * * * Nowhere in the books is there any reference made to the exchange of bonds for this stock * * * and in neither the minute book of the old company or of the new company, to my knowledge, is there any resolution that I was authorized by the board of directors to make this arrangement with Mr. Haule, neither the old or of the new company, to my knowledge. Q. And no resolution ratifying your conduct or arrangement with Mr. Haule ? A. Tes; the ratification was always in bulk, whatever I done was ratified in bulk. * * * There was no resolution adopted ratifying this transaction specifically. * * * There was a resolution adopted ratifying it in bulk. For instance, if I done ten different things they were taken up together and the minutes were read, and *592then a vote was always put on the minutes ratifying the action of the hoard of managers and of the president. That is in existence in the minutes.”
Mr. Ludeman for the defense testified that he became president in March, 1907. He first had a conversation with Haule in regard to the stock or bonds transaction testified to by him in 1907, the latter part of the year. “Every time Mr. Haule came there to the directors’ meetings he wanted to know what would he done in regard to his stock,, and that he wanted some bonds; that he wanted money, and wanted to sell those bonds, and he wanted to change them.”
A verdict for the plaintiff was returned by the jury, and from the judgment entered thereon and the order denying a new trial the defendant appeals.
By their verdict the jury have declared that the story told by plaintiff and his witnesses is true, and that the transaction was in reality a sale of bonds for future delivery and issuance of the stock as collateral thereto under an agreement to pay back the amount received, less dividends paid upon the stock in case the bonds could not be delivered.
We cannot say that this verdict is against the weight of the evidence. . The story was not inherently improbable. If this business corporation, engaged in the brewing business, needed money and was unable to sell and deliver its bonds because they had already been pledged as collateral for a preceding-loan, about which there is no question, it was a reasonable transaction that the president should attempt to procure needed funds from the stockholders, especially when the company was a brewer and- the stockholder was a saloonkeeper dealing in its. products. The stockholder refused to accede to the request to buy more stock, but- upon continued urging agreed to take bonds to be delivered in the future, with an' issue of stock as collateral. . There is nothing in the record to ¡suggest that the verdict is not fully supported by the evidence.;
The original corporation with which this agreement was made was a West Virginia corporation, and, if the transaction was lawful when made with it, the present company, its successor, is bound, because it is conceded that it took all the property and assumed all the liabilities of its predecessor. The laws *593of West Virginia governing corporations were not put in evidence, and, therefore, there is nothing to show that the transaction alleged was in violation of any of the statutory provisions of that State. That it could sell bonds is obvious because the very purpose of creating bonds is to sell them, for the purpose of raising money with which to transact the business of the corporation. If it could sell them it could sell them for future delivery. Whether it could issue its treasury stock as collateral security to a contract for the future delivery of its bonds was a matter to be decided by the laws of the State of West Virginia. That it could not has neither been alleged by the answer nor proved in the case. There is sufficient evidence of authorization and ratification to the president, both under his general powers and by the knowledge and transactions of the board of directors testified to, although not evidenced by written minutes.
In the recent case of Strodl v. Farish-Stafford Co. (145 App. Div. 406) the action was on a contract with respect to the purchase of the capital stock of a North Carolina corporation, under which plaintiff agreed that if at any time he should leave the employ of the company to sell to it at its par value all his stock, and the company agreed to buy it back. The North Carolina corporation was succeeded by defendant, a Connecticut company, which assumed all the contract obligations of its predecessors. Plaintiff’s connection with the company was severed and he tendered the twenty-eight shares of stock which he held. The tender was refused and he brought suit. The complaint was dismissed. This court unanimously reversed; Mr. Justice Laughlin saying: “Neither the statutes of North Carolina nor of Connecticut with respect to the authority of a corporation to sell its capital stock—either the original issue or treasury stock—conditionally or to repurchase the same were proved.. Manifestly the statutory law of this State bearing on the subject is not controlling. The validity of the contract and its enforcibility against the defendant depend either on foreign statutes or on common-law principles. We cannot take judicial notice of the statutory law of another State, and since it has not been pleaded and proved the dismissal *594of the complaint can only he sustained upon the theory that -the contract is void at common law, which could only be oh the theory that it is against public policy, for the defense of ultra vires can only be adjudicated on proof of the actual powers and authority of the corporation. That such a contract is not necessarily void as contravening public policy in any and all circumstances was long since decided by our Court of Appeals. (City Bank of Columbus v. Bruce & Fox, 17 N. Y. 507, and numerous other decisions to sustain that doctrine; Vail v. Hamilton, 85 N. Y. 453; Booth v. Dodge, 60 App. Div. 23; Joseph v. Raff, 82 id. 47; affd., 176 N. Y. 611; Moses v. Soule, 63 Misc. Rep. 203; Matter of Castle Braid Co., 145 Fed. Rep. 224.) In these circumstances, if there be any statutory law which rendered the contract ultra vires and void, or if it be unenforcible on the ground that the defendant had no surplus profits with which to repurchase the stock, then I think these were matters of defense to be pleaded and proved by the defendant.”
In Richards v. Wiener Co. (145 App. Div. 353) it was held that a contract to repurchase preferred stock at the stockholder’s option was enforcible. The defense was based upon section 664 of the Penal Law (formerly section 594 of the Penal Code) making it a misdemeanor for any director, to concur in any vote or act to apply any portion of the funds of such corporation, except surplus profits, directly or indirectly, to the purchase of shares of its own stock. Mr. Justice Scott said:' “It will be observed that the statute does not forbid a corporation to purchase its own stock, nor does it forbid it to enter into a contract to do so. What it does forbid is the consummation of such a contract by making the purchase otherwise than out of surplus. * * * In defending against plaintiff’s attempt to enforce it [the contract] the burden rested upon defendant to show that it would be illegal to do so, for there is no presumption one way or the other as to the existence of a surplus.”
It seems to us that no valid, legal objection to the recovery had in this case is presented by this record. It does appear, however, that the contract alleged in the complaint and proved upon the trial was that if the said bonds were not transferred to the plaintiff when demanded, the plaintiff should receive *595back the sum. paid, less the dividends paid to this plaintiff on the stock. This seems to have been lost sight of at the close of the case and the court charged the jury that if they found for the plaintiff their verdict would be, including the interest, $6,913. It appears that the plaintiff had received $410 in dividends.
The judgment and order appealed from should be reversed, ■ unless the plaintiff stipulates to reduce the amount of the verdict by $410, and if he does so stipulate, the judgment should be modified and affirmed accordingly, with costs to the respondent.
Miller, J., concurred.
Judgment and order reversed, new trial ordered, costs to appellant to abide event.