Shelby v. New York Steam Co.

WHITNEY, J.

This is an action to' recover interest for the past 20 years upon an instrument, signed by the president and treasurer and bearing the seal of the defendant company, of which the important part is as' follows:

“This is to certify that the New York Steam Company is indebted to W. A. Street in the sum of three hundred and fifteen dollars, due and payable out of the net earnings of said company in gold coin of the U. S. at any time after thirty days’ notice of payment shall have been given by the board of directors. This certificate bears interest at the rate of six per cent, per annum. Such interest will be paid semiannually at the office of the company on the first day of . April and October after this date.”

Both of the signers are dead.

Plaintiff introduced the instrument, and thus made a prima facie case. Quackenboss v. Globe Insurance Co., 177 N. Y. 71, 69 N. E. 223; Gause v. Commonwealth Trust Co., 196 N. Y. 134, 89 N. E. 476. It was conceded, however, that the instrument was issued without consideration, and supposed by the person who received it, who was a stockholder of the company, to be a scrip dividend. Upon this concession defendant at first rested and moved for judgment, to which it was entitled; but the motion was denied, and it then put in oral evidence mat the corporation had declared a scrip dividend about that time. It then undertook to prove that the declaration was illegal, because there were no sufficient net profits, but failed to do so by competent evidence. The general statement that, so far as the general auditor knows, “the company had not earned any dividends,” was excepted to, and the exception is good. The best evidence was the books of account, and they did not prove themselves (Leonard v. Faber, 52 App. Div. 495, 499, 65 N. Y. Supp. 391), nor was a proper foundation laid for their admission. The minute book, however, was properly proved, and is evidence both that its contents are correct and that, presumptively, 'proceedings not therein recited did not actuallyoccur. Woodhaven Bank v. Brooklyn Hills Imp. Co., 69 App. Div. 489, 74 N. Y. Supp. 1023. It contains no entry of any resolution of the directors authorizing a dividend. This cast upon plaintiff the burden of proving by some survivor that .a resolution for a dividend was actually passed, although not recorded in the minutes. No such evidence was offered, and the fair inference from the statements of defendant’s witness is therefore that the “declaration” of the scrip dividend was not by the# directors, but by the president and secretary.

The statute under which the corporation was organized did not authorize those officers to declare a dividend, but contemplated that that power should reside in the directors or trustees (Manufacturing Corporations Act [Laws 1848, c-40] § 13); and this power was then, as it is now, one regarded by the law as exclusively vested in the governing body of the corporation (Pen. Code, § 594). See . Williams v. Western Union Tel. Co., 93 N. Y. 162, 192; Morawitz on Corporations, § 446.

The plaintiff having failed to show authority for the dividend, the judgment must be affirmed, with costs. All concur.