[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 195
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 196 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 198 The plaintiff asserts that the claims, amounting to $300,776, held by the bank against the mill on the 1st day of May, 1875, have been fully and legally paid; and that between May 1, 1875, and the date of the failure of the bank, a new indebtedness, amounting to $419,361, was incurred by the mill to the bank with the assent of the defendants, and that they are liable to the receiver of the bank for the sums by which the indebtedness exceeds the capital stock of the mill.
The referee found as a fact:
"VIII. That to the creation of the debt of the Schaghticoke Woolen Mills to the Merchants and Mechanics' Bank of Troy, existing on the 1st day of May, 1875, or to any part thereof, the defendant, Daniel Robinson, did not assent."
As a conclusion of law: "I. That neither of the defendants are liable for any part of the indebtedness of the Schaghticoke Woolen Mills in excess of its capital stock exising on the 1st day of May, 1875." The plaintiff insists that the eighth finding of fact is without any evidence tending to sustain it, that it is a ruling upon a question of law, and that the referee erred in finding it, and the General Term in sustaining it. If the plaintiff's position is, in fact, well taken, he should have excepted to the eighth finding, pursuant to section 993 of the Code of Civil Procedure. (Brush v. Lee, 36 N.Y. 49, 53;Gidley v. Gidley, 65 id. 169, 171; Sickles v. Flanagan, 79 id. 224; Mead v. Smith, 28 Hun, 639.) But no exception was taken to this finding, nor was an exception taken to the conclusion of law above quoted, which seems to be a sequence to the finding of fact above quoted. Neither *Page 199 did the plaintiff request the referee to find the converse of this finding of fact, pursuant to section 1023 of the Code of Civil Procedure. It does not appear that the case contains all of the evidence or all bearing upon the eighth finding; and on such a record this court must presume that the finding was sustained by the evidence. (Porter v. Smith, 107 N.Y. 531; (Cox v.James, 45 id. 557.) However, it is quite unnecessary to determine whether Robinson assented, within the meaning of the section, to the creation of the debts existing May 1, 1875, for the referee finds, as a fact, that on that date he knew the amount of the indebtedness then outstanding, and, as a conclusion of law, that he assented, within the meaning of the section, to the creation of all debts which were incurred by the mill after that date. The other defendant, Pinkham, did not become a trustee until June 18, 1878, and was without power to assent or dissent, within the meaning of the section, to the creation of the debts incurred before that date, but he knew the amount of the indebtedness outstanding June 18, 1878, and assented, within the meaning of the section, to the creation of all debts which were incurred by the mill after that date. Thus the liability of the defendants depends upon whether the commercial paper found in the bank after its failure, and amount-to $419,361, was then an existing indebtedness in favor of the bank, and against the defendants. Had this paper remained unpaid in the hands of the person to whom it was given, the liability of the defendants, as assenting trustees for the excess could not have been successfully denied.
The referee does not find whether the existence of the contract of May 1, 1875, was known or unknown to the boards of the two corporations, nor is it disclosed by the evidence; but it does appear that the board of directors of the bank consisted of four members, D. Thomas Vail, a director and president; Charles R. Church, a director and vice-president; Francis Sims, a director and cashier. The name of the fourth director does not appear. Church was a partner of Robinson and an indorser on some of the paper made by the mill after *Page 200 May 1, 1875. The board of trustees of the mill consisted of five members, D. Thomas Vail, a trustee and president; Daniel Robinson, a trustee; Chester Griswold, a trustee; William Howard Hart, a trustee; and Thomas A. Knickerbacker, a trustee from May 1, 1875, to June 18, 1878, when James E. Pinkham succeeded Knickerbacker as a trustee, and from that date until the failure of the mill its trustees were Vail, Robinson, Griswold, Hart and Pinkham.
There is no evidence that the financial transactions between the bank and mill, prior or subsequent to May 1, 1875, were unknown to or disapproved by the board of either corporation, and this court will not, for the purpose of reversing the judgment, presume that the transactions were unauthorized by the boards. The contract does not appear to have been entered into for the personal benefit of Vail or Robinson, but solely for the benefit of the then involved corporations, and there is no evidence that Vail or Robinson profited, or sought to profit, by the contract. The contract was one which the boards of the corporations had power to authorize, their presidents to make, or to ratify after it had been made, and the burden was on the plaintiff to show that the contract was not authorized or ratified by the boards. (Bank of Vergennes v. Warren, 7 Hill, 91; Gillett v.Campbell, 1 Denio, 520; Elwell v. Dodge, 33 Barb. 336;Chemical Nat. Bank v. Kohner, 85 N.Y. 189, 193; Smith v.Hull Glass Co., 11 C.B. 897, 929; Lee v. Pittsburg Coal andMining Co., 56 How. 373; affirmed, 75 N.Y., 601; Morawetz on Corp. [2d ed.] §§ 336, 538, 593.) The plaintiff failed to rebut the presumption that the contract was entered into or ratified by the authority of the boards of the corporations, and it must be held to be binding on both. Under it the commercial paper made by the mill and paid by the bank after May 5, 1875, was, as to these defendants, paid, and no cause of action was established against them under the twenty-third section in respect to it.
The judgment should be affirmed, with costs.
All concur, except PARKER, J., not sitting.
Judgment affirmed. *Page 201