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or any written instrument for the payment of money, save only for the purpose of collection of said instrument, unless thereunto duly authorized by the vote of the directors of this company duly held at a regular or monthly meeting of the board of directors and entered on the minutes of said board."

“No officers or agents of the company shall singly or together, unless thereto specially authorized, contract or cause to be contracted, any debt or liability in the name or on behalf of the company beyond the ordinary legitimate business and current expenses thereof."

(2) Beiermeister Bros. & Co. was a firm and copartnership at Cohoes, N. Y., carrying on a distinct and separate business from that of the Troy & Cohoes Shirt Company. Such copartnership was composed of said Frederick Beiermeister, Jr., said John M. Beiermeister, and said Charles F. Beiermeister. It had no other member.

(3) Said International Trust Company was and is a corporation of the state of Massachusetts, duly authorized, etc., and was authorized to do and was doing a general banking business. John M. Graham was the president of said company, who did all the business for said company in connection with the discounting of the notes in question. He and said company knew that Frederick, Jr., and John Beiermeister were members of the firm of Beiermeister Bros. & Co. He and said company knew that said Frederick Beiermeister, Jr., was president, and that said John M. Beiermeister was secretary and treasurer, of said Troy & Cohoes Shirt Company. That fact appeared on the face and back of each of the notes in question. The negotiable instruments law of the state of Massachusetts, being chapter 73 of the Revised Laws of said state, contains the following provisions:

"Sec. 46. An accommodation party is one who has signed the instrument as maker, drawer, acceptor or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party.”

“Sec. 69. A holder in due course is a bolder who has taken the instrument under the following conditions: (1) That it is complete and regular upon its face. (2) That he became the holder of it before it was overdue, and without notice that it had been previously dishonored if such was the fact. (3) That he took it in good faith and for value. (4) That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.”

"Sec. 73. To constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowl. edge of such facts that his action in taking the instrument amounted to bad faith.

"Sec. 74. A holder in due course holds the instrument free from any defect of title or prior parties, and free from defences available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon."

"Sec. 76. Every holder is deemed prima facie to be a holder in due course ; but when it is shown that the title of any person who was negotiated the instrument was defective the burden is on the holder to prove that he or some other person under whom he claims acquired the title as holder in due course. But the last mentioned rule does not apply in favor of a party who became bound on the instrument prior to the acquisition of such defective title.”

(4) On the 10th day of March, 1903, the Troy & Cohoes Shirt Company at Cohoes, N. Y., without consideration, and not for any purpose connected with its own business, and, so far as appears, without any meeting of or action by its board of directors, authorizing such action, made its promissory note of which the following is a copy, viz.: "$5,000.00

March 10th, 1903. "Six months after date, we promise to pay to the order of ourselves Five Thousand Dollars 00/100, payable at the International Trust Co., Boston, Mass., value received.

Troy & Cohoes Shirt Co.

“F. Beiermeister Jr. Prest.

“John M. Beiermeister Treas." The name "Troy & Cohoes Shirt Co." and "F. Beiermeister Jr. Prest." were signed thereto by the president, and "John M. Beiermeister Treas.” was signed thereto by such treasurer. Said note was thereupon and without consideration indorsed as follows: Said president of said company first wrote the name of said company on the back thereof, and his own name with the word “Prest.” following, thereunder, and then said treasurer wrote his name under the name of the president, adding "Treas." Said F. Beiermeister, Jr., and said John M. Beiermeister then indorsed said note individually by writing their names in the order named thereunder. The said note, without consideration, was then delivered to said Charles F. Beiermeister, vice president of said shirt company, and also a member of the firm of Beiermeister Bros. & Co., who indorsed said note by writing his name thereon as follows: "C. F. Beiermeister,” and said note was then delivered to said F. Beiermeister, Jr. (a member of said last-named company, the copartnership, and also president of said shirt company), who indorsed same, without consideration, by writing the name of such copartnership thereon as follows: "Beiermeister Bros. & Co." Such indorsements then read as follows and in the following order, viz.:

"Troy & Cohoes Shirt Co.
"F. Biermeister Jr., Prest.
"Jobn M. Beiermeister Treas.
"F. Beiermeister Jr.
"John M. Beiermeister.
"C. F. Beiermeister.
“Beiermeister Bros. & Co."

The note was not made or given for an advance or advances made, or any consideration whatever given or paid, by any one or more of such indorsers.

(5) The Troy & Cohoes Shirt Company was not indebted to said partnership, nor to said F. Beiermeister, Jr., but said partnership and said F. Beiermeister, Jr., each were indebted to Troy & Cohoes Shirt Company:

(6) Beiermeister Bros. & Co. had an account with said International Trust Company, from which it drew money on check from time to time.

(7) Henry Beiermeister was the agent of said firm Beiermeister Bros & Co.

(8) On the day of the date of the said note, March 10, 1903, said agent of said copartnership, known and representing himself to be such agent, presented the said note to said International Trust Company at its place of business in Boston, Mass., the place where payable, for discount, and he then and there stated and represented to the said International Trust Company, and directly to its said president, John M. Graham, who was doing the business for said trust company, that such note was made, executed, indorsed, and delivered on account of advances of money made by said Beiermeister Bros. & Co. to the said Troy & Cohoes Shirt Company. The said International Trust Company, so represented by its president in the transaction, believed such representations, and thereupon discounted such note for, and placed the proceeds thereof to the credit of, the firm of Beiermeister Bros. & Co.

No part of such proceeds was paid to or for the benefit or use of the maker, Troy & Cohoes Shirt Company. It is not shown that the directors of said company, acting as a board, authorized the making, execution, indorsement, and delivery of said note.

(9) The other four notes, each for $5,000, and reading the same, except as to date, were made, executed, indorsed, delivered, and discounted in precisely the same manner, by the same persons and companies, and under the same circumstances, and with the same representations, and the proceeds were placed to the credit of the same firm, as in the case of the note of March 10, 1903, the only difference being in the dates of the notes and of the transactions relating thereto, viz., one was dated and discounted April 3, 1903, two May 21, 1903, and the last May 29, 1903.

From these facts it appears that the International Trust Company knew, when it discounted these notes, that Troy & Cohoes Shirt Company, the maker, was a New York corporation; that Frederick Beiermeister, Jr., and John M. Beiermeister were the president and secretary and treasurer thereof, respectively; and that such named persons were members of the firm of Beiermeister Bros. & Co., a firm carrying on a separate and an independent busi

From these facts the referee has found as a fact "that the notes in question bore upon their face and in their indorsement, when presented for discount by said firm of Beiermeister Bros. & Co. to the International Trust Company of Boston, notice that they were accommodation notes.” Such referee has also found from the aforesaid facts "that said notes in question bore upon their face and in their indorsements, when presented for discount by Beiermeister Bros. & Co. to International Trust Company of Boston, notice that they were ultra vires and void as obligations of Troy & Cohoes Shirt Company.” The referee also finds as a fact "that the claimant (International Trust Company) has failed to prove any loan of moneys to Troy & Cohoes Shirt Company, as alleged in its proof of claim.” The proof of claim in due form, and properly verified, states that "the said Troy & Cohoes Shirt Company

was at and before the filing of the said petition, and still is, justly and truly indebted to said corporation (International Trust Company) in the sum of twenty-five thousand ten and 60/100 (25,010.50) dollars; that the

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consideration of said debt is as follows: money loaned as per notes attached.” The claim then says that no part of said note has been paid, no note received, and no judgment rendered, and that there are no set-offs or counterclaims, except $534.72. The original notes, with certificates of protest attached, were annexed to the claim.

I do not see the pertinency or correctness of a finding that the claimant has failed to prove any loan of moneys to Troy & Cohoes Shirt Company, as alleged in its proof of claim." The International Trust Company has neither stated nor suggested in its proof of claim that it did loan money to the Troy & Cohoes Shirt Company. It simply makes a claim upon the notes, with the statement that the consideration was money loaned as per notes attached, and as the last indorser upon each of said notes is Beiermeister Bros. & Co., the fair inference is that the money was loaned to this indorser, and not to the maker of the note.

The trustee insists that the making, execution, indorsement, and delivery of these notes were not the exercise of a power given by law, or, if given by law, such acts were not necessary to the exercise of the power given. The contention is that the Troy & Cohoes Shirt Company had power under the statute to give notes in the transaction of its business for money borrowed to use in its business, or in payment for property purchased, or for labor only, and that it had no power to make an accommodation note in this form, and indorse it in this form to a second party, and that the want of power to make this note appears upon the face thereof by reason of the fact that it is made by the maker payable to itself. It is also contended that under the by-laws quoted each note is void, for the reason that it does not affirmatively appear that the indorsement of such note by the president and treasurer was authorized by the vote of the directors at a regular or monthly meeting entered on the minutes of the board. It is further contended that each note is void because executed, indorsed, and delivered in violation of the by-law prohibiting the officers, unless specially authorized, from contracting any debt or liability in the name or on behalf of the company beyond the ordinary legitimate business and current expenses of the company. It is insisted that the International Trust Company of Boston was bound to know the powers of this company, the Troy & Cohoes Shirt Company. The trustee insists that each note showed to the International Trust Company upon its face that it was made and indorsed in the name of the company, by its officers, who were seeking to use such note for their own personal ends, and that the form of the note and of its indorsements were sufficient to put said trust company upon inquiry as to the power of the maker to utter such note, as to its consideration, and as to all other material facts. The trustee further claims that, as the International Trust Company was thus put upon inquiry, and failed to inquire further than it did, it stands charged with knowledge of all the material facts hereinbefore cited, and is as fully concluded and bound as though it had possessed actual knowledge when the paper was discounted.

The International Trust Company took these notes from the duly authorized agent of one of its customers, Beiermeister Bros. & Co. It would seem that it made inquiry, for it was informed that the note was made, indorsed, and delivered to the Beiermeister Bros. & Co. for advances made by that company to the maker of the note. It is not the case of a note made by a company payable to itself, and indorsed to an officer of the company, and by such officer discounted for his own benefit to the knowledge of the discounter. Here, while the note is made payable to the order of the maker, and was then indorsed by the maker exactly as signed, and also by the president and secretary and treasurer of the maker individually, it also bore the indorsement of C. F. Beiermeister. There is no evidence that the International Trust Company knew C. F. Beiermeister held an official position in, or had anything to do with, the Troy & Cohoes Shirt Company. There is no evidence that the president of the Troy & Cohoes Shirt Company, or the treasurer thereof, made or used or indorsed the notes for their individual benefit. In fact, they did not. The notes were made and indorsed as they were for the benefit of Beiermeister Bros. & Co., a copartnership doing an independent business. It is probably true that, had either the president or secretary and treasurer taken these notes, indorsed as they were, to the International Trust Company for discount with the statement that he desired the money for his own purposes, or that he was procuring the discount for himself, and not for the maker, this would have been notice to the International Trust Company of the invalidity of the notes; but the notes were not presented for discount by any officer of the maker. On the other hand, each note was presented on the day of its date by an agent, not of Frederick Beiermeister, Jr., or of John M. Beiermeister, but of an independent company, doing an independent business, who sought to discount the note for the benefit of this independent company. The International Trust Company possibly had cause to suspect that the notes had been made and used for the benefit of either the president or secretary and treasurer, or both, inasmuch as such notes bore their individual indorsements, and hence it made inquiry, and was informed, in substance and effect, that the individual indorsements of Frederick, Jr., John M., and C. F. Beiermeister were accommodation indorsements, made to add their individual liability to the liability of the Troy & Cohoes Shirt Company, and that such notes were given for advances made by Beiermeister Bros. & Co. to the maker of the note.

In Wilson v. the Metropolitan E. R. Co., 120 N. Y. 145, the court says at page 150, 24 N. E. at page 385 (17 Am. St. Rep. 625):

“Undoubtedly the general rule is that one who receives from an officer of a corporation the notes or securities of such corporation in payment of, or as security for, a personal debt of such officer, does so at his own peril. Prima facie, the act is unlawful, and, unless actually authorized, the purchaser will be deemed to have taken them with notice of the rights of the corporation. Garrard v. P. & C. R. R. Co., 29 Pa. 154; Pendleton v. Fay, 2 Paige, 202; Shaw v. Spencer, 100 Mass. 388, 97 Am. Dec. 107, 1 Am. Rep. 115."

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