An application for a new trial on the ground of newly discovered evidence will be granted when it appears that testimony has in fact been discovered since the former trial, which, by the use of reasonable diligence, could not then have been obtained, and that such testimony is material to the issue, goes to the merits of the case, and is not cumulative. [Ed. Note. For other cases, see New Trial, Cent. Dig. 201; Dec. Dig. 99.*] (Syllabus by the Court.) Replevin by Alfred L. Ellis against the F. L. C. Martin Automobile Company. Verdict for plaintiff, and defendant obtained a rule to show cause why a new trial should not be granted for newly discovered evidence. Rule made absolute. Argued November term, 1908, before GUMMERE, C. J., and SWAYZE and TRENCHARD, JJ. when it was left with the defendant was material to the issue, not only as bearing upon the value of the car, but as tending to show for what purpose it was left with the defendant and what repairs were ordered by the plaintiff. In order to support his contention that it was in good condition, the plaintiff testified that he was a physician in active practice; that he had purchased the car in April, 1907, and had used it continuously in his practice from that time until June 18, 1907, when he took it to the defendant to have the tire retreaded; that he never had any difficulty with it; that it was in good condition when he bought it, and was in good condition when he left it with the defendant. On the other hand, the witnesses called by the defendant company testified in effect that the car was badly in need of repair when it was brought to them, and that the repairs to the engine were rendered necessary by its condition when they received it and not to any negligence upon their part. At the trial the plaintiff, after testifying that he had owned George S. Silzer, for plaintiff. Reed & Cod and driven the car since April, 1907, further dington, for defendant. TRENCHARD, J. The plaintiff, Alfred L Ellis, was the owner of an automobile. The defendant ran a garage, with a repair department, at Plainfield. On June 18, 1907, the plaintiff left his automobile at the defendant's garage for repairs. Certain repairs, hereinafter more particularly stated, were made. Later, when the plaintiff called for the machine, the company declined to let him have it unless he would pay the bill for the repairs, which he declined to do. Thereupon the plaintiff caused to be issued a writ of replevin. The defendant company gave bond and held the car, and this suit resulted. The jury found a verdict for the plaintiff, whereupon the defendant obtained this rule to show cause why a new trial should not be granted upon the ground of newly discovered evidence. According to the plaintiff's testimony at the trial, the automobile was left with the defendant company only for the purpose of having an old tire retreaded. According to the testimony on behalf of the defendant company, it was there for general repairs. It was undisputed that in fact the car was repaired generally by the defendant company, including repairs to, and new parts for, the engine. But it was contended by the plaintiff that the machine was in good condition when left with the defendant, and that no repairs were necessary and none were ordered excepting that to the tire, and that the repairs to and new parts for the engine were rendered necessary only by the negligence of the defendant company in handling the machine while in their care. It will thus be seen that the condition of the plaintiff's car stated that he had purchased it of the Man. hattan Storage Company of New York. The newly discovered evidence is to the effect that in fact the car was bought by the plaintiff on June 14, 1907 (but four days be fore it was left at the garage), and that it had never been in his possession before that time; that it was then four years old and was sold as it stood on the floor, without demonstration and without guarantee; and that its value was much less than that stated by the plaintiff on trial. With respect to this evidence, it is sufficient to say that it has in fact been discovered since the former trial; that, by the use of reasonable dillgence, it could not have been then obtained; that much if not all of it is material to the issue and goes to the merits of the case, and is not cumulative. Under these circumstances the motion for a new trial ought not to be denied. Van Riper v. Dundee Mfg. Co., 33 N. J. Law, 152; Kursheedt v. Standard Bleachery Co. (N. J. Sup.) 71 Atl. 39. Let the rule to show cause be made absolute. HAGEMAN v. BROWN et al. (Court of Chancery of New Jersey. March 25, 1909.) CREDITORS' SUIT (§ 39*)-BILL-SUFFICIENCY. A bill by a judgment creditor to enforce the judgment against land, the legal title to which debtor purchased the land with his own money is in the debtor's daughter, alleging that the and caused the conveyance to be made to his daughter, pleading facts negativing the idea that the conveyance was a gift, and alleging that the daughter has no beneficial interest in the land, but holds it in trust for her father, is sufficient as a bill to enforce the judgment against the debtor's equitable estate; an averment that | by an indorsee of a note before maturity against complainant was a creditor when the land was the corporate maker, that evidence that defendpurchased and the legal title placed in the ant's treasurer executed a note without audaughter's name being unnecessary. thority for his personal debt was admissible to shift to plaintiff the burden of proving that it was a holder in due course, or of overcoming the proof that the note was not given for a debt of the corporation. [Ed. Note. For other cases, see Creditors' Suit, Cent. Dig. §§ 154, 155; Dec. Dig. § 39.*] Bill by Aaron T. Hageman against Charles G. Brown and another. Order overruling defendants' demurrer to the bill advised. Paul Q. Oliver, for complainant. George Ball, for defendants. LEAMING, V. C. The bill is filed by complainant, as judgment creditor of defendant Charles G. Brown, for the purpose of enforcing the judgment against certain real estate, the legal title to which now stands in the name of defendant Roberta Brown. Defendants demur for want of equity. While the demurrer contains no specification pursuant to rule 209, it may for present purposes be considered as sufficient in that respect. At the hearing it was urged by counsel for demurrants that the bill could not be supported because of the absence of an averment that complainant was a creditor of defendant Charles G. Brown at the time the premises in question were purchased by him and the legal title thereof by him placed in the name of Roberta Brown. Under the bill as framed that averment is unnecessary. After setting forth that defendant Charles G. Brown purchased the property in question, and paid for it with his own money, and caused the conveyance for the same to be made to defendant Roberta Brown, and also setting forth facts which negative the idea that the conveyance was a gift to defendant Roberta Brown, the bill avers that defendant Roberta Brown "has no beneficial interest whatever in the said premises, but holds the same in trust for her father, the said Charles G. Brown." With these averments the bill may be sustained as a bill to enforce the judgment against the equitable estate of defendant Charles G. Brown. Halsted v. Davison, 10 N. J. Eq. 290, 295; Newman v. Van Duyne, 42 N. J. Eq. 485, 7 Atl. 897; 2 Story's Eq. Juris. § 1216b. [Ed. Note.-For other cases, see Bills and Notes, Cent. Dig. §§ 1677, 1680; Dec. Dig. § 497.*] 2. CORPORATIONS (§ 430*)—ACTS OF OFFICERS -NEGOTIABLE INSTRUMENTS-VALIDITY. Prima facie the act of the treasurer of a corporation in executing a note for his individual debt is unlawful, and, unless actually auis void in the hands of the payee. thorized or ratified by the corporation, the note [Ed. Note. For other cases, see Corporations, Cent. Dig. §§ 1740, 1741; Dec. Dig. § 430.*] Error to Circuit Court, Morris County. Action by Louis De Jonge & Co. against the Woodport Hotel & Land Company. Judgment for defendant, and plaintiff brings error. Reversed. Argued November term, 1908, before GUMMERE, C. J., and SWAYZE and TRENCHARD, JJ. Elmer King, for plaintiff in error. Willard W. Cutler, for defendant in error. GUMMERE, C. J. This suit was brought upon a promissory note dated August 16, 1906, for $750, payable 12 months after date to the order of C. I. McLoughlin, and signed "The Woodport Hotel & Land Co,, Thomas Bright, Treas.," and indorsed by McLoughlin to the plaintiffs. At the trial the plaintiffs proved that the signature to the note was written upon it by Thomas Bright, that Bright was then the treasurer of the defendant company, and that they became the holders of the note before maturity. Plaintiffs then rested. On the part of the defendant it was opened to the jury that the note in suit was made by Bright without authority from the defendant, that it was not given to secure any obligation of the company, but in payment for a motor boat purchased by Bright for his own use from McLoughlin, and that the plaintiffs took the note with knowledge of these facts. Thereupon the trial court directed counsel for the defend I will advise an order overruling the de- ant to first put in his proofs relating to the murrer. (77 N. J. L. 233) knowledge of the plaintiffs as to the consideration for which the note was given before proving the transaction itself. This LOUIS DE JONGE & CO. v. WOODPORT | course being pursued, the court considered HOTEL & LAND CO. (Supreme Court of New Jersey. April 8, 1909.) 1. BILLS AND NOTES (§ 497*)-NEGOTIABLE INSTRUMENTS LAW-HOLDER IN DUE COURSEEVIDENCE. Negotiable Instrument Act April 4, 1902, § 59 (P. L. p. 594), provides that every holder of a note is deemed prima facie to be a holder in due course, and that, when it is shown that the title of the negotiator was defective, the burden is on the holder to prove that he or some person under whom he claimed has acquired title as a holder in due course. Held, in an action that the proofs submitted did not justify the conclusion that the plaintiffs knew when they took the note, or had any reason to believe, that it was not an obligation of the defendant company, and held that, as the defendants had failed to show that the plaintiffs were not bona fide holders for value, it was not entitled to prove the real consideration of the note. Holding this view, the court then directed a verdict for the plaintiffs for the full amount of the note with interest. Upon this ruling and instruc- | been placed upon it by judicial construction tion the defendant assigns error. The exclusion of proof that the note in suit was given by the defendant's treasurer to pay his own individual debt, without authority from the defendants, resulted from a misconception of the respective rights of the parties as established by the law relating to negotiable instruments. By force of section 59 of the negotiable instrument act of April 4, 1902 (P. L. p. 594), every holder of a promissory note is deemed prima facie to be a holder in due course; 1. e., among other things, that he took the note in good faith, and for value, without notice of any infirmity in the instrument, or defect in the title of the person negotiating it. But that section further provides that, when it is shown that the title of the person who has negotiated the instrument was defective, the burden is on the holder to prove that he, or some person under whom he claims, acquired the title as a holder in due course. The effect, therefore, of the rejected proof, would have been to destroy the then existing presumption that the plaintiffs were "holders in due course," and to throw upon them the burden either of proving that fact, or of overcoming the proof of the defendant that the note was given for Bright's personal debt, and that his act in making it was not authorized or ratified by the company, provided that the making of the note under the conditions.recited rendered it invalid in the hands of McLoughlin, the payee. That it did have such effect is beyond dispute. It is a settled rule of commercial law that one who receives from an officer of a corporation the note of such corporation in payment of or as security for a personal debt of such officer does so at his peril. Prima facie the act is unlawful, and, unless actually authorized or ratified by the corporation, such note is void in the hands of the payee. Wilson v. Metropolitan, etc., Ry. Co., 120 N. Y. 145, 24 N. E. 384, 17 Am. St. Rep. 625; Rochester, etc., Turnpike Co. v. Pavior, 164 N. Y. 281, 58 N. E. 114, 52 L. R. A. 790; Campbell v. Manufacturers' Nat. Bank, 67 N. J. Law, 301, 51 Atl. 497, 91 Am. St. Rep. 438. The exclusion of the offered testimony was harmful error, and for this reason the judgment under review must be reversed. (76 N. J. E. 343) LLOYD et al. v. PENNSYLVANIA ELECTRIC VEHICLE CO. amounts to a legislative declaration that such is its intended force and effect. I perceive no reason why these elemental rules should not be applied to the construction of sections 18 and 86 of the revised corporation act of 1896 (P. L. p. 277), which is the matter presented for determination upon this appeal. If applied, the two sections may be harmonized. Section 86 of the act in question is a reenactment of section 80 of the act of 1875 (Rev. St. 1874, p. 29) after a judicial construction had been placed upon it. This construction was that the provision of section 80 as to distribution of surplus upon dissolution was "a legislative declaration of what are the rights of the holders of preferred stock when the law or contract under which the stock is issued does not in any way limit or restrict them." McGregor v. Home Insurance Co., 33 N. J. Eq. 181. As the statute law then stood such legislative provision was one that incorporators were apparently without power to escape. Such power is now, however, expressly conferred by section 18 of the revised act of 1896 by a new provision that authorizes the creation of stock with such preferences "as shall be stated and expressed in the certificate of incorporation." Hence, if incorporators do not desire that such legislative provision as to the rights of stockholders upon dissolution (contained in the eighty-sixth section) should be read into their charter contract, all that they have to do is to "state and express in their certificate of incorporation" whatever provision touching the matter they desire to substitute therefor. The power to do this is given in section 18, and the mode of its accomplishment is specifically laid down. It is only when incorporators do not avail themselves of the power thus conferred by section 18 that the legislative provision of section 86 determines the matter as theretofore. Thus the previously construed provision of section 86 and the new provision of section 18 are harmonized consistently with their joint enactment; incorporators having under the new provision of section 18 untrammelled power to define the relative rights of their stockholders upon dissolution, provided they do so in the manner specifically pointed out in such section, while the re-enacted legislative provision of section 86 is left in unimpaired force whenever incorporators do not avail themselves of the power conferred upon (Court of Errors and Appeals of New Jersey. them by section 18. Thus effect is given to April 2, 1909.) For majority opinion, see 72 Atl. 16. GARRISON, J. (dissenting). My vote in this case is determined by two fundamental rules for the construction of statutes: First, that effect be given to all of the language of each section of the act that is under construction; and, second, that the re-enactment of the language of each section without the interpolation of language that is to be found in neither. The contention of the appellants, on the other hand, does violence to both of these fundamental rules. The construction for which they contend would interpolate into section 18 after the word "preferences" the word "only," making it read "such prefer whereas, the legislative language is that stock shall have "such preferences as shall be stated and expressed." The effect is to alter section 18 diametrically, creating thereby an irreconcilable conflict between such section and section 86, where before none existed; for as the two sections left the hands of the lawmaker the legislative provision of section 86 was a part of every charter contract where no different provision was "stated and expressed" in the certificate, whereas, after such interpolation, such legislative provision was null and void, unless "stated and expressed" in the certificate. This is legislation not construction. Moreover, as construc tion seeks to avoid discord, not to create it, it is entirely alien to its function to insert in an act words that render the harmonizing of its several sections impossible. Because of the irreconcilable conflict thus gratuitously created the appellants strip section 86, not only of its judicially established force, but of all force whatsoever, by making It effective only when it had become ineffectual; for the proposition is that the provision of section 86 is to be given effect only when a like provision has been declared by the incorporators and "stated and expressed" In their certificate of incorporation, in which case, of course, section 86 is entirely unnecessary and of no effect at all. If this had been the intention of the Legislature, it is too plain for argument that it would not have reenacted the judicially construed provision of section 86. The net result, therefore, of departing from the elemental rule of giving to the language of the Legislature, is to legislate into section 18 a provision that is not therein, and to legislate out of section 86 a provision that was re-enacted by the Legislature in view of its established construction. I cannot agree with the appellants that this is the proper way to deal with legislative language. While a corporation organized for the purpose of carrying on a manufacturing business has implied power to make negotiable paper for use within the scope of its business, it has no power to become a party to bills and notes for the accommodation of others. [Ed. Note.-For other cases, see Corporations, Cent. Dig. 8 1831; Dec. Dig. § 467.*] 2. BILLS AND NOTES (8 443*)-ACTIONS—PERSONS ENTITLED TO SUE-Holder. The payee or indorsee of a promissory note, who is in possession of it, though not the bene ficial owner thereof, may sue thereon in his own name by consent of the owner, and for such purpose may strike out his own and subse quent indorsements. [Ed. Note. For other cases, see Bills and Notes, Dec. Dig. § 443.*] (Syllabus by the Court.) Action by R. M. Owen & Co. against Storms & Co. and another. Verdict for defendants. Rule to show cause why a new trial should not be granted made absolute. Argued November term, 1908, before GUM. MERE, C. J., and SWAYZE and TRENCHARD, JJ. Duane E. Minard and Cortlandt Parker, for plaintiff. Scott German and Herbert Boggs, for defendants. TRENCHARD, J. This was an action in the Supreme Court brought against Storms & Co. and James F. Kelly on a promissory note for $1,080, dated Newark, N. J., July 15, 1907, to the order of R. M. Owen & Co., signed by "Storms & Co., Incp., James F. Kelly, Trs.," and indorsed by the defendant Kelly. The trial at the Essex circuit resulted in a verdict for both defendants, as to the defendant Storms & Co. by direction of the court, and as to the defendant Kelly by the finding of the jury on the charge of the court. The plaintiff company are automobile man- In the present case the certificate of incorporation, after showing that preferred stock has been created, "states and expresses" the rights of such stock while the com-ufacturers. pany is a going, dividend-declaring concern, principal owner of the Newark Motor Car but omits to "state and express" what such rights shall be upon dissolution which is the very matter expressly provided for by the Legislature itself in section 86. Hence under elemental principles such legislative provision is to be read into the charter contract just as it was in McGregor v. Home Insurance Company, which case, in view of the creation of preferred stock by the defendant in the present case, is in no respect distinguishable from it. This was the conclusion reached in the court below by Vice Chancellor Leaming, with whose views I am in entire accord. I am requested by Justices REED, TRENCHARD, and VOORHEES to say that they concur in the views expressed in the foregoing memorandum. Company. Kelly had made contracts of sale for a certain number of the plaintiff's cars. and caused an order to be sent to their factory at Lansing, Mich., to have them shipped. He had previously promised to make a deposit to guarantee the payment for such cars as he should order, but this he did not do. The cars were sent to Newark consigned to the order of the plaintiff company, but they permitted Kelly to have them upon a promise that he would be personally responsible for payment. Kelly subsequently gave a note to pay for the cars, amounting to $4,080. This note, when it fell due, was renewed by two other notes given by Kelly. When these latter notes came due, Kelly gave to the plaintiff, in the place of them, four notes similar to that now in suit, and | dicated in Middleton v. Griffith, 57 N. J. of which that is one. Law, 442, 31 Atl. 405, 51 Am. St. Rep. 617. We think that the plaintiff company was the holder of the note, and was entitled to maintain suit upon it. This right is expressly given by statute (Act April 4, 1902; P. L. p. 583), and was undoubted at common law in the absence of a statute. Middleton v. Griffith, 57 N. J. Law, 442, 31 Atl. 405, 51 Am. St. Rep. 617. Section 51 of our negotiable instruments act of April 4, 1902 (P. L. p. 592), provides that "the holder of a negotiable instrument may sue thereon in his own name," and section 191 (page 614) of the same act defines a "holder" as "the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof." The instruction that, if the plaintiff was not the owner of the note, there could be no recovery, was therefore erroneous. While it is true that there is evidence tending to show that there was no consideration for the note in suit, yet, since the verdict may have been predicated upon the erroneous charge, it must fail unless the proofs show that for some other reason there was no right to recovery. We think the direction of a verdict in favor of the defendant Storms & Co. was right. Storms & Co. is a New Jersey corporation organized for the purpose of the manufacture and sale of plumbing supplies and to engage in the plumbing business. It had no connection whatever with the business of buying and selling automobiles. The evidence shows that Kelly was the treasurer of the company and owned 85 per cent. of its capital stock; that Kelly, whose paper theretofore given to the plaintiff had been dishonored, at the request or suggestion of the plaintiff or its agent, gave the note in suit to strengthen his own paper and in renewal of his own note. It does not appear that at the time the notes, of which that in suit was one, were given, Kelly had any authority from Storms & Co. to make them; but the company may have recognized them by charging him with some of them on his account with the company. But the learned trial judge properly directed a verdict in favor of the company on the ground that its act, even if Kelly's authority was admitted, was ultra vires; the notes being It is contended that no recovery could be mere accommodation paper. The rule is that, had because the plaintiff had not obtained while a corporation organized for the pur- a certificate to do business as a foreign corpopose of carrying on a manufacturing busi-ration, and the defendant relies upon the act ness had implied power to make negotiable for the licensing of foreign corporations of paper for use within the scope of its busi- March 29, 1904 (P. L. p. 384). But that act ness, it has no power to become a party to was repealed March 17, 1905 (P. L. p. 60). bills or notes for the accommodation of Moreover, the defendant's pleadings do not others. National Bank of Republic v. Young, set up, nor do the proofs disclose, that the 41 N. J. Eq. 531, 7 Atl. 488; Blake v. Domes- plaintiff has been transacting business in tic Mfg. Co., 64 N. J. Eq. 480, 38 Atl. 241. this state within the meaning of section 97 The company is not estopped from setting of our corporation act of April 21, 1896 (P. L. up the defense since there is no evidence p. 307), as construed by Delaware & Hudson that any stockholder or director except Kelly Canal Co. v. Mahlenbrock, 63 N. J. Law, 281, assented to or knew of the making of the 43 Atl. 978, 45 L. R. A. 538. Furthermore, if note in suit. Perkins v. Trinity Realty Co., the plaintiff's testimony be true, the trans69 N. J. Eq. 723, 61 Atl. 167. action which is the subject-matter of this suit was not carried on in this state, but in a foreign state. The contention of the defendant Kelly that there could be no recovery as against him therefore cannot prevail. Let the rule to show cause be made absolute. (75 N. J. E. 396) REDROW v. SPARKS et al. (Court of Chancery of New Jersey. March 5, 1909.) With respect to the verdict of the jury in favor of the defendant Kelly, we think it cannot stand. The learned trial judge charged the jury as follows: "If the plaintiff was not the owner of the note when the summons in this case was issued, the action was not well brought and the suit fails." The proof shows that after receiving the note, and before maturity thereof, the plaintiff com. pany for a valuable consideration turned it over by indorsement to its general manager, Raymond M. Owen, and that he, after it had been dishonored, turned it back to the company by indorsement to enable them to bring suit upon it. This was not disputed, it being conceded, it seems, that at the time suit was brought the beneficial interests in the note was in Raymond Owen. For the purpose of bringing this suit against the maker and the indorser, Kelly, the plaintiff 2. EQUITY (8_229*) — PLEADING-DEMURRERSUFFICIENCY. struck out its own and subsequent indorseA paragraph in an answer to a cross-bill ments in accordance with the practice in-' cannot be treated as a demurrer to the suffi 1. EQUITY (§ 191*)-PLEADING-ANSWER-IMMATERIAL PARAGRAPHS. benefit of a demurrer is immaterial to the case, If a paragraph of an answer praying the it will be deemed impertinent and may be stricken out on motion. [Ed. Note. For other cases, see Equity, Cent. Dig. § 434; Dec. Dig. § 191.*] |