East River Bank v. Hoyt

Clerks, J.

Although Jennings was a member of the plaintiffs’ corporation, and a director, his admissions or statements should- not be;received-as evidence against them, unless such admissions or statements were made concerning some transaction in which he was their authorized agent. (3 R. S. 692, § 112, 5th ed.)

The sole question, therefore, in this case is, was Jennings the authorized agent of the plaintiffs concerning the discount of the notes in question ? Because if he was not, his letter to Hoyt & Brother should not have been received at the trial. The only proof, then, to establish the usury, would be the evidence -of the defendant Hoyt, which being contradicted by that of the president, Jenkins, it is possible and even probable that the jury would have credited the latter, and have found a verdict for the plaintiffs. Independently of his own assertion, contained in the letter referred to, the only evidence introduced at the trial to show that Jennings was the authorized agent of the plaintiffs concerning this transaction is, that he was a meniber of the board of directors and of the discount board. -But the president repudiates the idea that he had any-special authority in relation to this particular transaction, for he expressly says-he did not communicate with Hoyt through any other person than Hoyt himself; and when we also consider -that Jennings -is not called by the defendants to explain his letter, or to show the authority upon which he undertook to act in his communication with Hoyt, I think the letter was not admissible in evidence. If we are to deem Jennings’ unsupported statements, as contained in that letter, to be binding on the bank, then, of course, any arrangements which any individual director, who was also a member of the discount board, may make will be conclusive, without showing that the subject was ever brought before the board, or ever alluded to at any of its sessions, or that that which is primarily only the joint action of the board, was delegated to such individual member of it. This would not only be seriously dangerous to the interests of the bank, but would be productive of great inconvenience and disorder in the management of its affairs. The directors would not only be imperilling its liabilities, but would be continually thwarting each other, and counteracting each other’s plans and arrangements. If any one can make arrangements without common consultation, any other may make arrangements positively dissimilar, and, in the very same transaction one may revoke or alter the engagements of any or all of the others.

[New York General Term, February 1, 1864.

As I can find, therefore, no authority from the proper source allowing Jennings to act concerning this particular transaction, except the mere fact that he was a member of the board of directors and of the discount board, I think his letter should not have been received at the trial.

The judgment should be reversed, and a new trial ordered; costs to abide the event.

Leonard, J. concurred.

Sutherland, J. dissented.

Hew trial granted.

Leonard, Clerke and Sutherland, Justices.]