Little v. Obrien

Where, by the terms of its incorporation, an insurance company were held to vest their stock in certain specified funds, and, instead thereof received their private notes from the several stockholders in payment of their respective shares, it was held that an individual stockholder could not avail himself of this misconduct of the company to avoid payment of his note so given. Where one becomes possessed of a negotiable promissory note, endorsed in blank fairly, and without fraud, it is in his power to discharge the promisor ; and he may recover the same, although he does not prove a legal transfer thereof to himself

Assumpsit by the plaintiff, as endorsee of a promissory note for 500.dollars, dated December 1, 1808, subscribed by the defendant, payable in sixty-five days to Joseph Obrien or order, and by him endorsed to the plaintiff. The action came before the Court on a case stated by the parties to the following effect, April term, 1810 : — The Union Fire and Marine Insurance Company oj Newburyport was incorporated by an act passed February 27, 1807, (1) by the ninth section of which it is enacted “ that the said company shall not, directly or indirectly, deal or trade in buying or selling any goods, wares, or merchandise, whatsoever; and the capital stock of said company, after being collected at each instalment, shall, within six months, be invested in the funded debt of the United States, or of this commonwealth, or in the stock of the United States Bank, or of any incorporated bank of this commonwealth, at the discretion of the president and directors of said company and, by the tenth section, “ that fifty dollars on each share in said company shall be paid within sixty days after the first meeting of said company, and the remaining sum due on each share within one year afterwards, at such equal instalments, and under such penalties, as the said company shall direct.” On the 30th of April, 1807, the president and directors of the company assessed fifty dollars on .each share, and * ordered the same to be paid on or before the 2d of June then following; on which day, it being agreed to receive notes and other securities in payment of the said first in stalment, the president and six of the directors attended, to examine and accept or reject such notes and securities as should be offered in payment as aforesaid. The defendant, on that day, being a subscriber for twenty shares in the capital stock of the company, gave his promissory note for 1000 dollars, payable in sixty days from the date, the consideration of which was his proportion of the said capital stock ; which note, together with an assignment of bank stock to a larger amount than the note, and a power of attorney to sell the same for payment of the said note were accepted as payment of the defendant’s proportion of the said instalment. On the 30th of November, 1807, a second instalment, of like amount with the first, became due, which was paid in a similar manner. The notes thus given were renewed at the end of every two months, and interest paid on the amount due at each renewal. By sundry payments previous to the 1st of December, 1808, the balance remaining due on both the said notes was 500 dollars, for which the note sued in the present action was given. At the time of the commencement of this action, the plaintiff had no interest or property in the note declared on, other than as agent of the president and directors of the company, or as an individual stockholder, he not having, at that time, paid any valuable consideration therefor; but the interest and property in the same note was at that time in the company. The note was delivered to the plaintiff, subsequently to the day on which it became due, by direction of the president and directors, for collection, and for the benefit of the company, without any endorsement or legal transfer thereof by the company. The defendant received certificates of twenty shares in the stock of the company on the 30th of November, 1807, *in consideration of the notes above mentioned, and of the payments which had been previously made on the first-mentioned note; and he afterwards received three dividends of profits on said shares, amounting to 25 per cent, thereon, being 500 dollars, and two other dividends had been declared of 10 per cent., which are holden with the said shares under an attachment thereof made in the present action. If, on the facts agreed, the Court should be of opinion that the plaintiff was entitled to recover, the defendant agreed that judgment should be rendered against him by default; otherwise, the plaintiff agreed to become nonsuit, and that the defendant should have judgment for his costs. The cause was argued November term, 1810, by Putnam and Banister for the plaintiff, and Davis (Solicitor-General) and Story for the defendant.