Ramboz v. Stansbury (1910) · DecisionDepot

Ramboz v. Stansbury

Name: California Superior Court Tentative Rulings
Creator: DecisionDepot
License: https://creativecommons.org/licenses/by-nc/4.0/

California Court of Appeal Jun 20, 1910 No. Civ. No. 819.Published

Before: Shaw

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Holding. A corporate indorsement of a negotiable note is valid without a formal board resolution or corporate seal when executed by authorized officers in the ordinary course of business. Furthermore, the transfer of a note carries with it the associated collateral, and a counterclaim for failure of consideration is unavailable against a holder in due course without notice.

Issues

Whether a corporate indorsement of a promissory note is valid without a formal board resolution or corporate seal.
Whether the transfer of a promissory note automatically transfers the associated pledged collateral.
Whether a defendant may assert a counterclaim for failure of consideration against an indorsee who took the note for value without notice.

Disposition. affirmed

Quotations verified verbatim against the opinion

“From these facts the necessary authority will be inferred, notwithstanding the absence of the corporate seal and the fact that evidence of the adoption of a formal resolution is wanting.”

“The indorsement and transfer of the note carried with it the collateral pledged as security for the payment thereof.”

Synopsis

APPEAL from a judgment of the Superior Court of Los Angeles County. George H. Hutton, Judge.

The facts are stated in the opinion of the court.

[651]

SHAW, J.

On July 12, 1906, the defendants made and delivered to the Consolidated Lumber Company, a corporation, their certain negotiable promissory note for $13,500, payable to its order on or before January 1, 1908. To secure the payment thereof they deposited in pledge with the Consolidated Lumber Company two hundred and fifty shares of the capital stock of the Western Lumber and Mill Company. Plaintiff sues as the indorsee of an intermediate indorsee of the note to foreclose the lien upon the stock so pledged to secure the payment of the note. Judgment was rendered for plaintiff, and defendants appeal therefrom upon bill of exceptions.

The answer admitted the execution of the note, but denied the indorsement and transfer thereof to plaintiff.

The court found that on May 1, 1907, the Consolidated Lumber Company, payee in said note, did, in the ordinary course of business, duly indorse, transfer and deliver the same to the Merchants’ National Bank of Los Angeles, which received it in good faith and in the ordinary course of business, paying therefor $13,500; that at the same time the Consolidated Lumber Company transferred and delivered to said bank the stock so pledged to secure the payment thereof; that prior to the institution of this action the bank indorsed the note and transferred the same, together with said stock so pledged to secure the payment thereof, to plaintiff herein. Appellants attack these findings, assigning as grounds therefor that they are unsupported by the evidence.

It is conceded that the note was transferred to plaintiff by the bank merely for the purpose of collection. The question presented is whether the note was assigned to the bank by a valid indorsement thereof. The indorsement is sufficient in form, and on behalf of the Consolidated Lumber Company is signed by the vice-president and secretary. Nevertheless, appellants insist that, in the absence of the corporate seal, a resolution of the board of directors authorizing the indorsement for and on behalf of the corporation was a prerequisite essential to a valid transfer of the note to the bank. There is no merit in this contention. Possession of the note, indorsed in due form, together with uncontradicted evidence that on behalf of the Consolidated Lumber Company

Ramboz v. Stansbury

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Synopsis

SHAW, J.

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