San Bernardino National Bank v. Colton Land & Water Co.

Fitzgerald, C. This action is brought to recover on a promissory note for two thousand five hundred dollars, executed by the defendants to the Farmers’ Exchange Bank, a corporation, and by it indorsed to plaintiff after maturity. The note, which is joint and several, is dated July 28, 1887, and is signed by the defendants in the [126]following order: “Colton Land and Water Company, by A. B. Hotchkiss, President; J. C. Peacock, A. B. Hotchkiss.”

The demurrer to the complaint was properly overruled.

The Colton Land and Water Company alone answered, alleging that it was merely an accommodation maker; that such execution of the note was in excess of its corporate authority; and that the plaintiff and its assignor had knowledge of the fact at the time of the execution and transfer of the note.

Judgment was rendered in favor of plaintiff, and the defendants the Colton Land and Water Company and A. B. Hotchkiss appealed from the judgment. Subsequently, an appeal was taken by the defendant corporation from the order refusing a new trial, but it is stipulated that both appeals be heard as one upon the same transcript.

It appears that the note sued on was made by the defendant corporation in pursuance of the following resolution adopted at a meeting of the board of directors of the Colton Land and Water Company, held at Colton on the twenty-seventh day of July, 1887, at which five of the directors, including the defendants Hotchkiss and Peacock, were present: —

“ Resolved by the board of directors, that this company borrow two thousand five hundred dollars, and execute its note therefor at regular market rate of interest to such person as might have the money to lend it.”

The following stipulation was entered into between the parties hereto: “ That the articles of incorporation of the Colton Land and Water Company included no power of the corporation to make accommodation paper, or to sign paper as an accommodation maker or indorser, but the corporation had the power, under its corporate powers, to sign negotiable paper for the purpose of paying corporate indebtedness, or for in any way carrying out the purposes of the incorporation, as set forth in the answer, including the borrowing of money for its own purposes.”

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