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49 Troom.

Leo Co. v. Jersey City Bill Posting Co.

the cases in the last-named jurisdictions we make the follow ing observations: In the Alabama cases of Warren v. Liddell, 110 Ala. 232, and W. T. Adams Machine Co. v. Interstate Building Association, 119 Id. 97, the rights of a vendor of chattels, under an agreement that they should remain per, sonalty until paid for, were held to be superior to those of a subsequent mortgagee of the land to which they were annexed as intended, though such mortgagee has no notice of the rights of the vendor of the chattels. But the decision was based chiefly upon the rule which there applies to the case of bona fide purchasers of chattels from a conditional vendee, who, by the rule there obtaining, do not take title to the chattels as against the original vendor. In Maine, in a late case, the court said: Russel v. Richards, 10 Me. 129; Hilborne v. Brown, 12 Id. 162, and Tapley v. Smith, 18 Id. 12, establish the principle that a building erected by one man on the land of another, by his permission, remains the personal property of him who erects it, and does not pass by a conveyance of the land to a third person, although from its character, purpose and mode of use it appears to be a part of the realty, and the conveyance is to a bona fide purchaser without notice. These decisions have never been overruled in this state, although it must be admitted that they have been somewhat discredited by the comments of our own court in more recent decisions, and the rule established by them is contrary to the great weight of authority relating to this question.” Peaks v. Hutchinson, 96 Me. 530. With respect to the State of New York it is sufficient to say, as was pointed out by Mr. Justice Reed, speaking for our Court of Errors and Appeals in Campbell v: Roddy, 19 Stew. Eq. 244, 250, that their cases on this question “seem to be in confusion.”

We hold, therefore, in accordance with the weight of authority that the plaintiff

, being an innocent purchaser, without notice, of the lands to which the fence had been annexed, is not affected by the agreement between the tenant of his grantor and the owner of the fence, by the terms of which the latter was to have the right of removal. In such case the

Owen & Co. v. Storms & Co.

78 N. J.L.

fence became a part of the realty and passed by the deed. So to hold puts this case in accord with the obiter dictum by Mr. Justice Reed in Campbell v. Roddy, supra.

The result is that the judgment of the court below must be reversed and a venire de novo awarded.

R. M. OWEN & COMPANY V. STORMS & COMPANY AND

JAMES F. KELLY.

Argued November 9, 1908-Decided February 23, 1909.

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1. 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. 2. The payee or indorsee of a promissory note, who is in possession

of it, though not the beneficial owner thereof, may sue thereon in his own name by consent of the owner, and for such purpose may strike out his own and subsequent endorsements.

On rule to show cause.

Before GUMMERE, CHIEF JUSTICE, and Justices SWAYZE and TRENCHARD.

For the plaintiff, Duane E. Minard and Cortlandt Parker.

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For the defendants, Scott German and Herbert Boggs.

The opinion of the court was delivered by

TRENCHARD, J. This was an action in the Supreme Court brought against Storms & Company and James F. Kelly on a promissory note for $1,080, dated Newark, N. J., July 15th, 1907, to the order of R. M. Owen & Company, signed by “Storms & Co. Incp. James F. Kelly, Trs.," and endorsed by the defendant Kelly.

49 Vroom.

Owen & Co. v. Storms & Co.

The trial at the Essex Circuit resulted in a verdict for both defendants; as to the defendant Storms & Company, 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 manufacturers. The defendant Kelly was the principal owner of the Newark Motor Car 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, Michigan, 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 of which that is one.

We think the direction of a verdict in favor of the defendant Storms & Company was right.

Storms & Company 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 eighty-five 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

was one, were given Kelly had any authority from Storms & Company to make them; but the company may have recognized them by charging him with some of them on his account with the company.

in suit

Owen & Co. v. Storms & Co.

78 N. J. L.

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 mere accommodation paper. The rule is that while a corporation organized for the purpose of carrying on a manufacturing business had implied power to make negotiable paper for use within the scope of its business, it has no power to become a party to bills or notes for the accommodation of others. National Bank of Republic v. Young, 14 Stew. Eq. 531; Blake v. Domestic Manufacturing Co., 19 Dick. Ch. Rep. 480.

The company is not estopped from setting up the defence since there is no evidence that any stockholder or director except Kelly assented to or knew of the making the note in suit. Perkins v. Trinity Realty Co., 3 Robb. 723.

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 company, for a valuable consideration turned it over by endorsement to its general manager, Raymond M. Owen, and that he, after it had been dishonored, turned it back to the company by endorsement 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 interest in the note was in Raymond Owen.

For the purpose of bringing this suit against the maker and the endorser Kelly, the plaintiff struck out its own and subsequent endorsements in accordance with the practice indicated in Middleton v. Griffith, 28 Vroom 442.

We think that the plaintiff company was the holder of the note and was entitled to ma ain suit upon it. This right is expressly given by statute (Pamph. L. 1902, p. 583) and was undoubted at common law in the absence of a statute. Mid

49 Vroom.

Owen & Co. v. Storms & Co.

dleton v. Griffith, supra.

Section 51 of our Negotiable Instrument act (Pamph. L. 1902, p. 592) provides that "the holder of a negotiable instrument may sue thereon in his own name," and section 191 (at p. 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 reasoi. there was no right to

recovery. It is contended that no recovery could be had because the plaintiff had not obtained a certificate to do business as a foreign corporation, and the defendant relies upon the act for the licensing of foreign corporations of March 29th, 1904. Pamph. L., p. 384.

But that act was repealed March 17th, 1905. Pamph. L.,

. , p. 60. Moreover, the defendant's pleadings do not set up, nor do the proofs disclose, that the plaintiff has been transacting business in this state within the meaning of section 97 of our Corporation act (Pamph. L. 1896, p. 307), as construed by Delaware and Hudson Canal Co. v. Mahlenbrock, 34 Vroom 281. Furthermore, if the plaintiff's testimony be true the transaction 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 can

not prevail.

Let the rule to show cause be made absolute.

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