On appeal from the District Court of the First Judicial District of the county of Hudson.
For the appellants, Fred Goldstein.
For the respondent, Albert P. Margolies (William E. Decker, of counsel).
Before Justices Heher and Perskie.
The opinion of the court was delivered by
PERSKIE, J. Arthur Horowytz, defendant below, appeals from a judgment, based on a directed verdict, in favor of the
plaintiff below in the sum of $420 and costs. There was no service upon the other defendant, Harry Cahn.
The plaintiff, a corporation organized under the General Corporation act (Revision of 1896) of the State of New Jersey, made a loan to the defendant in the sum of $500. This obligation was evidenced by an interest bearing note executed by the defendant to the order of himself and endorsed by Harry Cahn. The plaintiff seeks to recover for an alleged balance of $375 due on the note with interest from December 30th, 1933.
Among the seven defenses set up by defendant was a denial that he was indebted to the plaintiff in any amount whatever; he claimed that he had paid to the plaintiff, through its agent Harry Cahn, the last installment due on the note on October 10th, 1931; he also set up the affirmative defense of "Nul Tiel Corporation." The latter defense is rested on the premises that the plaintiff was engaged in the banking business contrary to sections 3 and 6 of the General Corporation act under which it had incorporated, and which sections are a prohibition against the exercise of banking powers by companies so organized. At the end of plaintiff's case defendant moved for a nonsuit. That motion was denied. At the end of the entire case each moved for a directed verdict with the result already stated.
First: The defendant contends that the trial court erred in directing a verdict as a matter of law because under the proofs here exhibited a fact issue was present. This issue was thus created, it is claimed, by virtue of the plea of payment. It is, therefore, argued that it was for the jury to determine whether payment to Cahn, the endorser of the note, was payment to the corporation by reason of a principal and agent relation. Cahn, it should be marked, was a director of the plaintiff corporation and was also an accountant for the defendant. There was no proof of any expressed or implied authority nor was there any evidence of ratification. The sole contention was that Cahn had apparent authority. We do not think that there is any merit to this contention. It must be borne in mind that the entire theory of holding
the principal liable on the ground of apparent authority is based on the ...