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Silver v. Commonwealth Trust Co.

Decided: February 4, 1953.

MORRIS SILVER, PLAINTIFF,
v.
COMMONWEALTH TRUST COMPANY, A BANKING CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT AND THIRD-PARTY PLAINTIFF, V. THE TRUST COMPANY OF NEW JERSEY, THIRD-PARTY DEFENDANT



On reargument of defendants' motion for summary judgment.

Drewen, J.c.c.

Drewen

This is defendants' motion for summary judgment under Rule 3:56, as heard on reargument. Upon its original submission the motion was denied in accordance with the opinion reported in 22 N.J. Super. 604. All pertinent facts and details are fully set forth in the reported opinion (ibid.). The reargument embodies not only certain new matter but also the further urging of points previously made. Care will be taken to avoid needless repetition. The present opinion is supplemental to that already rendered and must be so read.

To begin with, it is insisted that plaintiff's case is manifestly defeated at the outset because of plaintiff's full awareness of the inchoate status of the corporation and of Eisenberg's relation thereto, as already detailed. From this state of facts these propositions are submitted as conclusive, viz.: that plaintiff knew there was no one with express authority to negotiate the check sub judice; that in the circumstances plaintiff must be presumed to have intended that the check be negotiated by Eisenberg in quite the manner in which he did negotiate it; and that plaintiff's intent in the premises must be taken to have included also the idea, especially in view of his previous transaction with Eisenberg in the

$10,000 loan, that the proceeds of the check would be used by Eisenberg and not merely retained by him for deposit in the corporate account. The validity of what is thus urged can be more sharply tested, I submit, by casting the general proposition in the form of a single question: by whom other than by Eisenberg, and in what manner other than that in which it actually occurred, could plaintiff have reasonably supposed that negotiation of the check would ensue? The vice of the thesis thus declared is that it can be maintained only by the arbitrary exclusion from plaintiff's intent of the very notion that would have been most in keeping with the legal and moral regularities of the situation. There is no contradiction of plaintiff's statement in the depositions that his specific purpose was to have the proceeds go to the corporation and definitely not to Eisenberg, plaintiff at the same time giving his own reasons therefor, the sufficiency of which he alone had the right to judge. Also, why is it not entirely legitimate to infer, for the very reason that "there was no one with express authority to negotiate the check," that plaintiff intended the check should be kept until there was? But in any case, how can such questions as these, questions of what plaintiff supposed or intended, and of what his reasons were, all indisputably questions of fact, be decided by way of a summary judgment?

Plaintiff also explains in the depositions that the corporate organization was soon to be completed, and that it awaited only the submission of an accountant's report. I quote from his testimony:

"Q. As a matter of fact when the $5,000 was loaned were you particular in seeing that the $5,000 actually went to the corporation? A. Definitely. Q. Why? A. Because the corporation was the body that was receiving this loan as disassociated from Shepard Eisenberg who had received the previous loan, which was for a separate purpose. Shepard Eisenberg received $10,000 to effect a dissolution of the partnership between himself and Jager. That loan was to finance the corporation * * *."

On the present motion this testimony must be taken as true. Savarese v. Pyrene Mfg. Co. , 9 N.J. 595, 599 (1952). There

thus appears at least one articulate answer to defendants' argumentative question as to what plaintiff could possibly have supposed. Taking plaintiff's word for it, as we are obliged to do, he supposed that the check would in due course be deposited to the credit of the named payee. We are certainly not obliged to assume, as defendants virtually ask, that it was somehow within the design of plaintiff's issuance of the check that Eisenberg's course with it be facilitated -- as the third-party defendant's failure of inquiry seems to have done -- so as to enhance the convenience of Eisenberg in diverting the proceeds to his own purpose, that being the disposition that was made of them so far as can be said at this time.

As for Eisenberg's signing of the corporate note in the transaction of the previous loan to himself, that could not possibly have conferred upon him authority to appropriate corporate funds to himself. The corporation, by virtue of Eisenberg's signature became, at most, accommodation maker, but as already pointed out, this was entirely at the demand of the lenders. Eisenberg was not acting at the instance of the corporation.

The next point is that plaintiff "well knew that Eisenberg was the beneficial owner of all the corporate stock." This is based upon what the depositions show to have been an assignment for the benefit of creditors, executed by Eisenberg individually and as equitable owner of the stock. For one thing, it appears that plaintiff did not represent Eisenberg in this transaction, and for another that the issuance of the check here in question occurred months before. Defendants say also that plaintiff's conduct in having Eisenberg execute the $10,000 note on the corporation's behalf was "recognition" of Eisenberg's full ownership. Plaintiff's determination at that time to get for his client all the security he could, whatever its worth (which is the way he tells it ...


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