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more than an exercise of discretion, a right reserved to each of a number of associates in any corporate or partnership enterprise. Hyde's active participation in his promise of indemnity, express or implied, can reasonably be given no other effect than that he, the majority stockholder, elected to abide by it. See, also, H. W. T. Co. v. Beatty, L. R., 12 App. Cas. 589; Chicago Hansom Cab Co. v. Yerkes, 141 Ill. 320, 30 N. E. 667, 33 Am. St. Rep. 315, 322; Continental Insurance Co. v. N. Y. & H. R. R. Co., 187 N. Y. 225, 79 N. E. 1026; Burden v. Burden, 159 N. Y. 287, 54 N. E. 17; Farmers' L. & T. Co. v. New York & North. R. Co., 150 N. Y. 410, 44 N. E. 1043, 34 L. R. A. 76, 55 Am. St. Rep. 689; Wallace v. Long Island R. R. Co., 12 Hun, 460; Hart v. Ogdensburgh & L. C. R. R. Co., 89 N. Y. 316, 35 N. Y. Supp. 566. The approval of the agreement of indemnity may furthermore be said to be inferable from the fact that it does not appear that the society, the corporation, or any of its members, at any time, repudiated it, which could only have been. done upon making restitution; that is to say, by securing to the guarantors the cancellation of their obligation as such. Duncomb v. New York & N. H. R. R. Co., 84 N. Y. 190. And, if the omission of repudiation falls short of an election to affirm the agreement of indemnity, it remains to be said that, since the agreement is voidable, and not void, it is to be given effect until it is disaffirmed. Barr v. N. Y., L. E. & W. R. R. Co., 125 N. Y. 263, 26 N. E. 145.
No express power to borrow money was given to a life insurance corporation by Laws 1853, p. 887, c. 463, p. 1029, c. 551; neither was it prohibited. Section 2 of the stock corporation law of 1892 (Laws 1892, p. 1824, c. 688), whereby the power is given to stock corporations generally, does not apply to moneyed corporations, the latter class of corporations being defined to be these formed under or subject to the banking or insurance law (General Corporation Law 1892 [Laws 1892, p. 1802, c. 687] § 3); and General Corporation Law, § 10, denies to all corporations all powers not expressly conferred, and such implied or incidental powers as are not necessary to the powers expressly conferred. This leads to the inquiry whether, at the time of the loan to Turner, the society was authorized to borrow as necessarily incidental to the proper performance of the duties imposed upon it by law.
It goes without saying that the society was bound to maintain and preserve its capital and surplus for its stockholders, and that it was under a like duty to preserve its solvency and financial security for its policy holders is no less indisputable. Attorney General v. Guardian Mutual Life Ins. Co., 82 N. Y. 336; People v. Empire Mutual Life Ins. Co., 92 N. Y. 105; Lovell v. St. Louis Mut. Life Ins. Co., 111 U. S. 264, 4 Sup. Ct. 390, 28 L. Ed. 423. Having acquired the bank stock, and the same having become a part of its assets, the society was bound to take all reasonable means to preserve it and to protect it against loss or depreciation. Such being its duty, its authority to act is apparent. The latter necessarily proceeds from the former. A duty without authority to perform it involves a solecism. The imposition of the one must needs beget the other. The choice of the means
volves but the exercise of that discretion which, so far as concerns the management of its internal affairs, is a part of the society's autonomy, without which it could not exist. The society was not authorized to borrow money generally, or for purposes other than its life insurance business; but, when borrowing as a means of preserving its assets, it was acting legitimately-that is to say, within its implied or incidental authority to respond to the duties imposed upon it by law. It matters not in what form it borrowed, so long as the loan was one to the society for a legitimate purpose; and it cannot be reasonably gainsaid that the loan to Turner for its accommodation was essentially a loan to the society. The society was eventually, and is finally, to repay the amount; and thus, toward Turner and his guarantors, it stood in the relation of principal debtor. Having authority to borrow for the particular purpose, its choice of a means, neither corrupt nor prohibited, presents no question for judicial interference. "If the means employed are reasonably adapted to the ends for which the corporation was created, they come within its implied or incidental powers, although they may not be specifically designated by the act of incorporation." 10 Cyc. 1097.
That the power to borrow money, when necessary to its existence, or to enable it to perform its duties, is within the incidental powers of a corporation, when not prohibited, was ruled in Barry v. Merchants' Exchange Company, 1 Sandf. Ch. 280, 289, cited with approval in Curtis v. Leavitt, 15 N. Y. 9, 62. In Furniss v. Gilchrist, 1 Sandf. 53, as well as in Orr v. Mercer Co. Mut. Fire Ins. Co., 114 Pa. 387, 6 Atl. 696, it was held competent to a fire insurance corporation, as within its incidental power, to borrow money to enable it to meet its indebtedness arising from an insurance loss. The exigencies which may invoke the exercise of the power, as well as the reasonableness of the choice of the means of its exercise, are aptly expounded by Judge Comstock in Curtis v. Leavitt, 15 N. Y. 64:
"It is truly said that corporations can only exercise such incidental powers as are necessary to carry into effect the express objects of their charters. But necessity' is a word of flexible meaning. There may be an absolute necessity, a great necessity, and a small necessity; and between these degrees there may be many others depending on the ever-varying exigencies of human affairs. It is plain that corporations, in executing their express powers, are not confined to means of such indispensable necessity that without them there could be no execution at all. The contrary doctrine would lead at once to a very great absurdity; for if there are several modes of accomplishing the end, neither one is indispensable, and each would exclude all the others. And thus, by inevitable logic, an express grant of power would lie dormant, because there are more modes than one of carrying it into execution. It is almost as difficult to say that the incidental power depends for its existence on the degree of necessity which connects it with the power in chief. Such a doctrine would impose upon the courts a never-ending difficulty, for the inquiry would always be whether the chosen instrumentality is the very best that could be selected, and if not the very best, however minute the difference may be, then the inevitable decision must follow that the choice was fatally bad, although strictly adapted to the end in view and made in the utmost good faith."
A summary of all the facts in evidence shows that the Equitable Life Assurance Society from time to time secured loans from the Mercantile Trust Company for purposes of its own to secure the pay
ment of which it pledged Turner's note with the guaranty of the plaintiffs Fitzgerald, Searles, and Coler, and that of the testators, respectively, of the other plaintiffs, of the payment thereof, the maker as well as the guarantors having severally assumed their respective obligations at the request of and for the accommodation of the society and upon its promise, express or implied, to indemnify them against loss or liability; and the society, though financially able so to do, has refused to pay the debt at maturity. The maker of the note pledged to secure the loans is financially irresponsible, the guarantors thereof are sued apart from the society by the creditor to enforce their obligations, a recovery against them is inevitable, the result is fraught with irreparable mischief to and the probable financial ruin of the guarantors, and the coercion of payment by the principal debtor is controlled and delayed by the creditor. That under such circumstances a court of equity will interfere by requiring the principal debtor to pay the debt and thus cause the guarantors to be exonerated, and for that purpose will enjoin the creditor from proceeding against the guarantors primarily, security being given to protect the former against loss from delay, is well settled in principle and by authority. Sheldon, Subrogation (2d Ed.) § 133, and cases cited in notes; Thompson v. Taylor, 72 N. Y. 32; Hayes v. Ward, 4 Johns. Ch. 123, 8 Am. Dec. 554.
The motion for an injunction pendente lite is granted, with costs. The order to be entered hereon must be settled on notice and provide for security to the defendant the Mercantile Trust Company, the amount of which will be determined on the settlement of the order. Ordered accordingly.
MURPHY v. FRANKLIN SAVINGS BANK IN CITY OF NEW YORK et al. (Supreme Court, Appellate Division, First Department. April 16, 1909.)
1. BANKS AND BANKING (§ 154*)-DEPOSITS-ACTIONS-PARTIES.
Where a wife, upon her marriage, had her deposit at a bank transferred from her individual account to the joint account of herself and husband, so that the signatures of both were required to withdraw funds, the husband had such an apparent interest in the deposit that he should be made a party to an action to compel the bank to pay it.
[Ed. Note.-For other cases, see Banks and Banking, Dec. Dig. § 154.*]
2. PROCESS (§ 96*)-SERVICE BY PUBLICATION-SUFFICIENCY OF AFFIDAVITS. Affidavits for an order for service of summons by publication alleged that the defendant sought to be served had gone to the Klondike; that plaintiff had heard from him on several occasions; that the last information concerning his whereabouts was in a letter from a third person, stating that defendant was at a certain place in Alaska; that plaintiff's attorney wrote to the postmaster there, and to one at another place, receiving no reply to one letter, and being informed by the other postmaster that he could not give any information. Held that, in view of the fact that postmasters are not at liberty to disclose addresses of people in the absence of special circumstances which were not shown to exist, the affidavits did not show a change of address from the one given plaintiff in the letter, but showed an address of defendant where it was probable that matter duly mailed to him would be received by him, and hence
were not sufficient to satisfy a judge that plaintiff could not with reasonable diligence ascertain the place where defendant would probably receive matter transmitted through the post office, necessary under Code Civ. Proc. 440, so as to justify dispensing with service by mail and the ordering of service by publication.
[Ed. Note. For other cases, see Process, Dec. Dig. § 96.*]
Houghton, J., dissenting.
Appeal from Judgment on Report of Referee.
Action by Mary Murphy against the Franklin Savings Bank in the City of New York, impleaded with Patrick Murphy. Judgment for plaintiff, and defendant appeals. Reversed, and new trial granted. Argued before PATTERSON, P. J., and LAUGHLIN, CLARKE, MCLAUGHLIN, and HOUGHTON, JJ.
Wilson M. Powell, for appellant.
LAUGHLIN, J. I am of the opinion that the judgment should be reversed, upon the ground that jurisdiction of the defendant Patrick Murphy was not acquired by the service by publication. The action is to recover the balance of a fund on deposit with the appellant to the credit of the plaintiff and of the defendant Patrick Murphy. The passbook indicates that it was a joint account; that the signature book of the bank, in which the signatures. of the parties were entered at the time the account was opened, contains the entry, following the signatures and information concerning the parties required by the rules and regulations of the bank, as follows: "Both signatures required to draw."
The balance on deposit at the time the action was brought was the sum of $3,484.44. Prior to the opening of this joint account, the plaintiff had the sum of $1,223.08 on deposit to her credit with the appellant. On the 29th day of April, 1891, after plaintiff married the defendant Patrick Murphy, they both went to the bank, and she authorized the transfer of her individual account to their joint account. She testified upon the trial that she supposed that either of them, on the production of the bank book, could draw on the account; but she also testified that she knew that her money was transferred to the joint account, and that the signatures of both herself and her husband would be required when money was to be withdrawn. The president of the appellant was permitted to testify, without objection or exception, that, although he did not superintend the transfer of the account, he knew from the records of the bank that it was changed to a joint account, and that the signatures of both were required to withdraw funds. It would seem that additional deposits to the credit of this account were made; but it does not appear that any money was withdrawn. In these circumstances, it is evident that the defendant Patrick Murphy had an apparent interest in this account, and that he should be a party to any action by which the appellant is to be required to pay it over, in order that it may be protected against a subsequent action by him in which other facts may For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, Rep'r Indexes
be proved tending to establish that he has an interest in this fund. He was, therefore, properly joined as a party defendant, and before trial or judgment service of process should be made upon him, by which he will be foreclosed from asserting any claim against the appellant on account of the fund.
I think that the moving papers satisfactorily show that, in the exercise of due diligence, personal service could not be made upon him within this state; but, on the other hand, I am of opinion that the order, in so far as it attempts to adjudicate that the affidavits were sufficient to satisfy the judge that the plaintiff could not "with reasonable diligence ascertain the place or places where the defendant would probably receive matter transmitted through the post office," as provided in section 440 of the Code of Civil Procedure, and dispense with service by mail, was without evidence to support it, and therefore void. The question having been raised directly in the action, the court, perhaps, is not confined to an adjudication as to whether the proof was sufficient to sustain the judgment against collateral attack by the defendant Murphy, but may say that final payment should not be entered on unsatisfactory proof dispensing with service by mail. If so, then it is very clear, from the testimony of the plaintiff given upon the trial, that she knew from a letter which she had personally received from her husband, in answer to one which she had mailed to him through a third party some three or four years before the trial, that he was in Cleary City, Alaska, or Seattle, Alaska, and that he might contemplate asserting a claim to this fund, because, according to her testimony, she had requested of him and he promised to forward to her a power of attorney to authorize her to receive this account, which he never did. This precise information was not contained in the affidavit which was presented to the judge who dispensed with service by mail.
The order for service by publication was based upon the affidavits of the plaintiff, her attorney, and of one Fay. These affidavits showed that the defendant Patrick Murphy had gone to the region known as "the Klondike"; that the plaintiff had heard from him on three or four occasions, but did not remember from whence the letters were written; that the last information concerning his whereabouts was contained in a letter which she received from a person in Vancouver, British Columbia, in the month of June, 1906, stating that his address at that time was Cleary City, Fairbanks, Alaska. The affidavit contained nothing tending to show any change in his address. It was alleged in the complaint, also, that in June, 1906, plaintiff received a letter from a party in Vancouver, stating that her husband's address at that time was "Cleary City, Fairbanks, Alaska." It appears to be asserted on this appeal, for the first time, in the brief of counsel for plaintiff, that Cleary City and Fairbanks are two different places, and that together they did not constitute a proper post office address. This was not explained in the complaint or affidavits, nor upon the trial, and the court should not now be called upon to speculate as to whether that was a proper post office address in June, 1906, or whether a letter so addressed would have reached the plaintiff. If