3 Robbins. Cogan v. Conover Manufacturing Co. "We hereby assign to the Greenville Banking and Trust Company, as collateral security, the sum of ten thousand dollars, out of our order for six condensers for the North Jersey Street Railway Company of Newark, N. J., through the Brown Engine Co., of Corliss, Wis., amounting to $25,200. "Our terms of payment are one-half on delivery and balance on sixty days thereafter. "We hereby agree to collect the above money, acting as agent of the Greenville Banking and Trust Company, and immediately on receipt of same to turn over to them such proportion of amount collected as the above assignment of $10,000 is in proportion to $25,200, the total amount of the order. "Jersey City, N. J., Mar. 30, 1903. "THE CONOVER M'F'G Co., "E. K. CONOVER, Prest." "JANUARY 5TH, 1904. "In accordance with a resolution passed by the board of directors at a meeting held this date, we hereby assign to the Greenville Banking and Trust Company, as collateral security, the sum of thirty-seven hundred and eighty dollars ($3,780), out of an order from the Public Service Corporation of New Jersey. "We agree to act as the agent of said Greenville Banking and Trust Company in collecting this money, and agree to turn it over to them immediately on receipt of same, in such sums as it may be received. "This $3,780 is the balance remaining of our final payment of $6,300, after deducting $2,520 which has already been assigned to said Greenville Banking and Trust Company. "To balance due on Condenser No. 5, shipped Octo- Condenser No. 6, held in our shop for shipping in- $2,100 4,200 $6,300 "JANUARY 7TH, 1904. "For value received, we hereby assign to the Greenville Banking and Trust Company the above account. "THE CONOVER M'F'G Co., "E. K. CONOVER, Prest." Cogan v. Conover Manufacturing Co. 69 Eq. The minutes of the directors of the Conover company with respect to the matter are as follows: "MEETING OF DIRECTORS, July 20th, 1903, page 72. "The following resolution was offered by Mr. Holmes: "Resolved, That the directors of the company hereby ratify the action of the president in making an assignment to the Greenville Banking and Trust Co. of part of the account for Newark Condenser, which assignment reads as follows: "March 30th, 1903. We hereby assign to the Greenville Banking and Trust Co., as collateral security, the sum of $10,000 out of our order from the North Jersey Street Railway Co., through the Brown Corliss Engine Co., amounting to $25,200. "Terms are one-half on delivery and balance in sixty days. "We also agree to act as their agent in collecting this money and agree to turn over to them immediately upon receipt of same, in the proportion as $10,000 bears to $25,200, the total amount of contract. "The above resolution was seconded by Mr. Cogan and unanimously carried." "MEETING OF DIRECTORS, January 5th, 1904, page 77. "The following resolution was offered by Mr. Cogan and seconded by Mr. Holmes: "Resolved, That we hereby assign to the Greenville Banking and Trust Company, as collateral security, the sum of thirty-seven hundred and eighty dollars ($3,780), out of an order from the Public Service Corporation of New Jersey. We agree to act as the agent of said Greenville Banking and Trust Company in collecting this money and agree to turn it over to them immediately on receipt of same in such sums as it may be received. This $3,780 is the balance remaining of our final payment of $6,300, after deducting $2,520 which has already been assigned to said Greenville Banking and Trust Company. "Also, a copy of this assignment and a copy of this resolution be given to the bank." The only one of these writings which is a clear, absolute assignment is that dated January 7th, 1904, written upon the bill dated January 1st, 1904, and this assignment lacks any authorization by the directors of the Conover company. The action of the directors, as shown by the minutes quoted above, was correctly set forth in the paper dated January 5th, 1904. There is no evidence whatever to show any power lodged in the president of the Conover company to make any such assignment as the one he did make under date of January 7th, 1904. 3 Robbins. Cogan v. Conover Manufacturing Co. Without such authority lodged in him by the directors a president of a corporation is without power to make any such assignment, pledge or disposition of the company's property. Stokes v. New Jersey Pottery Co., 46 N. J. Law (17 Vr.) 237 (Supreme Court, 1884); Raub v. Blairstown Creamery Association, 56 N. J. Law (27 Vr.) 262 (Supreme Court, 1893); Bennett v. Keen, 59 N. J. Eq. (14 Dick.) 634 (Court of Errors and * Appeals, 1899). The reason the president of the Conover company, after having given to the trust company a writing exactly in accordance with the resolution of the directors (which is the paper dated January 5th, 1904), subsequently gave the absolute assignment, dated January 7th, 1904, is explained by both the president of the trust company and the president of the Conover company. Their explanation is that, since under the writing of January 5th the money from the Public Service Corporation was to be collected by the Conover company and not by the trust company, and since the trust company desired to have it so that it could itself collect the money, the president of the Conover company made and delivered the paper of January 7th, 1904. The only contract between the two companies, as has been before pointed out, is that evidenced by the writing of January 5th, 1904, and the rights of the trust company must be determined with respect to that paper, since they must rest upon it. The subject-matter being a portion of money to be earned in the future by the assignor, the assignment is an equitable one and must be ruled by the principles applicable to such assign ments. It has been held that equity disregards form and searches for intention with respect to equitable assignments. Bower v. Hadden Blue Stone Co., 30 N. J. Eq. (3 Stew.) 171 (Vice-Chancellor Van Fleet, 1878); affirmed, sub nom. Lyon v. Bower, 30 N. J. Eq. (3 Stew.) 340; Shannon v. Mayor of Hoboken, 37 N. J. Eq. (10 Stew.) 123 (Vice-Chancellor Van Fleet, 1883); affirmed, 37 N. J. Eq. (10 Stew.) 318; Seyfried v. Stoll, 56 N. J. Eq. (11 Dick.) 187 (at p. 189) (Vice-Chancellor Emery, 1897); Weaver v. Atlantic Roofing Co., 57 N. J. Eq. (12 Dick.) 547 (Vice-Chancellor Grey, 1898). Cogan v. Conover Manufacturing Co. 69 Eq. par The first source from which to gather the intention of the ties to this instrument is, of course, the instrument itself. This instrument (dated January 5th, 1904) exactly conforms to the language of the resolution adopted by the directors who authorized its execution. The first paragraph of this writing is undoubtedly a clear assignment of the sum of $3,780 out of the money to become due from the Public Service Corporation when the Conover company should have filled its order. The second paragraph reflects seriously upon the effect of the first paragraph. By this second paragraph the Conover company still retains the right to collect the money, and agrees, when it shall have collected it, to turn it over in such sums as it may receive it. The distinction between an equitable assignment of a sum of money which is effective and an agreement to pay out of a particular fund which is ineffective as an assignment has been variously expressed, but of course always to the same common intent. * * * The supreme court of the United States, in the case of Christmas v. Russell, 14 Wall. 69, said: "An agreement to pay out of a particular fund, however clear in its terms, is not an equitable assignment; a covenant in the most solemn form has no greater effect. The assignor must not retain any control over the fund, any authority to collect or any power of revocation. If he do, it is fatal to the claim of the assignee. The transfer must be of such a character that the fund-holder can safely pay, and is compellable to do so, though forbidden by the assignor." Citing cases. Trist v. Child, 21 Wall. 441. In the case of the American Pin Co. v. Wright, 60 N. J. Eq. (15 Dick.) 150, Vice-Chancellor Pitney said: "The distinction, when dealing with pure personalty, is between a promise to pay out of the fund after it comes to the hands of the promisor, and a direction to the present holder of the fund to pay it or a part of it to another person. The first is a mere promise; the latter is an assignment." Applying these tests, I should have grave doubt in determin 3 Robbins. Cogan v. Conover Manufacturing Co. ing whether this should be held to be an equitable assignment, or only an agreement to pay out of a particular fund. The strength of my doubt is increased by the testimony heretofore alluded to of the presidents of the two companies, which shows that, in their view, this paper left it with the Conover company to collect the money, and then, under its agreement, turn it over. But by reason of a finding of fact next to be alluded to, I do not find it necessary to determine the question of law just suggested. It appears from the proofs that on the 7th day of January, 1904, the $3,780 mentioned in the writing of January 5th, 1904, was borrowed by the Conover company from the trust company upon a note of the Conover company endorsed by itself and its president. This note was No. 701. On April 6th, 1904, a note was given in renewal thereof, which was numbered 746. On July 6th, 1904, a note was given in renewal thereof, which was numbered 801. On July 12th, 1904, three of the directors of the Conover Manufacturing Company gave to the trust company their notes for $10,000, divided into three notes of $3,333.33 each. These three notes were given to take up notes of the Conover company of various numbers, including No. 801. Subsequently, it appears from the proofs, the directors paid these notes. It seems to me, therefore, to be indisputable that the advance by the trust company which this writing was given to secure has been paid, and hence the trust company has no claim under this writing against the Conover company or its receiver. The only suggestion made by the counsel for the trust company against the effect of the obvious facts was that the writing of January 5th did not specifically mention the note given, or to be given, for the loan of that money, and that, therefore, the trust company had a right to hold it as general collateral security for any sums due by the Conover company to the trust company. I do not think that this is an answer, or that any contention based thereon can be sustained. |