[225 N. Y.] Opinion, per CRANE, J. [Feb., referred to which were to connect at either end with the Delaware and Eastern Railroad, as built or as being" constructed. While this road had not actually been finished, yet as the agreement stated that it was, this indicated at least an intention that the money of the new syndicate, or at least that which was to be borrowed, was not to be used to complete it. (c) The advances were to be made " upon the security of this agreement, if necessary, together with the bonds and certificates subscribed for hereunder." It could hardly be supposed that loans were to be procured upon the strength of a subscription agreement before any railroad such as contemplated was incorporated or bonds issued or authorized to be issued. It says that if necessary the subscriptions may be used to obtain money together with the bonds. While this might not require the bonds to accompany the agreement, yet in the most liberal interpretation it was expected that the corporation should be formed and the bond issue authorized. Agreements to subscribe for the stock of a corporation to be formed presuppose the organization of the corporation before they become binding and enforceable. It may not be that the subscriptions must be full and complete before the contract of a subscriber can be enforced, but the corporation when formed is generally the party to enforce the agreement. (Marysville Electric Light & Power Co. v. Johnson, 93 Cal. 538; Ashuelot Boot & Shoe Co. v. Hoit, 56 N. H. 548; Athol Music Hall Co. v. Carey, 116 Mass. 471; International Fair & Exposition Assoc. of Detroit v. Walker, 83 Mich. 386.) In the absence of express authority to borrow upon the individual subscription to buy bonds, the agreement to subscribe assumes the incorporation of the bonding company and that it will not be enforceable until that time. What was said in Dorris v. Sweeney (60 N. Y. 463, 467) about a stock subscription is not inappropriate here. The 1919.] Opinion, per CRANE, J. [225 N. Y.] defendant in that case signed an instrument whereby he and others agreed to form a company for the purpose of purchasing a patent for preserving fruits and vending the same and to pay for the amount of stock set opposite their respective names. Five thousand dollars was subscribed by the defendant. The company when formed also included the purpose of manufacturing preserved fruits and of canning fruits. This court said: "A legal and effectual formation of a corporation or joint stock company for the purpose specified in the contract was a condition precedent to his obligation to put in his capital. He would not be bound under such a contract to invest his capital in the stock of a corporation not legally formed, or which had not obtained the franchise of carrying on the business contemplated by the contract, and in which he had agreed to become interested." (See, also, Buffalo & Jamestown R. R. Co. v. Gifford, 87 N. Y. 294; Buffalo & Allegany R. R. Co. v. Cary, 26 N. Y. 75.) The loan made, in this case, 'was to Searing & Co. and not to any contractor. It was not for the purpose of building the extensions, above referred to. The trust company knew that $50,000 of it was to repay a previous loan obtained a month before the subscription agreement was signed. The Delaware and Eastern Railway Company was not at the time incorporated for it did not come into existence until May 13th, 1907, and no bonds were issued or authorized to be issued until after July 1st, 1907. Searing's letter to President Baldwin, March 30th, 1907, stated: "We now have our lines out arranging the underwriting for this new proposition and have already made a very substantial start. We will not begin any construction work until we have the funds in hand to complete the Hancock and East Branch division." Therefore, we must conclude that this contract did not authorize Searing & Co. to obtain money from the [225 N. Y.] Opinion, per CRANE, J. [Feb., Empire Trust Company for and on behalf of Jermyn at the time and under the conditions stated, and that a plain reading of the paper in the light of the known facts so indicated to the trust company. We have not overlooked the force of the sweep of the appellant's argument that this was one railroad enterprise undertaken to connect Schenectady with Hancock, and that all the moneys raised at any time were devoted or to be applied to the one cause irrespective of the three or four separate corporations. This may be the natural way in which the business man would look at it. Viewed in optimism and hope no doubt many great undertakings would not be finished if the organizers stopped at every step to examine too closely the obstacles. Success often overlooks faults and the law is not always quick enough for some necessary action. Failure, however, is critical and scans the letter as well as the spirit of an agreement. So here, it may very well be that the parties understood this to be the building of a single railroad and that the four corporations were but a means to one end, that the two separate syndicates which had been formed were in essence but one and that a loan obtained at any time and used for the common purpose was justifiable. Yet when the scheme failed the parties naturally turned to the writings as a chart of powers and liabilities. In the absence of estoppel the party who has given an authority in writing is right in asking that that authority be followed as it is stated and not as the other parties thought he would be willing they should use it. As above indicated there was no authority given Searing to borrow the money as was done and the loss must fall upon the trust company. Appellant's counsel in his brief states that in order for his client to win, the agreement must be read in the light of the purposes and objects to be accomplished, and that "the terms used are in some respects artificial 1919.] Opinion, per CRANE, J. [225 N. Y.] and inapt." Of course nothing can be added to or read into the agreement unless there be ambiguity which gives play for judicial interpretation. We find no such ambiguity. If we pass this question of authority to obtain advances and consider the agreement as an assignment or collateral security for the loan to Searing & Co., then we would be inclined to some of the views expressed by the counsel for the trust company. Thus, we do not believe that the findings show any fraudulent misrepresentations regarding the right to control the $6,000,000 bond issue. It was evident on the face of the papers that the syndicate was in the process of formation, that Searing & Co. were the promoters and organizers and were to create the corporation and procure the bonds. The right to control spoken of was not the expression of a past fact upon which to base fraud, but rather the expression of anticipated results due to the promoters' activities. They were to get subscribers and sell the bonds. It is evident that there could be no false representations upon which Jermyn relied under these circumstances. Neither do we think there was such lack of mutuality or consideration upon the face of the paper as to make the agreement void. We would, however, be bound by the unanimous finding that there was a collateral agreement between Jermyn and Searing that the subscription would not be binding until the full amount had been subscribed, and as this would be a good defense against Searing & Co. it also would be sufficient as against third parties. The collateral was non-negotiable, open to all the equities in the hands of innocent purchasers, existing between the original parties. However, we need not pass upon this branch of the case as the appellant concedes that its right to recover, if at all, is based upon the authority in the syndicate agreement to borrow money upon the credit of Jermyn. It asserts its rights as one who made a loan to the syndi [225 N. Y.] Opinion, per CRANE, J. [Feb., cate upon the faith of an authority conveyed in the underwriting agreement upon Searing & Co. as syndicate managers. We find, as already stated, no such authority as used at the time and under the circumstances presented. Some rulings of the trial court have been called to our attention and we also are in accord with much that the counsel for the appellant has stated about them. No doubt it is somewhat annoying to have the trial court express a decided view that the written paper gave Searing & Co. the authority to borrow money of the Empire Trust Company and then subsequently change about and decide the other way, but this is one of the irritations of litigation and the frailities of the human mind. Then, too, much evidence was received as against Searing & Co. not competent as against the Empire Trust Company but which it is stated was subsequently used as against the latter in forming the decision. Even if this should be true no question is presented which we can pass upon in view of the unanimous affirmance. The evidence was competent against one defendant and could not be excluded. If we are bound by findings, although there be no evidence to sustain them, we would likewise be bound where the findings are based upon evidence received as against one party only, but used for conclusions against the other. This would be a matter for the Appellate Division in reviewing the evidence and not for this court. Evidence might well have been received showing all that Searing & Co. had done in building the railroad, the amount of money expended and the other subscribers obtained or solicited, but we are convinced that the exclusion of this evidence was harmless in view of our opinion on the main question of authority. Some of the findings are inconsistent, but taking those most favorable to the appellant we have arrived at the conclusion already stated. |