## Facts

- The Long Island Railroad Company executed a $60,000 bond and mortgage to the Morris Canal and Banking Company, a New Jersey corporation.
- In 1840, Morris Canal assigned the bond and mortgage to the State of Michigan in connection with Michigan’s claim for a large debt.
- Michigan later sold the bond and mortgage at public auction, where Abraham G. Thompson purchased for value.
- Morris Canal later entered receivership; in 1845, its receivers purported to assign the same bond and mortgage to Hoyt.
- Hoyt claimed superior title under the receivers’ assignment and challenged the earlier transfer to Michigan as unauthorized under Morris Canal’s charter/bylaws and as invalid under a New Jersey insolvency statute restricting preferential or fraudulent corporate transfers.
- Evidence showed the Michigan assignment was approved by a quorum of Morris Canal’s directors, executed with corporate formalities (including the corporate seal), and treated as within corporate business and later ratified.
- Thompson purchased in New York without notice of any alleged defect or statutory violation; after Thompson’s death, his executor defended the action.

## Issues

1. Whether the assignment from Morris Canal to Michigan was validly authorized (or ratified) under the corporation’s charter and bylaws so as to pass title.
2. Whether a New Jersey insolvency statute could render the Michigan assignment void or voidable against a bona fide purchaser for value without notice who later bought in New York.
3. On an appeal from an order granting a new trial, whether affirmance requires entry of judgment absolute against the appellant who stipulated to that consequence.

## Decision

- The Court of Appeals affirmed the intermediate court’s order granting a new trial.
- The court held the assignment to Michigan was valid as an authorized (and, in any event, ratified) corporate act sufficient to pass title.
- The court held Thompson was a bona fide purchaser for value without notice and took good title; the asserted New Jersey insolvency restriction did not defeat his rights in these circumstances.
- Because Hoyt appealed from an order granting a new trial and stipulated to judgment absolute if the order was affirmed, the court entered final judgment against Hoyt.

## Legal Principles

- A corporate conveyance approved by a quorum of directors with appropriate execution formalities is binding on the corporation; an act within corporate power may be ratified by the board and, once ratified, is effective as if originally authorized.
- A bona fide purchaser for value without notice acquires title protected against certain prior defects or infirmities that might make a transfer voidable between the original parties or creditors.
- A foreign insolvency or anti-preference statute, even if it gives creditor remedies against an insolvent corporation, does not necessarily invalidate the title of an innocent purchaser who buys for value without notice in another jurisdiction.
- When an appellant challenges an order granting a new trial under a procedure requiring a stipulation for judgment absolute upon affirmance, the appellate court must enter final judgment against the appellant if no reversible error is found.

## Conclusion

The court concluded that Morris Canal’s assignment to Michigan was properly authorized or ratified, that Thompson’s good-faith purchase for value without notice gave him an indefeasible title notwithstanding the asserted New Jersey insolvency statute, and that affirmance of the new-trial order required judgment absolute against Hoyt under his appellate stipulation.


Hoyt v. Thompson’s Ex’r, 19 N.Y. 207 (N.Y. 1859)