Attorney-General of New-York v. Life & Fire Insurance , 2 Sarat. Ch. Sent. 11 ( 1842 )

The chancellor decided in this case, that a corporation, without any express or implied power in its charter for that purpose, may issues a negotiable promissory note, either as a post note, or payable on demand, when not prohibited by law from doing so; provided such note is actually made and issued for any of the legitimate purposes for which the company was incorporated. But that the whole operations of the Life and Fire Insurance Company in what are usually called the life and fire bonds, were for purposes not authorized by its charter, and in violation of the restraining acts of April, 1813, and of April, 1818. And that such bonds are null and void, and furnish no evidence of any valid debt against the company.

Report of referees confirmed, and the claims upon the bonds ordered to be rejected by the receivers in the distribution of the effects of the company among its creditors and stockholders.