412
FEDERAL REPORTER.
of tlje wifj!,4PPliopri!lted by him to own use with her and qovseIlt. Taylor v. Brown. 4 AU. Rep. 888. The I'fproofiB on the wife' to that it was Invested for her benefit, and as her separate estate; and a mere genllrl'l ql\<lElrstand,ingtQ that e.trect between the husband and wife will not exclw'l. O.r claim to theirs. & Merchants' Nat. Bank 3 AtI. . · Whet. there fa no evidence of arit agreement or understanding at the time the husbanel the, of by him at aur time that he was to repay it, the be held to have rio legal'claim against him therefor, nor will she be p.ermi.tted. to sp.pr.o.p.riate. h is. PT.OB.,e.rtt '.1io. n.lin.ally ii! repa,ylll.ent thereof, to the. exclu. . . . , W4ke v. Gri1lin, (Neb.) W. Rep. 461.
sur
NATIONAL EXCHANGE BANX; OF BOSTON 11.
Wmm and others. 1887.)
(1ircuit OOflli't. 1I0LDlIlR-BU:tl,DlilIf OF,
w: D ·. Michigan. S. D.
·1. NEGOTIABLE INSTRUMENTS - UNAUTHORIZED INDORSEMENT - BONA FroB
Upon proot of tlJ,e .aDd of notes by 8 partner In transferring them by in contravention of the rights of the non-assentin.g. member.s o.f his firm., t.he b ..urden of proof is cast upo.n the inshowing tJ;lat befol,'e maturity for a valulloble conSl eratlOn. Where notes are signed in blank. to be filled up, and this fs done, so that. when they are indorsed to by a third party. they are completefn with no indications of any defect In their execution in his hands, they are valId ijJutffected by the circumstance that they were sig.\led In blank.. Such h:.\lPly 8:0: authority to fill up the blank. OF PAPER-BOlU l3'IDE HOLDER.
2. SAME-ExECUTION IN BLANK.
8.
Whenever a copartuerBhip ooopts and is engaged in a course of business in which the use of its commercial paper; such as these notes are, is appropriate and reasonably to be expected. or does in fact make use of it. with the common knowledge of the members Of the firm. whenever the convenience or necessities of the firm may require, then thetirm is liable upon commercial paper made in f.tsnanie by o.D8!of its members to one who takes it bona fide. in t4e usual course of bUSIness. be.fore maturity. and for a valuable consideraof th.ll partner making the paper. or misaption, notwithstanding any propriationbY him to otlier uses thlj.'n: those of his firm. SAME-LiABILITY;
4.
Such liability is not t:J1.e case of a trading copar.tnership. if by that. term is in.tended one eIiga.g e.d· .In .the business of liuyin.g and selling, thQugh it would. as a I:\lle, 'sucl1, but extends to alI cases where the nature of the businel\s fairly and J,'eas\lnably implies such use as an appropriate incident thereto, or where the. actual course of business pursued adopts the practice of issuing the mercantile paper of the tirm to accommodate its necessities or convenience whenever the occasions occur. and such occasions . do in fact occur, and are thlls provided for.
fl. SAME-PRESUMPTION OF AUTHORITY.
, If thll making of wercimtile paper of the firm by one of its members under any circumstances Is permissible and consistent with the rights of the other of the firm, the authority must be presumed in favor of a bona jid6 AS. 'l'0 Tuum PARTIES. Conditions in articles of pa.rtnership restricting the authority of the part· ners, that are not known to third parties, cannot affect them, and the nature of lhe copartnership.is to be determined by what it assumes to the pUblic to be, and by its mode of doing business.
II.
NATIONAL EXCHANGE BANK 11. WHITJll.
413
'7.
{llsue is uncontradictel1. and no circumfiltancea in the case. to. aiscrel)it h. and it appears to the that a verdict . COD:tTary,tothis evidence couldn0t be supported, an expreail direction should be gi'Ve" to. the jurytp 1fitJ!.auch evidllnce· Up0J;1lj,U
.
·
At Law.A8sumpsit; . was brought, by. the plaintiff upon three promissory notes; the fi:rst bearing date October 17, 1882, pay,able at the plaintiff's bank in Boston in. four months from date, and being for the sum of 85,288.'15; the second bearing date 27, 1882, payable at the same place, in four months from date., and being for the sum of$5,100.73; the thhd bearing date January 15, 1883, payable also at the same place, in four months from date, and being 'for. the sum of $5.,391. 90. The notes were all made in the name of F. H. White & Co., to the order of Ferry & Bro., and were indorsed in the name of the latter firm. It appeared from the evidence that the nrm of F. H. White & Co. was composed of White, Dow:ling, and E. P. Ferry, and that T. W. FeFJIyandE; P. Ferry composed the firm of Ferry & Bro. The firm of F. H.White & Co. were engaged in the business of manufacturing lumber s,t Montague, Michigan, for various parties, quite extensively, and, among others, for Ferry & Bro., who were lumber dealers on a large sca.le,having their principal oBiice at Grand Haven. These lines of b.usiness had been carried on by the tespective firms for at least 10 years prior to the transactions of the giving, indorsing, and discounting of the notes in question. These notes were signed in blank by E. P. Ferry (then in the territory of Utah, and who was a common member of the two firms) in-the name of F. H. White & Co., and by him transmitted to the office of Ferry & Bro., at Grand Haven, with intent on his part that they should be 'filled up and indorsed by Ferry & Bro. for discount at the plai.ntiff's ba.nk. They were accordingly filled up in the handwriting of the wife of the clerk or book-keeper of Ferry & Bro., indorsed by that firm,sellt to the plaintiff, and discounted by it. All this took place, in thecas6(j)f each note, at about the date thereof. Neither White nor Dowling had any knowledge of these transactions at the time, and the first knowledge they had of them was when the first note matured, and was presented for payment at F. H. White & Co. '8 place of business. NeitheD of them has at any time ratified the making of the notes, which were, as to their firm, purely accommodation paper. White & Dowling are the sole parties who defend, and the ground of their defeD;se is that their partner, Ferry, had no authority, express or implied, to make these notes in the name of their firm; that F. H. White & Co. was a non-trading firm; and that, from the nature of their business, the 'making of mercantile paper was not necessary, and that there had ne.ver been any holding out of a firm business which would justify the public in treating any member of the firm as having an implied authority to make negotiable paper in its name. The articles of copartnership were offered in evidence, and it appeared from them that .the; was the manufacture of lumber from logs for other of tllie.financWcoucerns of the finn was by
414
'. ,FED'ElU\L: ;REPORTER.
the articles cOillJIlitted to Dowling and Ferry. But it· did not from ,any that the. Knew' anythillg of articles,. , .' Ita.ppeared from the evideD(Je of ,1Mbite· and DowliQg .firm books that White & 30 men in::a.bd'about' their mill and business; that the extent orit was some $30,000 of earnings per year; that they kept a regular bank account with a bank,at WhitebJl11"d!ose byjthat oriseveral o'dcasionsf:thei:firm hadma.deits notes w,th'ibank , .and had themdiscollnted of raising to:pay,thidr, men, and for stippliesand repairs of machineryr :awMhe in,cidentsofthebusiness; and it alsO appears that at bank, and at an:other bank;at Muskegon; the firm paper had been discounted for the 'purpose of raising money to meet drafts drawn all the firm by E. P. Ferry for portions of the amount.standing to his credit on the firm books, of which. there was a considerableaniount at the date of the first of the notes in suit. F. H. White:!& Co. had printed drafts or orders, in blank,on Ferry & Bro., of which it made frequent use in collecting amounts due White & Co; for sawinglumber for that firm. Sometimes these drafts were made payable to E. P. Ferry for the ,purpose of paying ,him tor his dividends of profits, and for advances to White & Co. This course of business had beenpurBued by White &'00. for many years, and with the knowledge of all the members. The making and discountingof the firm paper was' not very frequent, but:was resorted to when an occasion required the use of money' not then' in hand. White and Dowling were the principal managers of the business of that firm. The plaintiff proved that it received from Ferry & Bro. the notes in question,and discounted them at or near their respective dates, placing the proceeds thereof to the credit, upon the bank's books, of Ferry & Bro., who were then their customers. and against which Ferry & Bro. checked to meet obligations falling due at the bank. On one of these occasions, the second, the note was discounted and placed to Ferry &; Bro.'s credit when there was an overdraft by that firm. On the other occasions the credits on the discounts met checks made by Ferry & Bro. to take up precisely the same sort of paper which had:been discounted, but without the knowledge of White or Dowling. At the close of banking hours on the day the third note was discounted, there. was standing .to the credit of Ferry'& Bro.on.plaintiff's books about &1,200. There was no evidence to show any bad faith or negligence on the part of the plaintiff, or to show that anything done on its part was out of the usual course of businsss. There was no conflict in the evidence. Norris Norris, for plaintiff. M. Brown and J. O. F'itzgerald,r for defendant Dowling. T. J. for defendants E.P. & T. W. Ferry. Smith, Nima, Hoyt Erwin, for defendant White. The court, before charging the. jury, in explanation of its views upon the law of the case, follows: SEVERENS, J. The court is of opinion that upon proof of the misapplication 'and unlawful use of the notes sued on; in transferring them, 1:>y themdorsement of Ferry & Bro., to the plaintiff,in contravention
NATIONAL .:EXCHANGE BANK'll,. WHITE.
415
of the righfu of the n9'n"asaenting membersof the :firm of 'F. H. White, & Co., the.burden ofproof was east upon the plaintiff of showing it is alxma fide holder of the ,notes,and that it received them before maturity fora .v8J.uable consideration., Smithv. SM Co., 11 Wall. 139; Stewart Vo La'Miny, 104 U.S.505.. The plaintiff has offered evidence in support of that· burden. . That proof is not contradicted, and no circumstances; ap.pearin.the case to discredit. it;. and it a.ppears to the court that a verdict, contrary to this evidence could not be supported, and that, therefore,an express direction from the court lllust be given to. find in accordance with such uncontradicted testimony. Orleans v. Platt, .99 U. S.676; Jmprooenumt Co;v:. Mttn8O'1i, 14 Wall. 442; Walbrunv. Babbitt,16 Wall. :.577;,Arthiwl'v.Morgan, 112 U. S. 49,5, .5 Sup. 0't. Rep. 241j OwtntyofMaconv. ShO'res,·97 U. S. 2 7 2 . ' . ' The ;nbtes appear'to ha.ve beensig.ll¢d in b1s.l))t, and delivered to Ferry &Bro.,tobtdilled up; and this waadone sotllat, when they were indorsed. to and .discounted by the plaintiff, they in complete fQrm, With'no indica.tions,of any defect in their execution.. .This being so, the, court holds that in the hands of the plaintiff al;e valid and unaffected by the circumstance that they were signed in blank. Such fadtsim,ly'aIi'authQrity 19 fill-up the bla,nk. Michigan},lamkv. Eldred, 9: Wall.. od:4;Good'mAJ,n v.Bi-moods, 20 HQw. 361.· " , .. The articles ofcopi!.rtnersbipof F. H. White & Co. were admitted as. part of the croslHlxaminatioIJ. .ofthe ,witness to prove copart;who testified.. that be bad' seen them. It .not appearing that their contents were known to,the it is not affected by the articles, and the nature of thatcopartnel!ship is tobedetennined by ,what it assumed to ,the publio tQ be,and-PY its mode. of doing ,Wimhip v.U. S·. BQl1'I1s;5 Pet., 529; Hich,igan Bank v. Eldred, 9 Wall. 544. ,Whenever'a copartnership adoptsanl1 is engaged in a course of business in .whicb the use of i;ts .commercial paper, such as these notes are, is,a'ppropmte and to be ,expected, or ,does in use of it, with the 'commOJl know.ledge of the members of the firJ.l)","",henever the conven.ienceor necessities.9fthe firm may require, then the firm is liable upon commercial. paper made in its name by one of its members toonewhoitakesit bonqfide, in the usual of business, before maturity, and for a valWIible consideration, notwithstanding any fraud of the partner making the paper,or misappropriation by him to other uses than those of his finn. The court holds that such liability is not restricted t0141e ease ora trading copartnership, ifby that term is intended one engaged in the business of buying and selling, though it would, as a rule, include such, but extends to all cases where the nature of the busiReSS ·reasonably'implies .such use as a:n appropriate incident t'hereto,OIwhere the actmtl cQluse of buainess pursued adopts the prae-tice of issuing the mercantile paper of the firD;l tO,accommodate its necessities or convenience whenever the occasions occur, and such occasions Qdin factoQcpland arl" for. Kimbro v. BuUitt",22 How. 256;Joo"", 499, 505, 4 Sup. Ct. Rep.i160j JohnaWn v: Dutton, 27 Ala. 245; McGregor v. Cleveland, 5 "
416
If the making of mercantile paper of the firm by one of its members under any circumstances ispehnissible, and consistent With the rights of the other members of the'fi1ini,theautbority must be presumed in favor of Dubuque,l Wall. 175, 203, and cases there CIted. Although GitIfc1c6 V. Du:buqueWQS an actIOn upon municipal bonds, the principle there stated seems applicable, those things being challg'ed which shoUld be.· It must be presumed that the defendants White and Dowling were of the matters which were evidenced by their partnership books,and of the transactions therein disclosed. If the court were to submittd the jury in thiscll:se the question of fact whether tile firm of F. White &00. did So conduct its business as to impliedly authorize the making of firm paper by one cjf its members fotany purpose,' it WoiJld· he it$ duty to instruc't them that if they credit to the defendants and their bOelks, ahd the undisputed evidence from the b'ank-books at Whitehall, th'6il'verdict must be for the plaintiff. The oou,rtdoes not deem it proper tr submit the qliestion under st1chcil'eilitlstances.
n.
SEVi!:RJ!lNS, J:, (charyingju,ry.).· Regretting very much ,that these defendants White and Dowling, wHo itlone make defense here, in such asituatlon tha.t they must sutter troni the wrong-doing of their associate) the court is unable to relieve thein Without violating principles of la.w are to the sMurity of mercantile basiness) and viola.ting also the rights tif parties '6f· the 'wrong. As there is,· in the opinoin of Hie COtirt,110 question 6f fa<ltab6tlt which there is any conflict in the evide:ritle, the court holds that, giVing effebtto the testimony, the plaintiff is entitled to a verdict, and'you are insttubt9dto find accord'" ingly, llgainstall the defendants. ·Tlie amount dae on the notes, according to the computation stated 'ihyollr hearing, and as I understand not disputed, is $19,306.27, but upon the suggestion of the court of a doubt whether tM amOunt of the 1ll.St {)alailce standing on the plaintiff's books tel the credit of Ferry & Bro., being that of January 22, 1883, amounting to which, withth\:lintElrest, then was 81,514.82, ought nono be deducted, the plaintifi"soounsel consents thei-eto, and this, ao-. to the computation of coUl'lsel,leaves &17,791.45 as theamount for which the verdict should be rm'ldered.
The jury rendered their verdict for the plaintiff. accordingly. The defendant D6wlihg moved fora new trial. That motion ca.me on D. J., and was argued
for bearing before JAcKSON, C. J., and
br tn;e counsel whO tried. the case.
, JACKSON, Jo) 'Orally delivered, the opinion 'of the court, denying the motion up\>n substantially the samegi'bunds Its those stated in the opinion of the district judge at the trial.· .
STUBBS V. COLT.
417
STUBBS,
Ex'x,
'lI. COLT.
(Oircuit Oourt, D. Oonnecticut. March 26,1887.) 1. NEGOTI!L"'(\Llll INSTRUMENTS--DISIl:ONOR OF NOTE-NOTICE TO INDORSER.
In Georgia (act of February 28, 1676, 4) notice of the of a promis!!orynote need not be given to the indorser unless the note is made for the purpose of negotiatioh, or is intended to be negotiated at a chartered bank. ' Where the maker of an accommodation note in qeorgia sends it to the pavee' in who indor!!es it for the accommodation of the maker, and slmde it back to in Georgia!; the liability of, the accommodation indorser does not attach until the note is negotiated to a bona jiM holder; and the place where the note is thus negotiated is. in contemplation of law, the place where the 'indorsement was made, snd the law of that place will govern the contract of indotsement. 1 '. ' :
2.SAME-AcoolntODA.TION I:l!IDORSEMENT-CONFLICT OJl' LA.ws.
, John S. for plaiptitr. lIe:nry q. Robinaon. for defElildant. SHIPMAN,J. This is at law by the indo:rsee and holder oC negotiable"promissory note' against the indorser. The defendant has murred to ,the complaint. The complaint alleged that S. P. Goodwin, . ,; . pay of being then a resident of Savannah, ,citizen ofsaill"l'tate, p1adehis promissory note for the sum 0(83,000; payable, ,Oil de,rnand after date, to the order of the fendant, at ;the office of the Citizens'Loan Company, Savannah, Georgia, day of for value received; that said S. P. Goodwin, on the J.88B,sent said note 'hymail to thedefendant, then a resident of the town of Farmington, in the state of Connecticut, and a citizen of said . state, who re,ceived the same in due course ofmliil on the eighteenth of 1883; that defendant at said Farmington, on said eighteenthlday of October, i8&3. indorsed said note, and sent the same by mail to tht' saidS. P. Goodwin at saId who received said note in due course of mail; that said note wasao indorsed by the defendant for the accommodation, use, and benefit of the said S. P. Goodwin; that the said S. P. Goodwin, after receiving said note so indorsed, thereupon, for value I:eceived, transferred and delivered the same to the said Citizens' Loan Company at Savannah, Georgia, and received the proceeds thereof; that said Citizens' Loan Company remained the owner of said note until the nineteenth day of January, 1884, when the said company, for value received, transferred and delivered tbe same to the plaintiff, who still owns said note; that payment of said note has been demanded, but it remains unpaid. The defendant demJl,rred (1) because said complaint cOntains no allegation that the defendant was notified of any demand upon said note, of its protest for or of its non-payment, or that the holders looked to him, the defendant, for payment; (2) because it l!:lee note at end of case.
At Law.,
a
v.30F.no.6-27