Laverty v. Burr

By the Court, Sutherland, J. Ifosmer, the agent of the plaintiffs, took the note in question for a debt due from Allen, the maker, to them, He refused to take Allen’s note without security. The security given was" the endorsement of Burr and Baldwin, the defendants, and of Smith and Jenkins, the second endorsers. The plaintiffs, therefore, knew when they took the note, that the endorsement of the defendant was made by one of the partners, in the name of the firm, as security for Allen, and not for a debt due from the firm. The partner who did not sign the note, is not bound by it under such circumstances, unless he was previously consulted, and assented to the transaction; and the burthen of proving that the partner who did not sign the note consented to be bound, is thrown on the creditor. (Dob v. Halsey, 16 Johns. R. 38, and Foot v. Sabin, 19 Johns. R. 157.) In England, the assent of all the partners is presumed, and the burthen of avoiding the security is thrown on the firm, and they are required to prove that the note was signed by one of the partners on his individual account, without the knoxvledge and against the consent of the others, and that the creditor knew that fact when he took the paper of the firm. Here the onus probandi is thrown on the creditor. The law upon this subject is very fully considered and clearly established in the cases referred to, and also in Livingston v. Hastie & Patrick, (2 Caines, 246,) Lansing v. Gaine & Ten Eyck, (2 Johns. Rep. 300,) and Livingston v. Roosevelt, (4 Johns. R. 251.) The only distinction between this case and that of Foot v. Sabin, (19 Johns. R.) is this: in that case the note was signed by one of the partners in the name of the firm as sureties; here it was endorsed; and it was urged 532 upon the argument of this cause, that in every general partnership, each member necessarily possesses the power of signing or endorsing negotiable commercial paper in the customary way of business, though the power of pledging the firm as suretiés for third persons may not exist. The form of the transaction cannot be material except by way of evidence. When paper is signed by one partner in the name of the firm as sureties for a third, it carries on the face of it evidence that it was not given for a partnership debt, and proof of that fact becomes unnecessary. But when it is signed or endorsed in the ordinary manner, such proof must be given. But when the fact is established that it ivas not given for a partnership debt, and that the person to whom it was passed knew, it, no matter what the form of the instrument is, it does not bind the partners who did not sign or assent to it. In this case, the assent of Baldwin is not shown, and he is therefore entitled to judgment