Cooper v. McClurkan

The opinion of the Court was delivered, October 12, by Lowrie, J. McClurkan and Fleming were partners in trade, and Fleming drew a, bill of exchange of the partnership on himself, and negotiated it to the plaintiff, and now, in a suit upon it, McClurkan defends on the ground that it was not a partnership transaction. This appears to be well taken, for the case, without other evidence, stands just as if Fleming had given the endorsement of his partnership on his own note as security for his own debt, which he could not do: 1 State Rep. 417. The plaintiff says he is a bond fide holder without notice of the character of the paper. Is he without notice ? He is not, if the proper inquiries usually made by a prudent man would have led him to the knowledge of the fact that the acceptor, or principal debtor,, had himself drawn the bill, or in other words, made the contract that is intended to pledge the partnership as surety for himself. Common prudence demanded that the authenticity of the signature of the drawers should be ascertained, and this led directly to the fact that it was made by Fleming himáelf, and common sense would indicate that Fleming had no right to bind his partner as his surety. It is urged that, in borrowing money, copartners may give to' [84] their negotiable paper what form they please, and that therefore they ought to be liable here notwithstanding the form. The premise is true, but the conclusion needs, for its support, the proof that the copartners did borrow the money. If they did, then Fleming is an accommodation acceptor, and the drawers are bound as the real debtors. Without this proof, we must take the apparent transaction to be the true one, and regard Fleming as borrowing money for himself, and attempting to pledge his partner as his surety; that is, we must decide the case according to the evidence. Judgment affirmed. Knox, J., dissented.