Loeb v. Mellinger

Opinion by Rice, P. J., This was a suit brought by the holder of a negotiable promissory note purporting to have been made by H. L. Mellinger and Company to the order of Joseph Herzog and indorsed by him. The plaintiff offered the note in evidence and rested. The defendant, Mary A. Miley, then made offers to prove that she [596] was a married woman, that the note was given by her partner, Mellinger, without her consent or knowledge, that it was not given in any partnership transaction, nor for any debt contracted on account of her separate estate, nor for necessaries, and that it was simply an accommodation note given to Herzog to enable him to raise money. These offers were rejected. She then called the plaintiff for cross-examination, and he being asked as to the circumstances under which he became holder of the note testified as follows: “ Q. Did you buy this note of Joseph Herzog? A. I did. Q. At the time you bought it from him did you make any inquiry as .to who he got the note from ? ” Objected to by plaintiff. “ A. I took the firm name. Q. Did you ask him any questions in regard to the note? You are a shrewd business man, Mr. Loeb. A. I asked him who the partner of Mr. Mellinger was and he told me Mrs. Miley. Q. Did you ask him how he came to get the note? A. No. Q. Did you ask him no questions? A. No. Except he told me he had a horse transaction.” Mr. Brown: “Q. Got it for a horse he sold to them? A. Yes, sir. Q. Is he here? A. Not to my knowledge. Q. You took it then and bought it? A. Yes, sir. Q. Never inquired of Mrs. Miley about it? A. No, sir. ” Objected to by plaintiff. Mr. Brown: “ Q. Tins was before the -note was due ? A. Yes, sii\ Q. And that is all you know about it ? A. That is all I know. Q. He said Mrs. Miley was a partner? A. Of Mr. Mellinger. Q. And that it was a horse? A. Yes, sir, that he sold to Mr. Mellinger himself.” There being no further testimony, the court gave the jury binding instructions to find for the plaintiff. It is contended that the defendant’s offers were properly rejected, because they were not coupled with an offer to prove that the plaintiff took the note with notice of the fact that it was an accommodation note and was given without the knowledge or consent of Mary A. Miley. This was not a sufficient reason for rejection of the evidence, even if we accede to the proposition that an accommodation note signed with the firm name by the business partner of a married woman without her [597] consent or knowledge is binding upon her if it come into the hands of a bona fide indorsee for value before maturity. In a suit by an indorser of a negotiable note against the maker, the prima facie presumption is that the plaintiff obtained it upon a valuable consideration in the usual course of business before it was due. Where the note purports to have been made by a firm, and the partnership is proved or admitted by the pleadings the same presumption arises, and the additional presumption that it was given for the benefit of the firm. But where the defendant in the issue is a married woman and shows that it was an accommodation note issued by her copartner without her knowledge or consent, the question as to her liability is not free from difficulty. The Act of June 8, 1893, P. L. 344, provides that a married woman, whilst as to most contracts given the rights of a feme sole, “ may not become accommodation indorser, maker, guarantor or surety for another.” It may be argued with much force, that, as a married woman has no contractual capacity to bind herself in that way, the purchaser of her accommodation note takes it charged with her disability and subject to her right to set up that defense. It seems, however, that there is a plain distinction between a note given by a married woman which has nothing on its face to mislead the public or to avert inquiry into its consideration, or the contractual capacity of the maker, and a note appearing on its face to have been lawfully issued for a partnership debt. It is clear that a married woman can engage in a trade or business on her own account since the act of June 8, 1893. That act gives her ample power to do so. If it appears wise to her to become a member of a firm instead of engaging in trade on her own individual account we can see nothing in the act to forbid it. But when she becomes a member of a firm she is entitled to the same rights and exposed to the same liabilities to persons dealing with the firm as are the other members. Among those rights, in the absence of stipulations to the contrary in the partnership articles, is that of incurring a debt on behalf of the firm in the transaction of its business, and of giving the firm’s note as an evidence of its indebtedness. Of course one member cannot give the firm’s note for his individual indebtedness. As such an act would be outside of the agency which each member has the right to exercise on behalf [598] of the firm, it does not bind it. But when a negotiable note, given even for a personal debt of one of its members, comes to the hands of a bona fide purchaser before maturity and without notice, the law relating to negotiable paper allows a recovery from the firm. The rights of third parties have intervened and the firm must suffer, although if the contract were between the original parties to the transaction its defense would be perfect: Haldman v. Bank of Middletown, 28 Pa. 440; Potts v. Taydor, 140 Pa. 601; Real Estate Investment Co. v. Russell, 148 Pa. 496. Does a different rule apply where a married woman is a member of the firm, and the action is brought against the firm? So far at least as partnership property is concerned we are not prepared-to say that the same rule does not apply. But granting that it applies without qualifications, upon whom does the burden of proof rest ? Clearly upon proof of the facts alleged in the defendant’s offers, a case of fraud in the issuing of the note would have been made out which would have put the plaintiff to proof that he obtained the note -before maturity in good faith and for value: Knight v. Pugh, 4 W. & S. 445; Kuhns v. Gettysburg National Bank, 68 Pa. 445; Lerch Hardware Co. v. The Bank, 109 Pa. 240 : Investment Co. v. Russell, 148 Pa. 496; Porter v. Gunnison, 2 Gr. 297. If the plaintiff shows these facts the defense may he demolished, but that is no reason why he should not be required to show them, as the above cited cases and many others that might be cited abundantly show. It follows, that, whether or not the facts set up by the defendant would have been a complete defense as against a bona fide holder who obtained the note before maturity for value, the defendant should, nevertheless, have been permitted to prove them. A party has a right to prove airy fact relevant to the issue, if proof of that fact will shift the burden of proof. It is further urged that the evidence was not admissible because the defendant had not denied the partnership in her affidavit of defense as required by the rule of court. True she did not deny the partnership but she did deny in unequivocal terms that this was a partnership transaction. Indeed she set forth all the facts which she offered to prove on the trial. This was a sufficient compliance with the rule to enable her to put those facts in evidence. [599] It may be said that the error in rejecting the offers was harmless because it appeared by the uncontradicted testimony of the plaintiff subsequently given that he obtained the note before maturity in good faith and for value. This depends upon the interpretation to be put on that testimony, and the credibility of the witness. In one place it conveys the impression that when he took the note he was told that it had been given for a horse sold to the firm. In another place he uses language from which a jury might infer that it was given for a horse sold to Mellinger individually, and if that is what he meant it is impossible to see how he can claim to be an innocent holder. Under the circumstances it was not for the court but for the jury to decide what he meant. As Mr. Justice Trtjnkey said in Maynes v. Atwater, 88 Pa. 496, he “ may be either cultured or illiterate, evasive or candid, but it was for the jury to determine his credibility as a witness, the meaning of his words and find the facts.” Therefore we cannot say that the rejection of defendant’s offers was harmless error. Judgment reversed and venire facias de novo awarded.