Parke v. Smith

The opinion of the Court was delivered by Huston, J. — In the case of Baird v. Cochran, (4 Serg. & Rawle 397), it was decided that to exclude parties whose names are on the bill, but not parties to the suit and not interested, the note must not only be negotiable but actually negotiated in the usual course of business; and in Hepburn v. Cassel, (6 Serg. & Rawle 115), the same doctrine is distinctly repeated. In 1 Rawle 197, it is said, “ the rule is undoubtedly restricted to paper actually negotiated ;” but that case is put on the ground that the witness could not, by his own evidence, remove an objection to his own evidence apparent on the paper; and, I take it, says the Chief Justice, he could not. In Gest v. Espy, (2 Watts 268), this case is reviewed and commented on. It is again said the rule is “ that a party to a note cannot impeach it when it is strictly negotiable and has been negotiatedand again, “if the contest is between the original parties, or between the drawer and a person who has not become the holder by the usual mercantile endorsement, it is granted there is no ground for the application of the ruleagain, “ it is necessary for the defendant to prove by testimony aliunde that the original parties remained the same.” Here it was proved by the mortgage signed by both parties, that the note, instead of being passed by the endorser, was given by the maker to the plaintiff. The bare statement shows it was not received in the usual course of business; and if authority had been necessary, the cases cited, 8 Cowen 687, and 18 Wend. 478, are full to the point. Where the maker offers an endorsed note in payment of a contract, and especially for a past debt, it is not offering it in the usual course of business, and is, at least, prima, fade evidence that the endorser is a surety for the maker. If the transaction were real, the payee would be owner of the note, and he alone would have a right to pass it away: while the note is in he hands and is the property of the maker, although it is endorsed [290] by the payee, yet the parties can support no suit on it against each other; when it is passed to a third person, a right of action on it arises; but if it is passed by the maker, the payee and endorser is liable as surety or guarantor of the maker, and the holder who received it from the maker, may write a guaranty over the blank endorsement. Or if the endorsement was on it when the note was made and offered by the maker for his own debt, it has been held the endorser may be held' as surety without other evidence. See cases last cited, and Bayly on Bills (last edition) 46-48, and cases in the notes. Parke then received the note in question, not from Smith, Roy-er & CoNmt from Hall, and he considered and knew the endorsement injlct and law was only as surety for Hall. But this court decided in Sutton v. Irwine, (12 Serg. & Rawle 13), that one partner could not, by signing the name of the firm, bind the other partners by a guaranty, not in the course of their business, unless such act was authorized or subsequently sanctioned by them; and in Hamill v. Purvis, (2 Penn. 177), the same point is decided. One partner cannot bind the firm by an instrument under seal; this is the general rule; one, if not the only, exception, is a release; 3 Kent 24; last ed. 48 ; 3 Johns. 68 ; 1 Wend. 336; 4 Binn. 375. The objection that this could not be proved on the plea of non assumpsit was rightly abandoned. Judgment affirmed.