Rocky Mountain Nat. Bank v. McCaskill

Reed, O. The established practice of this court precludes the review of questions determined in the lower court, un [413] less exceptions were saved to the judgment, and error duly assigned. The only question submitted by the ■ single assignment in this case for the determination of the court is the one of the validity of the notes as partnership paper at the time of their execution and delivery. The dissolution of the partnership before the making of the notes seems to have been unquestioned. Whether the officers of either bank knew of the dissolution of the partnership is left in doubt. It is not conclusively or satisfactorily shown that they had such knowledge. The dissolution of the firm could in no way affect appellants unless it were shown that they had knowledge of it. Begular customers and dealers with a firm are required to have special notice of the dissolution. Parties who, like appellants, only take for discount the paper of the firm, are not required to have special notice, but there must be a reasonable or general notice, sufficient to warn and notify the public, by publication of a notice of dissolution, or in some other public manner. 1 Daniel, Neg. Inst., § 3695b Lovejoy v. Spafford, 93 U. S. 439; Bank v. McChesney, 20 N. Y. 240. It does not appear from the evidence that any notice whatever was given of the dissolution, or that the fact was known to any one but the former members of the firm. It was contended by appellees that Boworth had no authority to bind the partnership in the making of promissory notes. This contention ivas not established by the proof. If his authority in this regard was limited by a special contract between himself and McOaskill, nevertheless, as to third parties, such a contract would have been a nullity, unless their knowledge of the fact was shown. The authority of a partner to bind the firm within the scope of its business is implied, and grows out of the fact that it is a firm, and each member is a general agent for the other copartners. 1 Daniel, Neg. Inst., §§ 355, 356; Greenslade v. Dower, 7 Barn. & C. 635; Swan v. Steele, 7 East, 210. There is this distinction to be made: A contract made between partners, that certain members of the [414] firm only could bind the firm, might be valid as between themselves, and might make a debt which purported to be a firm debt an individual debt in the adjustment of the partnership affairs, while such debt would be a firm debt in the hands of a third party who had no knowledge of the Avant of authority of the partner executing the paper. Another well settled rule of law is that without actual knowledge of the Avant of authority of a partner to make negotiable paper in the name of the firm, wdiere paper properly executed in the name of the firm is discounted, the lender is not required to inquire into the intentions, or to see that the money is properly applied to firm uses; but if the lender knows that the paper is not made for the legitimate business of the firm, or knows that the money is obtained for the purpose of discharging an individual debt, the paper would be invalid in his hands as against the firm. The burden of proving that the lender was aware of the wrongful use of the firm name and cognizant of the fraud is upon the party asserting the irregularity. 1 Daniel, Neg. Inst., § 357; Hayward v. French, 12 Gray, 453; Sedgwick v. Lewis, 70 Pa. St. 221. The testimony is very conflicting in regard to the knoAvledge of appellants at the time of the execution of the respective notes that thejr were not being used for the pur-, poses of the firm, but for the individual benefit of Roworth; but sufficient appears in evidence in regard to what Avas said and done at the time, taken in connection with the established fact that the notes were substituted for the individual notes of Roworth, that had been frequently reneAved before that time for indebtedness that was not created in the name of the firm, but in his individual name, to warrant the court in finding that the respective parties had the necessary knowledge that the paper Avas not being used in the legitimate business of the firm. Although there was much testimony opposed to this view, there was sufficient in its favor to warrant this court in refusing to disturb the finding; and, as before stated, this court, by reason of the [415] absence of assignments of error, being precluded from examining the question of subsequent ratification and adoption of the notes by McCasMll, we recommend that the decree be affirmed. Richmond, C., concurs. Eissell, C., concurs in result. Per Curiam. For the ‘reasons stated in the foregoing opinion the judgment is affirmed. Affirmed.