Nevins v. Townsend

Hosmer, Ch. J. The principle advanced by the defendant is unquestionable, that the note declared on, having been indorsed to the plaintiff when over-due, is subject, in his hands, to every infirmity, which it had, when in the hands of the payee. The question then arises, had it an infirmity ? I am incapable of discerning any. It is a promissory note, in legal and accustomed phraseology, given by a partnership to one of the firm, for money loaned to it, and made with a view to circulation. The money was not advanced by Kneeland Townsend, qua partner; but as an individual, to be repaid wholly, and not in part; and to enable him to obtain the amount speedily, as well as to render the partnership responsible, the contract assumed the before-mentioned form. Although he could maintain no suit upon it, this did not arise from any infirmity in the contract, or any want of equity ; but from the principle that he could not be both plaintiff and defendant. He could transfer [8] the note; and thus get over this difficulty, merely technical; and it was intended, that he should do it, and reimburse himself for the money advanced. The objection founded on the form of the contract, is without support, either from law or justice. It has been said by the defendant, that Kneeland Townsend could not sue on the note, and of consequence, that his indorsee cannot; because it is in the nature of a receipt for money advanced, forming an item in partnership account; because it is subject to a final adjustment of accounts between the partners; and because one half of it only is due. These objections I have brought together, as they all depend on one position, and that is, that the money, for which the note is a security, was intended by Kneeland Townsend to be a personal advancement to the funds of the partnership : in other words, that it was a sum of money put into common stock, by one of the partners. Nothing is more unfounded than this supposition. A transaction must be estimated by the intent that characterizes it. Now, the object of the parties, was, to constitute the relation of lender land borrower. Kneeland Townsend advanced the money on loan, in a prescribed manner, to receive immediate payment; and the partners borrowed it with the intention to make immediate payment. It was a lawful speculation of the partnership, ultimately to derive money from some person in the community, who had the capacity of making a loan, and to become joint debtors for it. The immediate operation was a loan from Kneeland Townsend; but the eventual purpose was to replace this sum, by assigning the partnership security, made with this intent. It cannot be distinguished, in principle, from money loaned to both parties, by a stranger, and a note of the partnership delivered as a security for the repayment. Hence, the sum loaned by Kneeland Townsend was not to furnish an item in the partnership account; nor was the payment of it depend-ant at all on the final settlement of the partnership concerns. The demand of the plaintiff is unquestionable; and the decision of the court below correct. Peters and Bristol, Js. were of the same opinion. Brainard, J. was absent, New trial not to be granted.