Tompkins & Maden v. Woodyad

Moore, J. Assumpsit in the circuit court of Kanawha county by Plaintiff vs. Defendants, on the following note: 3400 Charleston, W. V., October 7, ]S6">. Eour months after date, I promise to pay to .the order of William Maden, negotiable and payable at the Bank of the West, without off-set, four hundred and sixty dollars, value received. ' CYRUS CRKIGH, Endorsed: WILLIAM MADEN, TOMPKINS & MADEN. [227] Defendants demurred to the declaration, and pleaded non-assumpsit ; and Tompkins filed a special plea, in which he alleged that at the time of the alleged assignment to plaintiff, he and Maden were engaged as partners in merchandizing, under the firm name of Tompkins & Maden; that by their partnership agreement neither member of the firm could use the firm name in any transaction not within the partnership business; that the assignment of the note of Creigh did not pertain to, nor was it within said partnership business, nor was said note at any time the property of the partnership; that the making of the said note and the assignment thereof were transactions in which neither Tompkins nor said firm-had any interest; that Tompkins did not assign the note nor use the name of the firm so to do, and that if Maden did use the name of the firm to make such assignment, he did so without authority to bind Tompkins in that behalf; and so said Tompkins was not a partner in making said assignment as alleged in tire declaration; that said assignment, if any such was made, was made to the Bank of the West, composed of plaintiff and Clay pool and others, of which Clay pool was agent, in taking said assignment, and had notice of the foregoing premises. At the June term, 1869, by consent, the case was tried by the court in lieu of a jury, and judgment rendered in favor of the plaintiff for five hundred and sixty-one dollars and nineteen cents, amount due, with interest from date of the judgment, and costs. Defendants moved the court for a new trial, but the motion was overruled, and to this action of the court Tompkins tendered his bill of exceptions, setting out the facts proved at the trial, as follows, viz: “ Be it remembered, that on the trial of the cause before the judge, the plaintiff read in evidence on his behalf the note in the declaration mentioned, in the words and figures following, to-wi-t: (See note heretofore copied aud made part of this record.) The plaintiff then proved that the names William Maden and Tompkins & Maden, endorsed on said note, were in the proper handwriting of said William Maden. It was proved that the defendant, William H. Tompkins, and said William Maden were, at the time said note was made and endorsed, partners exercising the business of merchants in the town of Charleston, in Kanawha county. [228] “The defendant, William H. Tompkins, was then sworn as a witness on his own behalf, and proved that he knew nothing of the'making of said note, or the endorsement of the name of Tompkins ifc Maden thereon at the time either of those acts were done, and that the first he knew thereof was about the time of the maturity of said note. It was proved by Tompkins that the consideration of said note was not a matter pertaining to the partnership of Tompkins & Maden, or in which they as partners were in any way concerned, but was a private transaction of said Maden, in which the said Tompkins had no interest as partner or otherwise, and from which he derived no benefit; that when he first heard of it (about the time of the maturity of said note, or a little before,) he gave notice to the Bank of the West, then the holder and owner of said note, through tlieir cashier, John Claypool, that the said note and endorsements thereon were not partnership transactions of Tompkins & Maden, and that he was not responsible and would not pay it. It was also proved that the Bank of the West was not an incorporated institution, but was a private partnership, and that said John Clay-pool was their cashier, and that he and the plaintiff were both partners therein; that at the time, or about the time of the date of said note, the maker thereof and said Maden went to the Bank of the West and offered said note to Claypool, as cashier, for discount, endorsed by said Maden only, which said Claypool declined to do; that said Maden then endorsed the said note in the name of Tompkins ck Maden, and offered it again for discount, and the note was then discounted' and became the property of the said bank. And it was also proved that the Bank of the West had no notice at or before the discount, or until about the time it became due, that Tompkins did not recognize it as a legitimate transaction on the part of the firm of Tompkins <fc Maden. It ivas also proved that after said Tompkins had given notice to said Claypool as aforesaid, that said note was not a partnership transaction of Tompkins & Maden, said bank, in another transaction with said Maden alone, paid him through their agent, Yfilliam A. Quarrier, about one thousand five hundred dollars, and that said bank also discounted for him a note of Mrs. Caldwell, and paid him through the same agent the nett proceeds, amounting to one thousand dollars. [229] “ But it was proved that this money was paid, and not discounted, in the compromise of a suit between Maden and the ■bant, and in which compromise the actual payment of money .and the discount of the note was a condition precedent, which left the bank no power to retain the money or to refuse the discount, and the bank, to secure the compromise, was coerced to pay the money and discount the note aforesaid. It was :also proved by the plaintiff that he, in the name of William Maden, the payee, for the plaintiff’s benefit, brought suit in 'the circuit court of Kanawha county, on the 5th day of July, 1866, and at the October term, 1866, obtained judgment against the maker of said note, and on the 9th day of October, 1866, caused an execution of fi. fa. to issue thereon, which went into the hands of the sheriff of Kanawha county, and was returned ,[No property found;’ and that on the 14th day of Febraary, 1867, he sued out another execution of fi. fa., directed to the sheriff of Greenbrier county, which was returned by the sheriff thereof ‘No property found.’ It was also proved that Cyrus Creigh, the maker of said note, resided about three miles from Lewisburg, in the county of Greenbrier, and that he paid said note to said William Maden, but the time at which this payment was made was not proved. The foregoing were all the proofs in the cause.” ■ From the said judgment of the circuit court the defendants appealed to this court. It is well settled that the endorsement by a partner in the name of a firm, of paper not belonging to the firm, which is in effect lending or giving the credit of the firm, carries with it the presumption that the'partner making it was not authorized. The business of a mercantile firm is usually buying and selling; and to lend the credit of the firm by endorsing paper not belonging to it is no part of the general and regular business, and the presumption of the law, therefore, is against the authority of the partner who signs the firm name for such purpose. It is the well settled doctrine of the American courts, that a third party taking from á partner the signature of his firm upon his own private, individual transaction, cannot hold the firm without proof of authority, adoption, or ratification. Such has been the argument of the appellants in this case, well supported by authority. Professor Parsons [230] recognizes the law to be settled, that “if one partner signs or endorses a note with the partnership name, but in payment or security of his private debt, and the taker knows it to be so, the other parties are not bound without their assent, or some act which justified the taker in suj^posing their assent; and the admissions of the partner signing are no evidence to prove the assent of the others. In this country it is clearly settled that the taker must prove the assent of the other partners, for prima facie such a transaction is a fraud both on the part of the debtor and the creditor.” (1 Parsons on Bills and Notes, p, 125, &c., ch. 5, § 5, and notes citing-many authorities.) In Mercein vs. Andrews, 10 Wend., 461, cited by Prof. Parsons, it was held “ that a partner is not liable to the payment of a note endorsed by his co-partner in the name of the firm, out of the course of the partnership concerns, although he be present and hear the arrangement respecting the endorsement; his assent must be proved, and will not be presumed.” It seems to me the facts proven in the case now before us were sufficient, under the numerous authorities settling the principle in similar cases, to have warranted a judgment in favor of the defendant, Tompkins, and that the court below erred in giving judgment against him. The judgment being a joint one against the defendants, Tompkins and Maden, should be reversed as to both, with costs here and in the circuit court, and this court proceeding to give such judgment as the court below should have done, must give judgment against the defendant, William Maden, with costs in the court below. The other judges concurred. JüEGMENT REVERSED.