Stafford v. Fargo

Mr. Chief Justice Walker delivered the opinion of the Court: The note sued upon in this case was over due, when it was assigned to defendant in error. He then took it subject to all equities or defenses that existed at the time. The ■assignee, after maturity, is supposed to have' notice of any defense that then exists, and it may be as effectually made in his hands as if suit were brought by the payee. This being the rule, it follows, that if there was a want of consideration to support the note when it was given, that defense may be properly interposed in this action. The note appears to have been given, as collateral security, for the money advanced by Lyon, as his portion of the capital in the partnership of which he was a silent member. If the evidence may be regarded, it shows that whilst he was in fact a partner, he only appears to the world and upon the partnership books as an agent of the firm; and to secure to him a return of his capital, in the event that no loss occurred, this note was given. If this is true, there was no consideration to support the note. Having been given for Lyon’s portion of the capital in the firm, he had the right, as a partner, in the event the business of the firm had been successful, after a dissolution, to recover his capital and his share of the profits by bill in equity; and upon this note, in such an event, he could have recovered his capital with interest. Being a silent partner, the note seems to have been given as evidence, that on a dissolution, if there had been no loss, he was entitled to a return of that much money. It was simply intended as a receipt for that sum of money, to be repaid if the firm was successful. But the rights and benefits resulting to a partner, is the consideration he receives for the capital he may advance. He received the consideration for his capital by being admitted as a partner. Heither of the partners owed anything to the firm, or to each other, by forming the partnership, nor could they until the copartnership ceased to exist. They, by forming the partnership, assumed the duties and liabilities growing out of the relation, but that created no debt from one member to another. A note given by one member of the firm to another, without some other and different liability or benefit, would be as entirely without consideration as if given by one stranger to another, where nothing was advanced or no liability existed. In this case the issue was formed, that the note was given without consideration. The evidence tending to prove that fact was therefore properly admitted. And under the issue and the evidence, the court could not have done otherwise than give the jury the fourth instruction asked by plaintiff in error. The evidence shows that the firm had sustained a loss even beyond the capital advanced, as well as the profits which had accrued to the firm, and that it was insolvent when it ceased to do business. This being so, the note was not payable according to the understanding of the parties when it was given. -- "Whilst a large discretion is necessary to be exercised by courts, in the manner of disposing of business, still some rules of practice are inflexible. Long experience has demonstrated that certain rules of practice are indispensable to the attainment of justice, whilst others conduce largely to the attainment of that end. It seems to, be the well recognized rule, that when a witness is called by one party, the other has only the right to cross-examine upon the facts to which he testified in chief. If he can give evidence beneficial to the other party, he should call him at the proper time, and make him his own witness and examine him in chief, thereby giving the other party the benefit of a cross-examination on such evidence in chief. Otherwise, the party calling the witness would be deprived of a cross-examination as to evidence called out by the other side, and the party against whom the witness was first called, would obtain the advantage of getting evidence under the latitude allowed in a cross-examination. It may be that unless the court could see that such an examination had resulted in injury to the opposite party, the judgment would not be reversed for that reason alone; but being calculated to work injury, such a practice should be discouraged. In this case, Lyon was called to prove a single fact, and the cross-examination should have been limited to that fact. |The judgment of the court below must be reversed, and the cause remanded for further proceedings. Judgment reversed.