Horn v. Newton City Bank

The opinion of the court was delivered by Horton, C. J.: It is the contention of Long, one of the plaintiffs in error — a defendant below — that there had been a material alteration in the note sued on without his consent, thereby releasing him from all liability upon it. The note was originally drawn payable to “H. A. Pitts’ Sons Manufacturing Company,” and after having been given to that company it was altered by substituting the name of “ O. B. Hildreth” for the original payee. This alteration was made without the knowledge or consent of Long, and he has never consented to or ratified the same. Within all the authorities, the substitution of O. B. Hildreth in the place of the original payee was a change of the personality of one of the parties to the note, and therefore a material alteration. (Bank v. Hall, 1 Halst. N. J. L. 215; Stoddard v. Penniman, 108 Mass. 366; Draper v. Wood, 112 id. 315; 17 Am. Rep. pp. 92, 106; 2 Daniel on Negotiable Instruments, §§ 1387 — 1390.) If Horn and Long had been associated together in a trading partnership, then either member of the firm might have bound his copartner by executing a promissory note in the name and on behalf of the firm, in any transaction pertaining to their partnership business. We suppose that under such circumstances, the material alteration of a note executed by the firm, with the knowledge and consent of one partner, would-bind his copartner, if the note had been given within the [522] apparent scope of the business of the firm, as it is a general principle relating to trading partnerships that each partner is the lawful agent in the partnership in all matters within the scope of the business. (Deitz v. Regnier, 27 Kas. 94.) ■A non-trading partnership, however, is controlled by rules differing from those controlling a commercial or trading one. (Deitz v. Regnier, supra.) Under the findings of the court, Horn and Long were partners only in the running of a threshing machine, and such a partnership is one of occupation or employment only. It is not a commercial or trading partnership. There was joint ownership between Horn and Long in the threshing machine, and there was a copartnership between them in the matter of operating the machine, with the'intention of dividing the profits and losses equally; but yet their business did not require the execution of negotiable paper as the proper, convenient and usual mode of conducting it. In a partnership to operate a threshing machine there does not exist the implied power in the several members to make promissory notes, and thereby bind the firm. Whoever deals with an individual jointly interested with another in the operation of a threshing machine must, at his peril, inform himself of the nature of the partnership. The note in suit was signed by the makers in their individual names, and not as a firm. Therefore, upon the face of the note one of the makers thereof had no right to bind the other without his consent to any material alteration. Horn had no authority to make a promissory note in the name of the firm or to bind Long, unless the latter had been previously consulted and consented to the transaction. (Lanier v. McCabe, 2 Fla. 32; Prince v. Crawford, 50 Miss. 344; Crossthwait v. Ross, 1 Humph. [Tenn.] 23; Smith v. Sloane, 37 Wis. 285; 19 Am. Rep. 757; Deardorf v. Thatcher, 78 Mo. 128; 1 Daniel on Negotiable Instruments, §§ 355-358.) If he had not the authority to make promissory notes and draw bills of exchange and thereby bind the firm, he had no • right to authorize a change of payee in the note executed by him and Long so as to bind Long thereby. [523] The material alteration of a note with the consent of a maker is virtually making a new note and ante-dating it. We therefore conclude that the material alteration of the note in question released Long. (Broughton v. Fuller, 9 Vt. 373.) That the bank purchased the note before maturity, for a valuable consideration, and is therefore a bona fide holder of the note, does not prevent Long from asserting the material alteration of the note as a defense. (Wait v. Pomeroy, 20 Mich. 425; Benedict v. Cowden, 49 N. Y. 396; Bank v. Stowell, 123 Mass. 196; 2 Daniel on Neg. Instr., §§ 1410-1413.) We have examined the question of practice presented by the briefs, but think the exceptions noted sufficient. The issue formed by the pleadings was submitted to the court, with a request that the court find the facts, specifically, and state its conclusions of law thereon. This was done. The defendants below objected to the rendition of the judgment against them, or either of them, upon the ground that the findings were not sufficient to support or authorize any judgment. This objection was overruled, and exceptions taken. The exceptions were, substantially, to the decision of the court upon matters of law, as set forth in its written findings. No motion for a new trial was necessary to present the inquiry whether the findings of fact supported the judgment. Whether the judgment is authorized and sustained by the special findings is not involved in the determination of the motion for a new trial. (Hover v. Cockins, 17 Kas. 518; Osborne v. Young, 28 id. 769.) The judgment against Long will be reversed, and the cause remanded, with direction to the court below to render judgment in his favor upon the findings of fact. All the Justices concurring.