Porter v. Write

Bartol, C. J., delivered the opinion of the Court. This suit was instituted by the appellee against the appellant and John B. Rose, partners doing business in the name of J. B. Rose & Co. The appellee sued as endorsee for value of three promissory notes ; one dated June 28th, 1871, drawn by A. J. S. Smith, at four months, and endorsed by J. W. Butler & Co., J. B. Rose & Co., and Perrigo & Kohl. One dated July 28th, 1871, drawn by J. B. Rose & Co., at four months, endorsed by J. W. Butler & Co.., D. C. Morgan and Eastman & .Rogers ; and one dated September 2nd, 1871, drawn by J. B. Rose & Co., at four months, and endorsed by J. W. Butler &.Co., Eastman & Rogers, Perrigo & Kohl, and D. 0. Morgan. The defence relied on by the appellee was that the notes were drawn or endorsed by his partner .Rose, without his knowledge or authority, that they were given or loaned by Rose, to J. W. Butler, his brother-in-law, without the knowledge or consent of the appellant, that the firm of J. B. Rose & Co. derived no benefit from them ; and that they were discounted by the appellee under circumstances which should have put him upon inquiry, to discover to [617] him their character; and exonerate the appellant from liability. The proof shows that the notes were drawn and endorsed by J. B. Rose, in the name of the firm, without the knowledge of the appellant, and were purchased, or discounted by the appellee for J. W. Butler, who received the money for them. That the firm of J. B. Rose & Co. was carrying on the printing business, as was known to the appellee; but the extent of their business is not disclosed by the evidence. The appellant does not appear to have been actively engaged in the business, the active or managing partner was J. B. Rose. John "W. Butler, the plaintiff’s witness, having testified, among other things, that he was carrying on business in “ house carpentering and building materials,” in the name of J. W. Butler & Co., and that the notes were discounted for his accommodation, was asked the question in chief, Cidid you exchange for them your firm’s accommodation notes in favor of J. B. Rose & Co?” The question was objected to; but the ¡Superior Court overruled the objection and allowed the question to be asked, and this ruling forms the subject of the appellant’s first bill of exceptions. No objection was made below to the form of the question, as leading, and no objection on that ground has been urged in this Court. The point made by the appellant on this exception, is, that the question and the answer thereto were inadmissible ‘cunless the witness knew, or could state that the defendant Porter, had knowledge of these transactions.” The point presented by this first exception will be noticed hereafter. In answer to the question, the witness J. W. Butler said, cc I was in the habit of exchanging notes with J. B. Rose & Co. I have had notes of-J. B. Rose & Co., which were paid; I was in the habit of exchanging notes with J. B. Rose & Go. in the year 1871, and in that [618] year, loaned said firm in addition to exchanged notes, as much as $2500 in cash in the aggregate at various times during the year. In some instances in which I got notes of J. B. Rose & Co. discounted, J. B. Rose & Co. got the money for the discounted notes ; in others witness’ firm got the money, and in other instances J. B. Rose & Co. got part of the money from a discount, and J. W. Butler & Co. got the rest. Mr. Rose sometimes asked witness to lend him money for his pay-roll on Saturday afternoon, also spoke of having notes to pay for which I lent him money ; in dealing with him, I dealt with him upon his statements.” After this testimony had been given, George U. Porter, one of the defendants, testified that he was one of the firm of J. B. Rose & Co. until November 16th, 1871, when it was dissolved ; the question was then asked him by defendant’s counsel, “Had you any knowledge of the existence of either of the notes sued on, during the existence of the partnership of J. B. Rose & Co.?” The question was excepted to by the counsel of the appellee, but the Court permitted the question to be answered, reserving the right to exclude the evidence after hearing the same, if it should not prove to be competent and legal evidence to go to the jury. The witness then proceeded and testified as follows : “I never had any knowledge of either of the notes sued on, during the existence of the partnership. I knew Miles White, the plaintiff, but never had any business transactions with him, or conversations with him on the subject of these notes, either before or after their maturity. I never authorized any note to be given by Mr. Rose in the name of the firm; if any money had at any time been needed in the partnership business, witness would have provided it. Witness did not know that any money was ever borrowed of Mr. Butler at any time for the use of the firm. The notes sued on were not to his knowledge, connected with the business of the partnership.” [619] The plaintiff by his counsel objected to the admissibility of the above offered evidence of George U. Porter, on the ground that the same if true, did not impeach the validity of the notes sued on in the hands of the plaintiff as a bona fide purchaser for value, without notice ; and the Court excluded the same, whereupon the appellant took his second bill of exceptions. In our judgment there was no error in the ruling of the Superior Court, as stated in the first and second bills1 of exception. It was competent to prove by the testimony of Butler, the course of his dealing with the firm of J. B. Rose & Co., and that it was the practice of Rose the managing partner, to borrow money for the firm, and to assign and endorse notes for the use of the firm ; without showing express authority for that purpose from his co-partner, the appellant; such authority would be implied from the existence of the partnership, and the nature of its business. The appellee being a bona fide holder of the notes sued on, his legal rights are in no manner impaired or affected by the fact that the appellant was ignorant of the making and endorsement of the notes by Rose, his co-partner, or that the appellant had not given him any express authority to bind the firm in the premises, and the evidence given by the appellant on this subject was therefore irrelevant, and properly excluded from the jury. In order to render the evidence admissible, and material to affect the rights of the appellee, it was necessary to prove that he had knowledge of the want of authority in Rose to bind the firm by signing or endorsing the notes; or that the same was not within the scope of the business of the partnership; or to bring home to him the knowledge of such facts, as to put him on inquiry ; and make it gross negligence on his part to have purchased the notes. But no such testimony was offered in the case. On the con [620] trary, there is no evidence that the appellee knew, or had any reasoD to suspect that the notes were signed or endorsed by Rose without the authority of his co-partner, and not in the regular course of their business for the use and benefit of the firm. In the absence of such evidence there was no error in refusing the prayers of the defendant below, for the reason stated by the Superior Court, that there was no evidence in the cause sufficient to support them. (Decided 3rd March, 1874.) Judgment affirmed.