National Exchange Bank of Boston v. White

The court, before charging the juiy, in explanation of its views upon the law of the case, expressed its opinion as follows: Severens, J. The court is of opinion that upon proof of the misapplication and unlawful use of the notes sued on, in transferring them, by the indoisement of Ferry & Bro., to the plaintiff, in contravention [415] of the rights of the non-assenting members of the firm of F. II. White & Co., the burden of proof was cast upon the plaintiff of showing that it is a bona fide holder of the notes, and that it received them before maturity for a valuable consideration. Smith v. Sac Co., 11 Wall. 139; Stewart v. Lansing, 104 U. S. 505. The plaintiff has offered evidence in support of that burden. That proof is not contradicted, and no circumstances appear in the case to discredit it; and it appears to the court that a verdict contrary to this evidence could not be supported, and that, therefore, an express direction from the court must be given to find in accordance with such uncontradicted testimony. Orleans v. Platt, 99 U. S. 676; Improvement Co. v. Munson, 14 Wall. 442; Walbrun v. Babbitt, 16 Wall. 577; Arthur v. Morgan, 112 U. S. 495, 5 Sup. Ct. Rep. 241; County of Macon v. Shores, 97 U. S. 272. The notes appear to have been signed in blank, and delivered to Ferry & Ero. to bo filled up; and this was done so that, when they were indorsed to and discounted by the plaintiff, they were in complete form, with no indications of any defect in their execution. This being so, the court holds that in the hands of the plaintiff they are valid securities, and unaffected by the circumstance that they wore signed in blank. Such facts imply an authority to fill up the blank. Michigan Bank v. Eldred, 9 Wall. 544; Goodman v. Simonds, 20 How. 361. The articles of copartnership oí F. II. White & Co. were admitted as part of the cross-examination of the witness called to prove that copart-nership, who testified that he had seen them. It not appearing that their contents were known to the plaintiff, it is not affected by the articles, and the nature of that copartnership is to bo determined by what it assumed to the public to be, and by its mode of doing business. Winship v. U. S. Bank, 5 Pet. 529; Michigan Bank v. Eldred, 9 Wall. 544. Whenever a copartnership adopts and is engaged in a course of business in which the use of its commercial paper, such as these notes are, is appropriate and reasonably to be expected, or does in fact make uso of it, with the common knowledge of the members of the firm, whenever the convenience or necessities of the firm may require, then the firm is liable upon commercial paper made in its name, by one of its members to one who takes it bona fide, in the usual course of business, before maturity, and for a valuable consideration, notwithstanding any fraud of the partner making the paper, or misappropriation by him to other uses than those of his firm. The court holds that such liability is not restricted to the caso of a trading copartnership, if by that-tenn is intended one engaged in the business of buying and selling, though it would, as a rule, include such, but extends to all cases where the nature of the business fairly and reasonably implies such use as an appropriate incident thereto, or where the actual course of business pursued adopts the practice of issuing the mercantile paper of the firm to accommodate its necessities or convenience whenever the occasions occur, and such occasions do in fact occur and are thus provided for. Kimbro v. Bullitt, 22 How. 256; Irwin v. Williar, 110 U. S. 499, 505, 4 Sup. Ct. Rep. 160; Johnston v. Dutton, 27 Ala. 245; McGregor v. Cleveland, 5 Wend. 475. [416] If the making of mercantile paper of the firm by one of its members under any circumstances is permissible, and consistent with the rights of the other members of the firm, the authority must be presumed in favor of a Iona fide holder. Gelpcke v. Dubuque, 1 Wall. 175, 203, and cases there cited’. Although Gelpcke v..Dubuque was an action upon municipal bond’s, the principle there stated seems applicable, those things being changed which should be. It must be presumed that the defendants White and Dowling were cognizant of the matters which were evidenced by their partnership books, and of the transactions therein disclosed. If the court were to submit to the jury in this case the question of fact whether the firm of F. H. White & Co. did so conduct its business as to impliedly authorize the making of firm paper by one of its members for any purpose, it would be its duty to instruct them that if they should give credit to the evidence of the defendants and their books, and the undisputed evidence from the bank-books at Whitehall, their verdict must be for the plaintiff. The court does not deem it proper to submit the question under such circumstances. SevereNS, J., (charging jury.') Regretting very much that these defendants White and Dowling, who alone make defense here, are in such a situation that they must suffer from the wrong-doing of their associate, the court is unable to relieve them without violating principles of law which are essential to the security of mercantile business, and violating also the rights of parties innocent of the wrong. As there is, in the opinoin of the court, no question of fact about which there is any conflict in the evidence, the court holds that, giving effect to the testimony, the plaintiff is entitled to a verdict, and you are instructed to find accordingly, against all the defendants. The amount duo on the notes, according to the computation stated in your hearing, and as I understand not disputed, is $19,306.27, but upon the suggestion of the court of a doubt whether the amount of the last balance standing on the plaintiff's books to the credit of Ferry & Bro., being that of January 22, 1883, amounting to $1,226.51, which, with the interest, then was $1,514.82,’ ought not to be deducted, the plaintiff’s counsel consents thereto, and this, according to the computation of counsel, leaves $17,791.45 as the amount for which the verdict should be rendered. The jury rendered their verdict for the plaintiff accordingly. The defendant Dowling moved for a new trial. That motion came on for hearing before JacKSON, C. J., and Sevbkb.NS, D. J., and was argued by the counsel who tried the case. Jaceson, J., orally delivered the opinion of the court, denying the motion upon substantially the same grounds as those stated in the opinion of the district judge at the trial.