Case ID: hill_4/html/0259-01.html
Source: Caselaw Access Project
Author: {"author": "Nelson, Ch. J;", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Austin and others vs. Vandermark, impleaded &c.
    An accommodation endorsement made by one member of b, mercantile Sim without the assent, either express or implied, of his co-partners, cannot be enforced against the latter, except in favor of a Iona fide holder without notice. Per Nelson, Ch. J,
    N. gave L. a business note, endorsed by M., which was transferred to A. After the note fell due, M., being indebted to N., made another note for the same amount, payable to the order of and endorsed by the latter together with V. & Co., and sent it to A. as a substitute for the first note, which he desired should be returned to him, Held, that though the firm name of V. &. Go. was used for M.’b accommodation, the circumstances were not sufficient to charge A. with knowledge of the fact; and that he was therefore entitled to a verdict against all the members of the firm, though the endorsement was made by one, without the knowledge or consent of the others.
    
      Assumpsit, by the endorsees against the endorsers of a promissory note, tried at the Ontario circuit, in November, 1841, before Moseley, C. Judge. The note was for $424,50, dated October 16th, 1839, made by Norton, Bartle & McNeil, payable a the Mechanics’ Bank in the city of New-York, to the order of and endorsed by Norton, Ford & Co. and 0. Vandermark & Co. All the defendants except Frederick Vandermark, of the firm of 0. Vandermark & Co., allowed judgment to pass against them by default. On the trial, the case was this : Norton, Ford & Co. being indebted to one Lane, gave him their note endorsed by Norton, Bartle & McNeil, which was transferred by Lane to the plaintiffs. When this note became due, Norton, Bartle & McNeil owed Norton, Ford & Co., and agreed to the note in question and to get it endorsed by O. Vandermark & Co. for the purpose of taking up the first note on which. Norton, Ford & Co: were liable as principals. The note in question was accordingly made, and endorsed by 0. Vandermark in the name of his firm for the accommodation of the makers. The defendant F. Vandermark was not present when the endorsement was made, nor did it appear that he knew of or assented to it. The note in question was sent, to the plaintiffs in a letter written by McNeil, one of the. makers, dated Phelps, October 30th, 1839. The letter was in these words : “ Gent’n—Above I send you Norton, Bartle & McNeil’s note for amount of Norton, Ford & Co.’s note in favor of Henry Lane for $417 past due, and which you will please return me per mail.” In answer to .this letter, the plaintiffs wrote to McNeil as follows : “ New-York, November 2d, 1839. Sir : We received this morning in yours of the 30th ult. a note drawn by Norton, Bartle & McNeil at 63 days from 16th Oct. 1839, for #424,50, to replace one of Norton, Ford & Co.’s for $411,15, protested for non-payment the 5th ult. By reference &c., you will perceive that the note for $424,50 is $4,44 too much. This amount we will hold subject to your order on payment of the said note.” There was no evidence in the case, other than the above letters and the notes themselves, to show that the plaintiffs knew the note in question was endorsed by 0. Vandermark & Co. for the accommodation of the makers, or that the name of the firm was endorsed without the knowledge of the defendant F. Vandermark. The judge charged the jury that, prima facie, the plaintiffs were to be considered bona fide holders, and that it lay upon the defendant F. Vandermark, to show the plaintiffs knew, when they took the note, that he did not consent to the endorsement. The judge further charged, that there was not enough upon the face of the notes and letters to show that O. Vandermark & Co. were accommodation endorsers. The jury found for the plaintiffs, and the defendant F. Vandermark now moved for a new trial on a case.
    
      F. M. Haight, for the defendant, F. Vandermark.
    
      Jl. Worden, for the plaintiffs.
   By the Court,

Nelson, Ch. J;

As the firms of 0. Vandermark & Co. and Norton, Ford & Co. were joint payees and endorsers,,the note must be regarded, prima facie, as business paper with which the former firm was connected, and therefore properly negotiated by one of the members. But the material question in the case is, whether the circumstances given in evidence were sufficient to make out a notice to the plaintiffs that O. Vandermark & Co. were accommodation parties. If so, the plaintiffs are properly chargeable with want of authority on the part of O. Vandermark to bind his firm. The making of accommodation endorsements is out of the scope of the partnership business of a mercantile house, and therefore not binding upon it, unless done with the express or implied assent of all the members of the firm. This is the rule, except where the paper comes to the hands of a bona fide holder. (Gansevoort v. Williams, 14 Wend. 133, 138; Wilson v. Williams, id. 146.)

The only circumstance in the case tending to establish the plaintiffs’ knowledge of the relation which the firm of O. Vandermark & Co. occupied in respect to the note in question, without regard to the form in which it is made, is, that the note was sent in a letter to the plaintiffs by McNeil, one of the makers. This, I admit, had the debt for which the first note was given been the debt of McNeil’s firm, would, if unexplained, have been conclusive in favor of the defendant, for the reason given by the chancellor in Stall v. Catskill Bank, (18 Wend. 478.) But the first note was not given for the debt of McNeil’s firm, and therefore the fact of his possession and transmission of the note in question to the plaintiffs is not at all inconsistent with the presumption arising from the face of the note, viz. that it was business paper. The paper being sent to take up the note of third parties, the natural inference from the fact is, that McNeil acted as agent for this purpose in behalf of Norton, Ford & Co., the real debtors, for whose benefit the note held by the plaintiffs was about to be renewed. Besides, McNiel’s firm being endorsers upon the note that had just fallen due, he was interested in seeing that it was taken up ,• and this might well account, in the minds of the plaintiffs, for his being the medium of communication on behalf of the principal debtors. At least, I think it would be more natural for them to draw such an inference from the facts within their knowledge, than that McNeil’s firm had made the note and procured the names of the real debtors and of O. Vandermark & Co. as accommodation endorsers, for the mere purpose of taking up the first note.

It appears to me the transaction should be regarded in the same light as if the note had been transmitted by Norton, Ford & Co. to the plaintiffs. If such had been the case, there would have been no difficulty. Nothing would then have appeared to distinguish the transaction from the ordinary case of a party paying his debt by turning out to the creditor what appears, on its face, to be a business note.

I am of opinion that the ruling of the learned judge at the circuit was correct, and that a new trial should be denied.

New trial denied.