Case ID: ny-super-ct_44/html/0132-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Sanford, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HERBERT B. FREEMAN, Plaintiff and Respondent, v. JOHN M. FALCONER, Impleaded, &c., Defendant and Appellant.
    PROMISSORY NOTE, LEGAL OWNER OF.
    'OPARTNERSHIP, LIABILITY OF FORMER MEMBER THEREOF, WHO
    ALLOWS HIS NAME TO BE USED AND CONTINUED AS IF HE WAS AN
    ACTUAL MEMBER OF THE FIRM.
    In the absence of malafldes in a plaintiff’s possession of promissory notes, indorsed in blank or specially to himself or his own order, the legal title is in him, and he is legally the real party in interest, and can maintain an action on the same, even though it appears that the transfer is merely colorable as between the parties (See cases cited in Hays v. Southgate, 10 Hun, 511; also Sheridan «. The City of New York, Court of Appeals, see 4 N. Y. Weelcly Big. 28).
    Where the relations of a partner to his copartners have been terminated, yet his name was continued in the name and style of the firm formed by his former copartners with his knowledge, sanction and approval,—Held, that he was liable on the contracts and obligations of the firm so using his name as if he had actually continued as a member and partner thereof.
    Before Curtis, Ch. J., and Sanford, J.
    
      Decided May 6, 1878.
    Appeal from a judgment entered on a verdict in favor of the plaintiff ; and from an order denying defendant’s motion, made on the minutes, for a new-trial.
    The action was brought upon two promissory notes in writing, made by J. M. Falconer & Co., to the order of Manning, Bowman & Co., and by them specially indorsed to the order of the plaintiff. The separate answer of the defendant, John M. Falconer, who alone appeared, put in issue all the allegations of the com"ilaint, and averred, by way of affirmative defense, that ae notes were the property of Manning, Bowman & Co., who were the real parties in interest, and ought to be plaintiffs.
    Upon the trial it appeared that the notes in suit were made by the copartnership firm of J. M. Falconer & Co., to the order of Manning, Bowman & Co., who specially indorsed them to the plaintiff, and directed payment thereof to his order.
    The defendant, John M. Falconer, offered to prove that the payees named in the notes, Manning, Bowman & Co., were the real owners thereof, and that plaintiff held them merely as their agents, and for the purpose of collecting and. remitting the proceeds.
    The evidence was excluded and the defendant excepted.
    The defendant, Falconer, testified, without contradiction, that he ceased to be a member of the firm of J. M. Falconer & Co., about November 1, 1875, when his partners, Barrowcliffe and Manly, bought out his interest in the firm at a sheriff’s sale, under execution, and afterward continued the business in the same firm name of J. M. Falconer & Co. He further testified, that he was in the employ of the firm, giving it the use of his name and skill, at a salary. The notes were made in February, 1877.
    Evidence was offered tending to show a compliance by Barrowcliffe and Manly with the statute “allowing the continued use of copartnership names in certain cases ” {Laws of 1854, ch. 400 ; 1863, ch. 144); but it did not appear that the case was within the statutory requirements. There was no evidence that the firm of J. M. Falconer & Co. ever had business relations with foreign countries, or that, when the defendant ceased to be a member of it, it had transacted business in this State for a period of five years.
    
      The defendant requested the court to direct a verdict in his favor, on the ground that he was not a member of the firm of J. M. Falconer & Co. when the notes were made, and was, therefore, not liable thereon. Also upon the ground that it appeared that the notes were the property of Manning, Bowman & Co., some evidence to that effect having been introduced without objection.
    The court refused so to do, and an exception was taken.
    The court charged the jury, in effect, that the statute did not authorize the continuance of the use of John M. Falconer’s name by his former partners, after their purchase of his interest in the firm ; and their subsequent use of his name, with Ms knowledge and approbation, rendered him liable for its use, as if he had used it himself. The court submitted to the jury the question whether the signature to the notes was genuine, charging that if it was, the defendant would be liable for the use of his name, inasmuch as it was used with his approval, in the same manner, and to the same extent, as if he had used it himself. Exception was taken to the charge in this respect.
    
      Thomas & Wilder, for appellant.
    
      C. F. Wells, for respondent.
   By the Court.—Sanford, J.

Upon the question of the plaintiff’s title to the notes in suit, and Ms right to maintain an action thereon, the weight of authority is adverse to the position contended for by the defendant. In Hays v. Southgate, 10 Hun, 511, the cases upon this point are collated and commented on, and it is laid down as the settled rule, established by numerous adjudications of the court of appeals, that in the absence of mala Jides in a plaintiff’s possession of promissory notes, indorsed in blank, or specially to himself or his own order, the legal title is in him, and he is legally the real party in interest. The most recent case cited is that of Sheridan v. Mayor of New York, not yet reported, but decided by the court of appeals, December 22, 1876 (4 N. Y. Weekly Dig. 28). It was held in that case, that if plaintiff have a valid transfer as against his assignor, and holds the legal title to the demand, payment to him will protect the defendant against any claim by the assignor. He is, in such case, the real party in interest, under the code, and can maintain the action, even though, as between the parties thereto, it appears that the transfer is merely colorable.

There was no error in the refusal of the court to direct a verdict for the defendant, nor in charging that the defendant’s sanction and approval of the continued use of his name, by his late copartners, rendered him liable for the contracts of the firm. By allowing such use of his name, he held himself out to the world as a member of the firm, and it was wholly immaterial whether, as between himself and Ms co-defendants, there was a community of interest or not. If not partners inter sese, they were such as to all creditors who had dealings with them, without notice of their actual relations to each other. There is nothing in the case tending to show tliat the plaintiff, or the payees of the notes, from whom he derived title, had any notice or knowledge that the plaintiff was not a member of the firm, which carried on business under Ms name, with Ms consent and approval. The continued use of the firm name, by the defendant’s associates, after he ceased to be interested therein,' was not authorized by the statute (Laws of 1863, ch. 144), and the defendant is not protected from liability by the vain attempt of Ms associates to avail of, and comply with its provisions.

The verdict is sustained by the evidence, and the defendant’s exceptions are untenable.

The judgment and order appealed from, should be affirmed with costs.

Curtis, Ch. J., concurred.