Case Name: Petty vs. Hannum and Drane
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1840-12
Citations: 2 Hum. 102
Docket Number: 
Parties: Petty vs. Hannum and Drane.
Judges: 
Reporter: Tennessee Reports
Volume: 21
Pages: 102–105

Head Matter:
Petty vs. Hannum and Drane.
1. Where a hill was filed against H. &. D. former partners, to enjoin the collection of a judgment, obtained on a bill single, (which on a division'of the effects had fallen to D.) and D. had answered and denied the equity of the bill, and H. had permitted the bill to be taken pro eonfesso as to him: Held, that such default did not estop D. from denying and disproving the equity of the bill.
2. H. & D. purchased a bill single, given without consideration, without notice of such want of consideration, at a large discount > Held, that they were entitled to recover only so much as they had paid for the said^ill single.
John H. Petty, a citizen of the county of Stewart, purchased of William B. Nelson a tract of land, containing three hundred acres, lying in the county of Stewart, State of Tennessee, for which Petty executed his bill single to Nelson, for the sum of $600, payable on the 1st July 1829. Nelson gave Petty a bond to convey him the land, and put him in possession thereof about the 22nd December, 1828. On the 31st of the same month' W. B. Nelson sold the bill single, executed to him by Petty, to Walter H. Drane and Fisher A. Hannum, merchants, and partners in trade, for the sum of $400 in cash, advanced to him by Drane and Hannum, and endorsed it in the following words: “For value received, I assign the within note to Fisher A. Hannum, guaranteeing the solvency of the drawer. December 31st, 1828.”
Neither Nelson, Hannum or Drane, had any knowledge of any equitable defence existing against a recovery on the note, at the time of the sale and purchase thereof. When the bill single fell due,it was presented by Hannum for payment and Petty promised to pay it, and indulgence was granted upon such promise. On a division of the effects of Hannum and Drane, it fell to Drane.
On the 28th August, 1829, the heirs of Wikoff, citizens of Pennsylvania, instituted an action of ejectment against Petty, in the circuit court of the United States, sitting at Nashville, for West Tennessee, for the recovery of the possession of the land so sold by Nelson to Petty. Petty gave Nelson notice of the action so instituted, and requested him to defend the suit, which Nelson did.
At the September term, 1833, of said court, the plaintiffs recovered a judgment against Petty, and he was accordingly ousted of the possession by writ from said court. In the mean time, to wit, on the 31st December, 1830, Hannum and Drane instituted an action of debt in the county court of Stewart county, against Petty upon the bill single, and recovered judgment against him at the August term, 1830, for $600 debt, anct $39 damages and costs. A capias ad satisfaciendum issued on the judgment on the 9th August, 1830; Petty was arrested, and gave bond to keep within the prison limits.
On the 28th March, 1838, Petty filed this bill in the chancery court at Charlotte, against Hannum, Drane and Nelson, alleging that the bill single, executed to Nelson, was without consideration; that this fact was known to Hannum and Drane at the time of their purchase of it; that they purchased it at a large discount, and praying, that Hannum and Drane might be enjoined from- collecting the said judgment, and for general relief, &c.
Plannum and Nelson did not answer, and the bill was taken as confessed and set for hearing ex parte as to them at the October rules, 1838. Drane answered the bill. He admitted the note was given for the land, and that the land had been recovered from Petty, &c. but denied that he had received it with notice of any failure of consideration; that he took it-in the due course of trade and paid therefor the sum of $400,'“
To this answer, complainant filed a general replication. The -cáuse came on for final hearing at the' March term, 1840, on the bill, answer, exhibit and proof; when the chancellor, McCampbell, dpcided that the defendant, W. H. Drane,. should recover of the complainant the sum of $400, with interest from the 1st day of July, 1829, and that the defendants, Hannum and Drane; should be perpetually enjoined from collecting the balance of said judgment, &c. and that complainant pay two-thirds of the costs, and that Drane pay one-third thereof, &c. From this decree complainant appealed to the supreme court. - '
W. A. Cook, for complainant.
1. Whatis the effect of the pro confesso judgment against Hannum, one of the partners? Notice to one partner or joint purchaser is by construction of law, notice to the other. It will not avail to say that the other had no notice in fact; that might well be so, yet the firm or the co-partner who made the contract might have the most full and distinct information." It is not necessary to prove notice upon all the members of a firm. The legal effect, then, of ■ this pro confesso is tantamount to a direct confession by Hannum, "of notice of the want of consideration, and is equivalent in law, to a confession of notice by Drane.
2. The enormity of the discount, at which this note was bought by Hannum and Drane, is conclusive evidence of notice, as this court determined in the case of Hunt vs. Sanford and Coolc, 6 Yerg. 387.
3. If wrong in these positions, still the defendant would be entitled, to the sum of $400 and interest, there being a negotiation in the course of trade to that amount only. It would be most iniquitous to compel Petty, who had. received nothing, to pay Drane more than he had actually paid for the note.
W. K. Turner, for defendant, Drane.

Opinion:
Tuiiley, J.
delivered the opinion of the court.
The complainant purchased a tract of land from one William B. Nelson, for which he executed his note for the sum of six hundred-dollars, due and payable about the 1st day of July, 1829. This note was assigned by Nelson to the defendants, Hannum and Drane, before it became due, at a discount of one-third, or at the rate of sixty-six and two-thirds of a cent in the dollar. Nelson had no title to the land, and complainant has been evicted by the true owners. The defendants obtained judgment on the note, and this bill is filed to enjoin its collection. The bill charges, that Han-num and Drane, at the time they purchased the note, had full knowledge of the failure of the consideration.
The bill is taken for confessed against Hannum, but Drane answers, and denies explicitly, that, at the time of the purchase, either he or his partner, had any knowledge that the consideration of the note had failed, or that they "even knew what it purported to have been; he says that after the note fell due, complainant was written to upon the subject of its payment, and that he wrote a letter in reply which is exhibited promising to pay and requesting indulgence, which was granted for several months.
It is very obvious from the letters of complainant to the defendants, that he, himself, was not aware of the-failure of consideration of the note, when it fell due, and there can be but little pretence, for supposing that either Drane or Hannum could have acquired the. information sooner than himself. Drane denies it most positively, and there is no proof to the contrary. But it is contended, that as Hannum has not answered the bill,' but permitted it to be taken as confessed, he is thereby fixed with notice, it being charged in the bill, that notice to one co-partner or joint purchaser, is notice to the other, and that Drane is estopped from denying or proving the want of it on his part. To sustain this position would he to do Drane great injustice. This partnership has long since been dissolved, and in distribution of the effects, the' note in dispute fell to his share; he has no power to compel his former partner to answer; where he may be, and whether he has ever had actual notice of the filing of the bill, are wholly unknown to the court; under these circumstances, we say, to hold that a constructive admission of the fact, shall estop his co-defendant, Drane, for urging and proving the truth, would be doing him great injustice.
The question, however, has pot been without difficulties; but we have the satisfaction of knowing, that it has been settled .consonant with what, webelieve, to be justice,by the court of errors in the State of New York. In the case of Clason vs. Morris, 10 Johnson Rep. 524, it was held, after a laborious investigation, that where a bill in chancery is filed against two defendants, jointly interested, and the bill is taken pro confesso,-against one for want of appearance, and the other appears and disproves the plaintiff's cáse, the bill will be dismissed as to both defendants. It is true there was contrariety of opinion among the members of the court, but we think the majority weré right, and chose to follow the case. We, therefore, dismiss the complainant's bill, but will not give a decree for the full amount of the note and interest, but only the amount actually paid by the defendants, namely, sixty-six and two-thirds cents in the dollar, with interest thereon from the date of its payment, because we believe that it is only a negotiation of the note in the course of trade for that amount, which we have repeatedly held is the only thing which will protect an endorser of negotiable paper against an equitable defence on the part of the maker, and because, we believe the defendants ought not, in good conscience,"to ask to be permitted to make a specula-' tion out of a note situated as this is. Decree accordingly.