Case Name: SAYLOR ET. AL. vs. MERCHANTS' EXCHANGE BANK
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1880-03-31
Citations: 1 Walk. 328
Docket Number: No. 117
Parties: SAYLOR ET. AL. vs. MERCHANTS’ EXCHANGE BANK.
Judges: 
Reporter: Reports of cases decided by the supreme court of pennsylvania which have been omitted from the regular reports
Volume: 1
Pages: 328–336

Head Matter:
SAYLOR ET. AL. vs. MERCHANTS’ EXCHANGE BANK.
A partner has authority to renew notes of the firm.
Nothing but clear evidence of knowledge or notice, fraud or mala fides can impeach the title of the holder of negotiable paper taken before maturity.
An indorser had a note discounted in the bank ; the maker failed to pay the note ; the indorser got the note from the bank and settled with the maker. Held that the indorser was liable to the bank in an action for money had and received.
Error to Common Pleas of Schuylkill County. No. 117 July Term, 1879.
Summons in assumpsit. Declaration with common counts and three special counts filed September 12,1874. By agreement this case was tried before Pershing, P. J., without a jury. The following is a statement of facts found by the Court:
John E. Wynkoop and Edward W. Wynkoop composed the firm of Wynkoop Brothers, whose business was the manufacture of iron. These same parties, together with Henry Saylor and A. J. Medlar, composed the firm of Wynkoop, Medlar & Company. The business of this firm was the mining of. iron ore at Mount Holly, Cumberland County, Penna.
Wynkoop Brothers purchased ore from Wynkoop, Medlar & Company, for which they gave negotiable paper to the order oí Wynkoop, Medlar & Company. The notes were endorsed to the Merchants’ Exchange Bank, and the proceeds credited to and used by Wynkoop, Medlar & Company. As these notes matured they were not paid. They were renewed by the same makers, with the same endorsements, down to the giving of the several notes now in suit.
All of these renewals, including the endorsements, were in the handwriting of John E. Wynkoop, which fact was known to the officers of the bank, and were made without consulting the other members of the firm of Wynkoop, Medlar & Company.
The firm of Wynkoop Brothers went to protest in 1873, but continued business till the fall of 1874. Medlar, one of the defendants, had knowledge of the renewals before the firm of Wynkoop Brothers failed. He did not acquire this till two renewals had been made, and knew the notes were renewed again after this. He did not know (see his testimony) that “they were going to renew them.” He gave no notice to the bank that the paper was unauthorized. Saylor had no knowledge of the renewal of the notes by Wynkoop.
The following is a statement of the notes :
1. Wynkoop Brothers, endorsed by Wynkoop, Medlar & Company; discount August 14,1873; due November 17,1873, $800.22.
Renewed till January 20, 1874, then renewed till March 23, 1874, then renewed till May 26, 1874, then renewed till Jully 28, 1874, when it was protested.
2. Wynkoop Brothers, endorsed by Wynkoop, Medlar & Company ; discount March 3, 1874; due May 6, 1874, $750.00.
Renewed till July 9, 1874, when it was protested.
3. Wynkoop Brothers, endorsed Wynkoop, Medlar & Company . discount November 29, 1873 ; due February 23, 1874, $1,106.21.
Renewed till April 24, then renewed till June 27, 1874, when it was protested.
The business of both firms was conducted in the same office ; they had the same clerk”, and the respective members had free access to the books.
The plaintiff also claims to recover in this action, the amount oí a note made by Engle, Schultz & Company, to the order of. Wynkoop, Medlar & Company, and by them endorsed to the bank which discounted it on August 12, 1873. The amount of this note was $1,159.92, and matured October 15, 1873. It was sent to the Union Banking Company, of Philadelphia, for collection,' by which institution it was forwarded to a bank at Marietta; Engle, Schultz & Company having become embarrassed an arrangement was entered into between them and their creditors, by which Wynkoop, Medlar & Company received stock in a furnace owned by Engle, Schultz & Company, located at Newport, Pa., for the amount of their claim, including tnis note discounted by the Merchants’ Exchange Bank, plaintiff. This stock was divided between Wynkoop and other members of the firm. .Nothing was. realized on it.
Prior to the maturity of this note, O’Connor, the clerk of both firms, viz: Wynkoop Brothers and Wynkoop, Medlar & Company, on application to the plaintiff, obtained an order, as the agent of Wynkoop, Medlar & Company on the Marietta Bank for the delivery of this note to him for the purpose of having it renewed. He failed to get it. The note was protested and notice given to Wynkoop, Medlar & Company. It was not returned to the Merchants’ Exchange Bank, nor has payment of the note been made to it. . It was subsequent to the time the order to O’Connor that the settlement was made by Engle, Schultz & Company with their creditors. At this settlement John E. Wynkoop and A. J. Medlar, two of the members of the firm of Wynkoop', Medlar & Company were present and participate 1 in it.
defendant’s points and answers thereto.
Henry Saylor and A. J. Medlar, two of the defendants, present to the Court the .following points of law as arising upon the facts in this' case and which they respectfully ask the Court to pass upon, in making up its decision :
First. That as to the claim founded upon the contract relative to the note of Engle, Schultz & Company, there can he no recovery here against defendants as endorsers or upon any special contract in relation thereto, as there is no count in the narr. that charges the defendants as such endorsers or as parties to any such special contract, and there can be no recovery in any of the common counts as none of them cover any of the facts of this case in relation thereto ; that as to the count for money had and received, there caii be no recovery; first, because in such case it must be shown that the defendants received money of the plaintiffs, which in equity and good conscience they ought to pay over to them. That there is no evidence whatever that the defendants ever received any money because, for, or on account of said note.
The foregoing point is answered in the negative.
Second. That the notes in suit are representatives by renewals from two to four removed from the original notes which were given by the firm of Wynkoop Brothers to Wynkoop, Medlar & Company.' That there is no evidence in this case that John E. Wynkoop, who was a member of both firms, was ever authorized to make the endorsement of the firm name of Wynkoop, Medlar & Company for the accommodation of Wynkoop Brothers. That the undisputed evidence in this case is that the signature, as makers to the notes in suit of Wynkoop Brothers, and of Wynkoop, Medlar & Company, as endorsers thereon, are each in the handwriting of John E. Wynkoop, and that this fact was well known to the Merchants’ Exchange Bank, plaintiff at the time the several renewals were had. That the use of the name, Wynkoop, Medlar & Company for the accommodation of Wynkoop Brothers, upon the said renewal notes upon the facts before stated, and without the knowledge and consent at the time of Henry Saylor and A. J. Medlar, was a fraud upon them respectively, and there can be no recovery against them on these notes in suit and specially declared upon.
Answered in the negative.
CONCLUSIONS OE LAW.
It is a general rule, that each partner is the accredited agent of the rest, whether they be active,-nominal or dormant, and has authority as such to bind them, either by simple contract respecting the goods or business of the firm, or by negotiable instruments circulated in its behalf to any person dealing bona fide: Smith’s Mer. Law, *19 ; Brown vs. Clark, 2 Harris, 469.
If a security be transferred in the ordinary course of commercial transactions as upon discount without any knowledge of the transferee, that it was a separate transaction, the firm will be bound though the transferring partner may have converted the whole produce of the security to his own use ; to hold the contrary would shake all paper credit; Id. *26, Exparte Bonbonus, 8 Ves., 540.
If a partner gives or endorses negotiable paper in the firm name for his private purpose, a bona fide holder without notice may recover upon it against the firm and in all cases the signature of the firm in the handwriting of one of the partners is prima facie evidence of the authority of all: Sharswood’s Com. Law, 157.
Passing from these general principles, it is to bé observed that ■ in the- case before us there is no allegation of any fraud in the original making and endorsing of the notes of Wynkoop Brothers to Wynkoop, Medlar & Company, The one firm made the note for a valuable consideration, and the other received the proceeds of the discounts. They dealt fairly with each other, and in this respect this case differs from that of Miller vs. Consolidation Bank, 12 Wright, 514, and therefore occupied stronger ground. There, the firm of Miller & Persch were held to be liable for negotiable paper fraudulently issuéd by Persch for his own use. That the note and endorsement were both known by the bank to be in the handwriting of Persch, were decided not to be sufficient to put it on inquiry as to his authority to use the firm name. Agnew, J. said : “One who is a member of several business firms, has presumptively the same power in each that his partners have. To say he cannot draw and endorse the same paper as the representative of different firms, is simply to negative his power to act in the second firm, because he has acted in the first. Having in each the power of a partner, presumptively as to public, and acting in that apparent right, it is no ground of suspicion that his endorsement of the name of one firm is in bad faith to the other as makers of the note.”
In Ihmsen vs. Negley, Mohan and Company, 1 Casey, 297, it was held where an individual is a member of two firms and draws a promissory note to himself, signed with the name of one firm and endorses it with the name .of the other firm,; it. would not. present such a case as would compel the plaintiff, a holder for value before maturity, to prove the assent of the partners to such endorsement, or that the proceeds were applied to the benefit of the firm. This ease is cited with approval in Haldeman vs. Bank, 4 Casey. 440, and in the more recent cases of Sedgwick vs. Lewis, 20 Smith, 217, and Moorehead vs. Gilmore, 27 Sm., 118. In the ease last cited the doctrine of Miller vs. Con. Bank supra, is affirmed that each partner in a commercial firm has as much right to raise money for the use of the firm by the endorsement of negotiable paper, as to do so by means of paper originally issued. It is further said that the “latest decisions, both in England and this country, have set strongly in favor of the principle that nothing but clear evidence of knowledge or notice, fraud or mala fides can impeach the prima fade title of the holder of negotiable paper before maturity. See also Battles vs. Laudenslager, 3 Norris 446.
As to the note designated on the trial, as the Engle & Schultz note, that it was discounted by the bank on the endorsement of Wynkoop, Meddlar & Company, who received the proceeds, that it was protested, notice given, and never paid to the bank or returned to it, we think are tacts shown-by the evidence.
It is also the uncontradicted evidence that Wynkoop and Medlar, two members of the defendant firm, were personally parties to a settlement made with Engel, Schultz & Company by which they accepted stock in the furnace of Engle, Schultz & Company at Newport, in payment of this note. If the payee of a note, after transfer for value, receive the amount from maker, he is liable to the holder in an action for money had and received. Scott vs. Pilling, 2 Phil. B., 134; see also Dilworth vs. Hurst, 1 Phil. B., 222. There is no count in the declaration on this note and defendants claim in a point submitted that there can be no recov- • ery on any of the common counts. This position does not appear to be sustained by authority. In Leidy vs. Tammany, 9 Watts, 353, it is said “the count' for money lent is proper, as has been repeatedly said by some of the highest judicial characters, in an action at. the suit, of the payee against the drawer ot a bill of exchange, and in action at the suit of a payee to the drawer of the ' one maker of the other, (authorities referred to) and in an action at the suit of the endorsee against his immediate indorser, as here, it has been held that the plaintiff may recover on a count for money lent. Heesebwoer vs..Tims, K. B., 222 Creo. 3 ; Bayly on Bills, 5ed., 359, note 60.
In Ellsworth vs. Brewer, 11 Pick, 315, it was held that assumpsit for money had and received may be maintained by the endorser of a promissory note against any previous party to the note. Under a declaration containing the common counts for money paid, money had and received and money lent, a promissory note for $1,600 was admitted in evidence, on which Brewer was fourth endorser. It was argued that the plaintiff suing as endorser could' not recover on a declaration which contained no . count on the note.- To-this,-Shaw, C. J., said : We are all of opinion that no amendment and no special count were necessary in the present case, and that the plaintifi is entitled t.o recoveras endorser upon the count, for money had and received. Eor this lie cited many authorities. To the same effect are State Bank vs. Hurd, 12 Mass. R., 172 ; Olcott vs. Rathbone, 4 Wend, 495; Page vs. Bank of Alexandi'ia, 7 Wheat, 35 , 2 Starkie on Ev., *305.
See also Weiss vs. Mauch Chunk Iron Company, 8 Sm. 295.
We find in favor of the plaintiffs as follows:
Note Engel & Schultz, due Oct. 14, 1873, $1,159 93-Interest to Dee. 30, 1878 $362.47 — $1,522.39 Note due June 27, L874, $1,106.21 — Interest to Dec. 30,1878, $299.22— 1,407.15
Protest, 1.72
Note due July 9, 1874, $750.00 — Interest to Dec. 30, 1878,8221.37— 953.09
Protest, 1.72
Note due July 28,1874, $880.22 — Interest to Dec. 30,1878, $233.54- 1,115.48
Protest, 1.72
Total, $4,998.11
There was also parol testimony admitted at the trial to show that the Engel, Schultz & Co. note had been negotiated by the •firm that it had been protested, and what was done with it. Saylor and Meddlar took a writ of error and assigned ten errors which raised three questions. First as the admissibility of the parol evidence of the Engle, Schultz & Co. note. Second, whether the bank can recover on common counts for the amount of this note which is not in their possession. Third, whether the bank could recover against the firm on notes drawn by one member of firm and endorsed by him with the firm name.
Messrs. Hughes & Farquhar, Esqs., for plaintiff in error.
Parol evidence is not admissible to prove the contents of. a written instrument, unless it is shown to be lost. Campbell vs. Wallace, 3 Yeates 271; Rank vs. Shewey, 4 Watts 218; Parks vs. Dunkle, 3 W. & S. 291; Dreisbach vs. Berger, 6 W. & S. 564. Parol evidence cannot oe given, if the paper is in the hands of the opposite party without a notice to produce. Buchanan vs. Moore; 10 S. & R. 275; Carland vs. Cunningham, 1 Wright 228. The bank cannot recover for money had and received because defendants got no money and the action only lies for money actually received. Huntsecker vs. Heiny, 11 S. & R. 250. The bank -cannot recover because it had knowledge of the irregularity of the paper. One who takes partnership paper for an outside debt is bound to see that all the partners . assented to it. King vs. Faber, 10 Harris 21; Clay vs. Cotteral, 6 Harris 408; Potter vs. Gunnison, 2 Grant 279; Dickson vs. Primrose, 2 Miles 366; Edward on Bills,* 106; 14 Wendel 133; 3 Dutcher, N. J. 230; 3 Pickering 5.
John W. James Ryon, Esqs., Contra.
When the writing is collateral to the principal facts upon which ' the claim is founded, the confession of the party precisely identified is primary evidence; 1 Greenleaf Evidence P. 90, 96, 97; Sewall vs. Stubbs, 1 Casey 73. Parol evidence is admissible for various purposes. Bank vs. Fordyce, 9 Barr, 279; Rearich vs. Swinehart, 1 Jones 238; Barnhart vs. Riddle, 5 Casey 96; Musselman vs. Stoner, 7 Casey 270; Chalfant vs. Williams, 11 Casey 212. But the evidence was not as to the contents, but as to the existence oi the Engel, Schultz & Co. note. The bank does not seek to recover on the note; but on the promise made by defendants, when the bank gave up the note to them. The bank gave the order for the note on the promise that it or a renewal of the note should be given them. The settlement with Engle, Shultz & Co. was a tortious conversion of the note. The bank waive the tort and proceed in assumpsit. Gray vs. Griffiths, 10 Watts 431; McCollough vs. McCullough, 2 Harris 295. The agreement to renew the Engle, Shultz & Co. note was a waiver of protest and notice of nonpayment. Barclay vs. Weaver, 7 H. 400; Ridgway vs. Daley, 1 Harris 208. Knowledge of nonpayment is notice. West Branch Bank vs. Fulmer, 3 Barr 399; Gowan vs. Jackson, 20 Johns 176. The promise óf the firm to pay this note is sufficient to entitle the bank to recover; Sherer vs. Eastern Bank, 9 Casey 141; Levey vs. Peltis, 9 S. & R. 125; Donaldson vs. Means, 4 Dall 109; Loose vs. Loose, 12 Casey 541; Barclay vs. Weaver, 7 Harris 401; Trumble vs. Thomas, 16 Johns 152; Byles on Bills 237. Notice to one partner binds all; Telleer vs. Whitehead, 1 Dall 269; Modderwell vs. Keever, 8 W. & S. 65; Chidsey vs. Porter, 1 Casey 390. Promissory notes may be given in evidence under common counts; Chitty on Bills 579 and note. As defendants got the money from the bank and afterwards the note, the bank could recover for money had and received; Chitty on Bills, 580; Page vs. Bank of Alexandria, 7 Wheat 35; Chitty on Contracts, 673.
One partner had power to renew and bind the firm; Harkins vs. Elliott, 12 P. F. S. 393; Robinson vs. Taylor, 4 Barr 342; Davis vs. Desangue, 5 Wharton 530; Dundass vs. Gallagher, 4 Barr 205; Houser vs. Irvine, 3 W. & S. 345; Bell vs. Coleman, 2 C. B. 268; Russell vs. Phillips, 14 Q. B. 891; Robinson vs. Henry, 9 B. & C. 449; Gault vs. McGrath, 8 Casey 392; Sloan vs. Moore, 1 Wright 223; Thompson vs. Negley, 1 Casey 297; Burrow’s Appeal, 2 Casey 264; Hogg vs. Orgill, 10 Casey 344.

Opinion:
The decision of the lower court was affirmed on March 31, 1880, in the following opinion, per
Sharswood, C. J.
Upon the facts as found by the learned judge below we think his conclusions of law and entry of judgment were right. ' Nor do we think that his rulings on the questions of evidence were erroneous. So far as the note of Engle, Shultz & Co. was concerned the action was not upon that note — and upon the facts as found in regard to it, it is clear that the amount was recoverable upon the common counts.
Judgment affirmed.