Case Name: Adolph Lucker, Appellant, v. Caspar Iba and Others, Respondents. (Nos. 1 & 2.)
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1900
Citations: 54 A.D. 566
Docket Number: Nos. 1 & 2
Parties: Adolph Lucker, Appellant, v. Caspar Iba and Others, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 54
Pages: 566–569

Head Matter:
Adolph Lucker, Appellant, v. Caspar Iba and Others, Respondents.
(Nos. 1 & 2.)
Negotiable popes' signed for a firm by one membes' and used for his own pusposes — the use of a m'ong firm name is notice—proof of the bona tides of a ts'ansferee.
A note executed by one Green, who was a partner of one Iba, in the name of “ Iba & Green,” to secure moneys advanced to Green by the payee for the express purpose of paying his individual contribution to the firm expenses, cannot be enforced against Iba by one who took it with knowledge of the facts.
Persons dealing with the firm are chargeable with notice of the firm name, and the fact that the articles of copartnership provide that the firm name' shall be “Empire Garden,” is sufficient to'put a person to whom the payee indorses the note upon inquiry as to the reason why the note was signed “ Iba & Green.”
Evidence that the payee held the note, which was payable in three months, "a few days ” before negotiating it, is not sufficient to show that his transferee was a bona fide holder in due course, as non constat but that “a few days” exceeded the three months that the note was to run.
Appeal by Adolph Lucker, the plaintiff in each of the above-entitled actions, from a judgment of the Municipal Court of the city of New York, borough of Brooklyn, fourth district, in favor of the defendants, entered in the office of the clerk of said court on the 10th day of August, 1900, dismissing the complaint.
E. Walter Beebe, for the appellant.
S. Livingston Samuels, for the respondent Iba.

Opinion:
Goodrich, P. J.:
These actions are upon promissory- notes signed " Iba & Green." The court rendered judgment for the defendants in each case, and the plaintiff appeals.
Iba and Van Leer were partners in conducting a liquor saloon :and concert hall on the Bowery. The written partnership articles, dated December 12, 1899, provided that the firm name should be Empire Garden." The only reference to any other name is that moneys were to be deposited in a bank in the name of " Iba & Van Leer," Iba to have the exclusive right to draw checks thereon; and the parties were to bear equally the expenses of the business. Afterward, and on March 12, 1900, Green bought out Van Leer and Iba, -and a written agreement was made between the three, reciting the partnership articles of Iba and Van Leer and providing that "Iba hereby accepts the said Green as his partner the same as the said Van Leer was under, and by virtue of the copartnership agreement " between Iba and Van Leer.-
In April, Green applied to the defendant Brockmann for a loan of money. Brockmann, a witness for the jilaintiff, says: " When he -asked me for the money I asked him what he wanted the. money for; he said Mr. Brockmann, Iba wants me to furnish him with half •of the license to that saloon. I got to give him cash money; that is the reason I beg you to give me cash money. He wanted to get half the license money at the first of May to take out -•a license with Iba. Iba wanted it. He told me he wanted the money for Iba. Iba troubled him for half of the money ; he had to furnish half of the money because the license came due •on the first of May. Q. As I understand you, Green told you he wa'nted the-$490 to pay his half share of the license? A. Exactly."
Upon this, Green, without the knowledge of Iba, executed the two notes in suit and received the amount of them from Brockmann, who subsequently indorsed them to the plaintiff.
There was sufficient evidence for the court to find that the notes were given by Green, without the knowledge of Iba, for the pur pose of raising his individual half of the money which he was bound to contribute to one of the expenses of the business. Even if they had been signed with the only firm name provided by the partnership articles, Brockmann knew that they were given for an individual liability of Green, and he could not hold Iba liable.
In Van Voorhis v. Brown (29 App. Div. 119, 121) it was said: " It. is well settled that a note given by one jiartner in the firm name in payment of his individual debt cannot be enforced against the firm by one taking the note with full knowledge of the facts." (Citing cases.)
Professor Parsons, in his work on Partnership (4th ed. § 90), cites strong authority for the following rule : " Whenever a party receives from any partner, in payment for a debt, due from that partner only,, whether the debt be created at the time or before existing, or by way of settlement of or security for a debt, the indebtedness or obligation of the firm in any form, the jnesumption of the law is. that the partner gives this and the creditor receives it in fraud of' the partnership, and has consequently no demand upon them."
In Farmers & Mechanics' Bank v. Butchers & Drovers' Bank (16 N. Y. 125, 135) Judge Selden said: " The familiar case of the-giving of a negotiable partnership note by one óf the partners for his own individual benefit, affords an apt illustration of this rule. Each of the partners is the agent of the partnership as to all matters within the scope of the partnership business, and can bind the firm by making, indorsing and accepting bills and notes in such business ; but he has no more authority than a mere stranger to execute such paper in his own business, or for the accommodation of others. If he gives the partnership note or acceptance for his own debt, it-is void in the hands of any party having knowledge of the consideration for which it is given ; but when negotiated to a bona fide holder the firm is precluded from questioning the authority of the partner, and is effectually bound. The cases in this'state by which this doctrine is illustrated and established are numerous and uniform." (Citing cases.)
This brings us to the second question, the bona fides of the plaintiff as holder of the note. The only evidence on this subject, beyond the possession of the note, is the following testimony oh Brockmann i " Q. After you received this note, Mr. Brockmann, what did you do with it? A. I kept it a few days, then I had a payment to make to the brewery and I gave that in payment. Q. "Who did you give it to ? A. Adolph Lncker."
The original and only firm name under which the business was to be done was " Empire Garden." It was never changed, and there was no authority to either partner to sign any other name to partnership paper. Parties dealing with the firm were put on notice of the firm name, and the execution of the notes in a name not that authorized by the partnership articles was sufficient to put the plaintiff to his inquiry as to its reason, and to require him to show the authority of Green to sign the note with the name of " Iba & Green."
Turning now to the ¡Negotiable Instruments Law, section 98 reads: " Every holder is deemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as a holder in due course."
The production of the note was prima facie evidence that the plaintiff was holder in due course, but as it was shown that Brockmann's title was defective the burden still was on the plaintiff to prove that he or Broekmann acquired the note in due course. This burden was not lifted by the meagre proof that Broekmann held it a few days, the number of days not being proved. Non constat that the days did not exceed the- three months provided in the note for its time. -The plaintiff or Broekmann could- have testified to the exact date. Broekmann, - though a witness, was not asked to be more specific, and the plaintiff was not called as a witness, and we think the plaintiff's bona fides was not established.
For these reasons the judgments must be affirmed.
All concurred; Bartlett and Hirschberg, JJ., in result.
Judgments of the Municipal Court affirmed, with costs.