Case Name: Real Estate Investment Co. v. Smith & Russel. Russel's Appeal
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1894-07-11
Citations: 162 Pa. 441
Docket Number: Appeal, No. 194
Parties: Real Estate Investment Co. v. Smith & Russel. Russel’s Appeal.
Judges: Before Sterrett, C. J., Green, McCollum, Dean and Fell, JJ.
Reporter: Pennsylvania State Reports
Volume: 162
Pages: 441–443

Head Matter:
Real Estate Investment Co. v. Smith & Russel. Russel’s Appeal.
Promissory notes — Partnership.
In an action against a partnership upon a promissory note signed with the firm name, where the evidence is uncontradicted that the money was loaned to one of the partners for the express purpose of paying wages due by the firm, and there was nothing connected with the negotiation to suggest an improper use of the firm name or to put plaintiff upon inquiry, the other partner cannot resist payment on the ground that the money was not applied to the firm’s use, and that he had no knowledge of the existence of the note.
Argued March 21, 1894.
Appeal, No. 194, Jan. T., 1894, by defendant, William Russel, from judgment of C. P. No. 3, Phila. Co., Dec. T., 1890, No. 719, on verdict for plaintiff.
Before Sterrett, C. J., Green, McCollum, Dean and Fell, JJ.
Affirmed.
Assumpsit on promissory note.
At the trial it appeared that the loan represented by the note was made to William B. Smith, payee, one of the firm of Smith & Russel, upon the understanding that the money was to be used in paying wages due by the firm. The note was signed “Smith & Russel” and indorsed “William B. Smith.” John J. Ridgway, president of plaintiff company, testified as follows: “William B. Smith, of the firm of Russel & Smith, brought a note and asked whether the company would loan him $1,000 and he would see that it was returned. I think it was in the early part of the week and that they were not able to pay wages.” He also testified on cross-examination: “Q, Why did you take it drawn to William B. Smith? I don’t know, but he wanted the loan and we made it.”
The court refused to admit evidence that the firm never received the proceeds of the note, and that Russel had no knowledge of its existence.
The court gave binding instructions for plaintiff.
Verdict and judgment for plaintiff. Defendant, Russel, appealed.
Errors assigned were certain points, not quoted, and above instruction.
Edward S. Sayres, for appellant,
cited: Investment Co. v. Smith, 148 Pa. 496.
Henry R. Hatfield, for appellee,
cited: Investment Co. v. Smith, 148 Pa. 496.
July 11, 1894:

Opinion:
Opinion by
Mr. Justice Fell,
This action was upon a promissory note made by Smith and Russel to the order of Wm. B. Smith, and by him indorsed, and upon which the plaintiff paid its full face value. The defence was that Wm. B. Smith obtained and used the money for his own benefit.
The circumstances under which the money Avas borrowed and the firm note taken payable to the order of one of its members, who received the money, were fully explained by John J. Ridgway, the president of the company. Wm. B. Smith requested the loan for the purpose of paying Avages due by the firm of which he was a member. While the loan ivas doubtless made as a favor to him, it was for the business of the firm, and to the firm, and the firm note Avas taken. The note was not brought to Mr. Ridgway for discount, but Avritten by him after the needs of the firm had been made known, and in carrying out his intention to loan to it. There was nothing connected with the negotiation to suggest an improper use of the firm name, or to put the plaintiff upon inquiry.
The offer of the defendant went only to show that the firm did not receive the proceeds of the loan, and that the other partner had no knowledge of it. This under the established facts did not make out a defence.
The judgment is affirmed.