Case Name: Trullinger et al. versus Corcoran et al.
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1876-03-31
Citations: 81 1/2 Pa. 395
Docket Number: 
Parties: Trullinger et al. versus Corcoran et al.
Judges: Before Asnew, C. J., Sharswood, Mercur, Gordon, Paxson, aud Woodward, JJ.
Reporter: Pennsylvania State Reports
Volume: 81 1/2
Pages: 395–402

Head Matter:
Trullinger et al. versus Corcoran et al.
1. The firm of Goodrich & Co. sold goods to Croft, who sold goods to the men of defendants. By arrangement between the parties they credited Croft and charged the hands. Defendants paid Goodrich & Co. the indebtedness of Croft by their notes drawn by the acting member of their firm. Goodrich & Co. were succeeded by plaintiffs, and with a knowledge of the previous transactions continued to deal with Croft in the same way. Held, to be evidence of an assumption by the defendants to pay plaintiffs.
2. After Corcoran & Co. commenced the business, notes were given by Croft payable to his own order, indorsed with the firm name by the acting member without the knowledge of his fellows, and delivered to plaintiffs in payment of Croft’s debt. Held, that the change of the form of the assumption from drawers to indorsers did not relieve the defendants from responsibility.
3. The acting partner said the change was made because his firm did not wish to have more of their own paper out. This was a sufficient reason, and there was nothing to put the plaintiffs on inquiry as to the bona fides of the notes.
. March 27th, 1876.
Before Asnew, C. J., Sharswood, Mercur, Gordon, Paxson, aud Woodward, JJ.
Error to the Court of Common Pleas of Lycoming County, of January Term, 1876, No. 155.
This was an action of assumpsit, brought April 2d, 1872, by James Corcoran and others, trading as Corcoran, Weaver & Co., against George Trullinger, George Pancake, Alfred Pancake, and A., J. Croft, trading as Trullinger, Croft & Co.
The cause of action was two promissory notes, each drawn by M. A. Croft, payable to.his own order, indorsed by M. A. Croft, Trullinger, Croft & Co., and Corcoran, Weaver & Co.; one dated December 1st, 1871, payable in three months, for $800; the other dated December 9th, 1871, payable in three months, for $474.
The case was tried October 8th, 1874, before Gamble, P. J.
The plaintiffs gave the notes in evidence and rested.
The defendants called R. M. Weaver, one of the plaintiffs, who testified: That they had business transactions with M. A. Croft, who paid plaintiffs by notes of the defendants; the notes in suit were renewals, and were given for his indebtedness ; he had not given such a note before; the notes previously given were drawn by defendants to plaintiffs; some were payable to M. A. Croft’s order; the note of December 9th, 1871, was a renewal of a previous note which was given by A. J. Croft, one of the defendants, in payment of a debt of M. A. Croft; plaintiffs had been selling goods to M. A. Croft; sometimes he and sometimes A. J. Croft brought defendants’ notes to be credited to M. A. Croft; witness sometimes went to defendants’ office and obtained notes in payment of M. A. Croft’s indebtedness, and of defendants’ own indebtedness; none were ever drawn as the two in suit; witness received the $474 note at defendants’ office; one Kendig filled it up; A. J. Croft indorsed the defendants’ firm name.
George Pancake, one of the firm, testified: That A. J. Croft resided in Williamsport; the other three members of the firm resided in Harrisburg; the firm disolved in the fall of 1872; witness never authorized or assented to the indorsement of the paper of M. A. Croft with the firm name; witness first knew of it in the fall of 1871, before the maturity of the note; he notified plaintiffs that defendants would not pay them; that they were accommodation notes of M. A. Croft; defendants never paid a note of M. A. Croft indorsed by their firm ; defendants were not indebted to plaintiffs at date of these notes, or of the original notes of which they were renewals.
On cross-examination he said that defendants at different times preceding had paid notes of their firm given to plaintiffs ; those notes did include the account of M. A. Croft with the plaintiffs. M. A. -Croft furnished goods to men employed by defendants ; the business was done by orders given by defendants’ men in favor of M. A. Croft; they were charged to the men and credited to M. A. Croft; that business had continued for some years ; payments were made to M. A. Croft on account from time to time by notes payable to his order. A, J. Croft was the active manager of the business in Williamsport. After all the bills came in the defendants were indebted toM. A. Croft, after September 7th, for goods furnished after that date.
For plaintiffs in rebuttal, James Corcoran testified that plaintiffs had business transactions with defendants and M. A. Croft; he furnished goods to defendants and their men ; plaintiffs began to give a line of credit to him in September,. 1869.
The plaintiffs then, under objection and exception, gave evidence as follows:
J. E. Goodrich testified that Goodrich & Co. were in the grocery business until August, 1869, and were then succeeded by plaintiffs. Goodrich & Co.'sold goods to defendants and also to M. A. Croft. A. J. Croft came to Goodrich & Co., with his brother, M. A. Croft, when he started business ; he wanted Goodrich & Co. to let his brother have goods, and at the end of every thirty days M. A. Croft would give his paper with defendants as indorsers ; that the object was to pay their men all the goods they could, it would give them three months on that portion, as Goodrich & Co. took paper at three months, and all they paid their men out of his brother’s store would give them that time. M. A. Croft got goods from Goodrich & Co. on that arrangement until they sold to plaintiffs ; this arrangement was in course then; witness informed plaintiffs of the arrangement; Goodrich & Co. gave M. A. Croft credit on the strength of this arrangement. •
J. Corcoran, one of plaintiffs, testified that M. A. Croft’s name was found as a customer on the books of their predecessors, and they inquired of Goodrich as to the manner of their doing business with M. A. Croft, and plaintiffs continued to credit him ; they were paid in notes of defendants and of other parties; the notes were of M. A. Croft, indorsed by defendants ; each note was frequently renewed; A. J. Croft applied for the renewals. ' While plaintiffs were giving credit to M. A. Croft, witness knew he was selling goods to defendants’ men. A. J. Croft said defendants were indebted to M. A. Croft; he would give his own note, they would indorse it, and take care of it the same as if they were drawers; during the time the notes were running, plaintiffs continued to give credit to M. A. Croft, and he was furnishing goods to defendants men. Plaintiffs received twelve notes in all, and all were paid; they were signed by defendants; all were for indebtedness of M. A. Croft.
Plaintiffs did not consider M. A. Croft responsible, and gave him credit on the arrangement with defendants. Witness objected to take the note in the form in which it was, but A. J. Croft made the statement about their having so much paper out, said it would be a great accommodation to defendants, as they had many of their notes afloat, and did not want to put out any more.
M. A. Croft testified that he got goods of Goodrich & Co. when he commenced business, and then made the arrangement with defendants to pay their men in groceries ; and informed Goodrich & Co. at the time; witness was paid for these goods in defendants’ notes; they were sometimes drawers and sometimes indorsers; witness had a running account with defendants for their men; witness continued supplying defendants’ men after the indorsement of the original notes until the time they dissolved. Plaintiffs knew that the principal means witness had to pay them were defendants’ notes. When the notes were given it was the understanding that defendants were to pay them. He gave defendants credit at the time he received the notes. A. J. Croft indorsed the notes with defendants’ firm name, because witness had been getting notes for the goods their men had got from him.
The defendants gave evidence for the purpose of showing that M. A. Croft, when the notes were given, was indebted to the defendants, and generally in answer to plaintiff’s case.
A large number of points were submitted by each party, and the Court charged the jury very much at length.
The questions involved in the case are to be found in the fourth, seventh, and ninth points of the defendants, vrith the answers of the Court and the extracts of the charge, as hereafter given.
4th point. If, at the time the notes in question were indorsed by a member of the firm of Trullinger, Croft & Co., the said firm were not indebted to M. A. Croft, then the notes are accommodation notes, and no recovery can be had from the defendants.
Answer: To answer that point involves the consideration of a very important part of the case ;. and it cannot be answered without calling your attention to it.
This would be true if the firm had no connection at all with the original indebtedness; if M. A. Croft was an entire stranger to the firm; if it was his own debt, then this indorsement would be without consideration, and would be beyond the scope of power of either partner, and the firm would not be bound. But we cannot ignore the evidence in the case. The evidence is, that this continued dealing of M. A. Croft with Corcoran, Weaver & Co. was in pursuance of an arrangement recognized and carried out by Trullinger, Croft & Co. Why did Trullinger, Croft & Co. ever give their notes in payment of the debts of M. A. Croft ? Certainly it must have been in pursuance of some understanding, or Corcoran, Weaver & Co. would not have thought of calling upon Trullinger, Croft & Co. to pay the debts of M. A. Croft.' Twelve notes could not have been given without some understanding between the parties. M. A. Croft could not have been an entire stranger. It could not have been the mere assumption of the debt of a stranger. This must depend upon the whole evidence in the case.
7th point. If the jury believe that Trullinger, Croft & Co. were not indebted to M. A. Croft at the time the notes were given, then the notes are accommodation notes, and the indorsement by a member of the firm of Trullinger, Croft & Co. was an accommodation indorsement, and the firm is not liable.
Answer: If the jury believe that Trullinger, Croft & Co. were not indebted to M. A. Croft at the time the notes were given, then the notes were accommodation notes, and the indorsement ofi a member of the firm an accommodation indorsement, and the firm is not liable. ■ That would be true if there was no arrangement between the parties.
9th point. There is no evidence that A. J. Croft ever agreed or promised to give the note of Trullinger, Croft & Co. to Corcoran, Weaver & Co., in payment of the debt of M. A. Croft, and therefore this question canuot be submitted to the jury.
Answer: We decline to give the instructions asked for. Whilst it may be that there is no evidence of any distinct, separate and absolute promise upon the part of' Croft to give the notes of Trullinger, Croft & Co. to Corcoran, Weaver & Co., yet there are circumstances from, which such an arrangement may be inferred and -implied. We leave to you whether or not there was such an arrangement, and whether Mr. Corcoran, when he called upon Mr Croft for payment, did not call under that arrangement and in pursuance of it, and whether Croft did not recognize it. Although there may be no positive reiteration of the original arrangement, yet if it was practiced, followed,-and acted upon by both firms for two years, we think it is some evidence-that there was such an arrangement.
The Court chai’ged:
. The plaintiffs’claim is founded upon two promissory-notes, drawn by M. A. Croft, payable to his own order, and indorsed by the firm of Trullinger, Croft & Co. Under the general principles of law — the general commercial principles by which commercial paper is designated — that paper would be pronounced accommodation paper; it would be for the accommodation and benefit of M. A. Croft, and the indorsement of Trullinger, Croft & Co. would be as a mere surety for the payment of the money.
“ The law of partnership forbids one partner to travel out of the ordinary business of the firm, and pledge the responsibility of the firm to a stranger, or for a transaction entirely separate and distinct from the partnership business. It is without and beyond the scope of partnership business, and he has no such authority conferred upon him. That is an important principle for the protection of partners. . . . When a firm is organized and established each member of the firm by the terms of the association becomes an agent of the firm, — the legally authorized agent of the firm for the transaction of all business within the scope of the contemplated business of the firm. But when he travels beyond the scope of the ordinary business of the firm he has no such authority, and cannot bind his copartners.
“ Then there is another principle which is for the protection of the community. A firm is established and perhaps the business of the firm is, by consent of the partners, assigned to one of its members. lie transacts the business of the firm, and the community at large are entitled to all the protection that the law will give him against the other members of the firm for anything that he does within the scope of his partnership. Although he may have no authority to indorse paper, yet if he does, and that paper goes into circulation and is received by an innocent holder in good faith — without knowledge that it was indorsed without the authority of the firm — the firm is liable, notwithstanding the bad faith on the part of the partner makiug the indorsement. The necessities of commerce require that an innocent holder shall not suffer. It is better that the partners who have intrusted this partner with their business, and who have put it into his power to practice this fraud, should suffer than that the innocent man should. . . .
“Now whilst this is settled law, and these are the rules which govern, other questions arise in this case. This is upon its face negotiable paper. It is upon its face accommodation paper. It appears upon its face to be for the sole benefit of M. A. Croft. The question submitted to the Court and jury in this case is, Are there not such circumstances disclosed by the evidence here as to change the character of this paper as between these original partners, and which make it the obligation of the firm within the scope of the acting partner who signed the name of the firm ?
“ . . . The first inquiry to which we should direct your attention is, Was it for the .benefit of the firm? When a partner is intrusted writh conducting the business of a firm, auy arrangement which inures to the benefit of the firm may fairly be regarded as within the scope of his business. Mr. Goodrich says that Mr. Croft stated w'hy Trullinger. Croft & Co. were willing to become responsible for these goods. He states that that would give them three months’ time for the payment of their hands. If I remember right, he stated that the extension of time was what they expected'to accomplish ; that by getting goods and having to pay for them only every three months, it resulted in getting time for Trullinger, Croft & Co. in the payment of their hands.
“ Now, although we would look upon this transaction with suspicion, inasmuch as it is between brothers, we should be careful that no injustice is done the firm in consequence of that relation. But if this transaction upon its face appeared to be for the benefit of Trullinger, Croft & Co., and was thus explained by one of the members of the firm to Mr. Goodrich, that was sufficient explanation to Mr. Goodrich; and although, possibly, it may have been fraudulent, as between Croft and his partners, yet if it had the appearance of honesty, propriety — had the appearance of being for the benefit of the firm — Mr. Goodrich would not be affected by that fraud contemplated by a partner of the firm.” . . .
The verdict was for the plaintiff for $1476.72.
Judgment having been entered on the verdict, the defendants removed the record to the Supreme Court by writ of error, and assigned for error the admission of the evidence objected to, the answers to the points and various parts of-the charge.
J. Eutermarks and H. Shellenberger, for plaintiffs in error.
JR. P. Allen, for defendants in error.

Opinion:
Judgment was entered in the Supreme Court March 31st, 1876.
Per Curiam:
We think the evidence was sufficient to go to the jury on the question whether the indorsement of the firm name by Croft was not in pursuance of a long-continued course of dealing between the parties, and a pre-existing arrangement of the defendants to pay the plaintiffs for bills of goods furnished to the third party who supplied the hands of the defendants with groceries for which the defendants had engaged to pay. The change of the form of assumption from that of drawers to that of indorsers was accounted for. Croft, the partner, was the acting member of the firm, by whom all the former transactions were performed. He had authority to bind by a note, and when he changed the form from one character to the other he did -no act" beyond the substantial power to bind the firm as he had done theretofore. He gave a reason entirely sufficient, so that there was nothing to put the plaintiff on inquiry as to his power to continue to bind the firm as theretofore for the goods purchased by their hands.
Judgment affirmed.