Court Opinion

ID: 4912775
Source: CourtListenerOpinion
Date Created: 2021-09-22 00:00:26.113931+00
Date Added: 2024-06-11T08:13:43.462843
License: Public Domain

Baltzell, Justice,
delivered the following:
This is a suit in Chancery to recover upon a note purporting to be executed by Cervantes Harris as Treasurer of the Quincy Steam Saw Mill Company. The authority of Harris being denied an effort is made to sustain it by the position that he was also a mem-berofthe Company andas such hada right to execute notes in the name of the firm — and secondly, that West the party charged as another member of the firm acquiesced in the notes executed, and neither repudiated nor rejected them. Conceding that Harris signed the note as a member of the firm the question arises as to its obligation upon the other members and particularly upon West, regarded now as the«only responsible party. If the Company had been indebted to McCabe, for articles purchased of him which were necessary for the concern and in their usual line of business we presume there'would be no difficulty. But McCabe had no claim against the Company. His claim was against Lanier for a debt unconnected with the Company and he took this note by the statement in the bill “believing Lanier to be in failing circumstances and unable to make any better arrangement for the payment of the debt.” It is too well settled to be now disputed that “where a note is given in the name of the firm by one of the partners for the private debt of such partner and known to be so by the person taking the note, the other partners are not bound by such note unless they have been previously consulted and *41consent to the transaction.” 16 John.,38. 2 Caines, 246. 2 John., 300. 4 Ibid., 251. 1 Wend., 531. Chitty on Bills, 47.
In such case it lies upon the creditor to show that his debtor had authority so to give him the joint security of the firm : prima facie the transaction is fraudulent on the part of both debtor and creditor. Bailey on Bills, 57. Green vs. Weakin, 2 Stark. 307. Williams vs. Walbridge, 3 Wend., 415.
We have considered the case most favorably to McCabe by treating this as a -partnership concern having the right to issue bills, but are satisfied that no such authority exists as to this company except it be given by their articles of association or otherwise. The partnership must be in a trade or concern to which the issuing or transfer of bills is necessary or usual; for otherwise a copartner will not be liable for the act of his partner unless he gave express authority. Therefore a director or shareholder in a mining or gas light company, or a partner in a farm, is not liable like a partner in trade for every bill issued without his authority. Chitty on Bills 39-46. Dickinson vs. Valpy, 10 B. &. C. 128. 5 M. &. R., 126. 4 John. 267.
Nor do we consider that there was a subsequent approbation, acknowledgement, or admission as made out in the bill and answer to fix the liability of West. There must be an acknowledgement to the plaintiff or some prior holder of the bill and it must be explicit and express. Chitty 46. So far we have treated the note as signed by Harris without reference to the endorsement by Lanier. This does not in our opinion alter the case. There was a signing by one stockholder and an endorsement by another of a note passed by the latter for his individual use. This is in effect hut the making of a note by two of the members of the Company in a form different from an ordinary note signed by the two, but does not vary the rule which requires that a notecso given should be with the consent of those sought to be charged and if not it imposes no obligation upon them. Instances have been cited of a recovery upon bills and notes issued by a firm and passed by an individual member in good faith for his own use. This may well he where a company indebted, by the consent of all the members give a note or bill. Sometimes 'a recovery has been had on a bill or note of this kind fraudulently put in circulation bufbeing in the hands of a Iona fide holder. But there is nothing of the kind here either by proof or the admission of the parties, indeed the .very contrary appears. McCabe however as *42assignee of Lanier stands in his place to the extent of the note with the Company if any thing shall be due to him on a settlement of their affairs and if he thinks proper his bill may be continued for an account and settlement with that view. If this however be unnecessary by the state of their affairs and is declined, then the bill of complaint should be dismissed.
It is therefore decreed and ordered that the decree of the Circuit Court be and the same is hereby reversed and set aside as to West and the cause remanded to that Court with directions to allow the complainant, if he chooses, to have an account and settlement of the affairs of that Steam Saw Mill Company or to amend his bill to allege express ratification by West and for other proceedings consistent with equhy, and if not, that his bill be dismissed with costs as to West.