Court Opinion

ID: 3612001
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:55:54.36785+00
Date Added: 2024-06-11T14:24:17.672020
License: Public Domain

The facts admitted by the pleadings and those found by the judge should be considered together; the former are conclusive, because the parties themselves best know what the facts are, and the latter can only be questioned in this court when there is not sufficient evidence upon which to rest the finding; the fact that the persons named in the complaint constituted the firm of Germain  Co., not being denied in the answer, is conceded; the complaint then states that Rollin Germain, one of that firm, made his individual notes, and without the knowledge or consent of the firm or either of its members, and in the presence of the defendant indorsed upon them the firm name of Germain  Co. and delivered them to the defendant, for the purpose of discharging an individual liability of Rollin Germain to the defendant, all of which was well known to the defendant at the time of his receiving the notes and indorsements. These facts, thus stated, are in no respect denied by the answer, except the single allegation that the notes were made, indorsed or delivered to pay an individual liability of Rollin to the defendant. This negotiation leaves the answer "pregnant with the admission" that the notes were made by Rollin, who, without the knowledge or consent of the firm or either of its members, and in the presence of the defendant indorsed upon them the firm name for the purpose of discharging an individual liability of Rollin Germain. (The denial that it was a liability to the defendant, is, at best, but technically accurate, the fact being that the notes were made, indorsed and delivered to the defendant for the purpose of discharging an individual liability to him, in the one case as executor and in the other as administrator.) After the allegations thus admitted, the plaintiffs proceed by stating that, before the notes became due and payable, the defendant, with intent to injure *Page 621 
and defraud Germain  Co., and to make the firm liable upon such indorsements, and with intent that they should be enforced against and collected of the firm, did, for a valuable consideration, transfer them to the New York and Erie Bank. The answer admits that for a valuable consideration the defendant indorsed and transferred the notes, before their maturity, to this bank, and does not deny that he did transfer them with intent that they should be enforced against and collected of the firm, but denies that he made the transfer with intent to injure the firm; what less than an intent to injure is established by his admission that he transferred them to an innocent party, with intent that they should be enforced against and collected of the firm (Cunningham v. Freeborn, 11 Wend., 241, 253); or by the finding, "that he did indorse the notes to the bank to put themin a shape where the other parties could not defend against the indorsements? He knew that the legal effect of what he thus did would be to injure the firm, and that he was successful in accomplishing his object is established by the finding that, upon due proof of the indorsement and protest of the notes, the receiver of the assets of the firm, in pursuance of an order of the Superior Court of Buffalo, made in the month of March, 1863, paid the bank, out of such assets, the full amount of the notes; and thus it is established, by the admissions of the defendant and the findings of the judge, that the firm have been injured to the amount which the receiver has paid out of its assets. And by whom injured? Not by Rollin alone, who fraudulently placed upon the notes the firm name; but by the defendant, who not only concurred in the wrong (Gansevoort v. Williams, 14 Wend., 134, 138), but consummated the injury by putting the notes, as the judge finds, "in a shape where the other partners could not defend against the indorsements." It is not alleged in the answer that the defendant received the notes thus indorsed, relying upon the truth of any statement made by Rollin as to his authority to indorse upon them the name of the firm. That issue was not properly in the case; it was, nevertheless, made on the trial, and *Page 622 
that part of it which related to the defendant's reliance upon the truth of what Rollin said was sharply contested, and the judge did not find either way upon it, but did find what was some evidence of the fact, viz.: that when Rollin indorsed the notes he represented to the defendant that he was authorized so to do, and omitted to find the only contested fact, to wit, that the defendant, relying upon the truth of such representations, received the notes. Without considering whether, if he had thus found, it would amount to a defense, it is sufficient to say that the finding comes short of establishing the defendant's good faith in accepting the notes thus indorsed, but, as a whole, substantially finds the reverse. It is objected that the plaintiffs are not the owners of the cause of action, but portions of it belong to other members of the late firm of Germain  Co. The complaint states, and the answer does not deny, and therefore concedes, that in September, 1862, George W. Tifft was, by the Superior Court of Buffalo, appointed receiver of the effects of the firm of Germain  Co.; that as such he became possessed of all the property and effects of the firm. It is then found, as a fact in the case, that on 23d April, 1863, pursuant to the order of the court conferring upon him his receivership, he paid the bank the full amount of the notes, which, as the judge elsewhere found, the defendant had indorsed to the bank "to put them in a shape where the other parties could not defend against the indorsement;" it was not until this payment that the cause of action against the defendant became complete, and, by its payment out of the assets of the firm, it became, for the benefit of the creditors of the firm, the property of the receiver, which, like any other asset of the firm, he had the right, under the order of the court, to sell and assign to whomsoever the court should direct, and the assignee would, as the plaintiffs did in this case, become vested, for their own benefit, of the entire interest which Tifft had for the benefit of the creditors of the firm. The answer alleges that these indorsements were paid in pursuance of an agreement between the parties. The evidence *Page 623 
and finding is, that the payment was made in pursuance of the order of the court. It may be that the order was predicated upon the agreement, but it is not so found, nor is there, in the case, any evidence of it. Whether, if it was a fact, it should change the result is not a question for our consideration, nor was there a finding, or evidence to support one, that the debts of Germain Co. were, before the assignment to the plaintiffs, or since, paid. The inference is almost, if not quite, irresistible that they were not paid before the assignment. If they had been, the court, unless imposed upon, would not have ordered it to be made. To the question as to the release of Rollin Germain under the agreement of the 7th of January, 1863, there are at least two answers; one is that the liability of the defendant, contingent or complete, belonged to the receiver for the benefit of the creditors of the firm, and, hence, that the firm could not, by discharging Rollin, if in their power then to do so, impair the liability of the defendant; that the receiver only could do that properly without the concurrence of the court. The other is that, on the 7th of January, 1863, the debt which Rollin incurred to the firm of Germain  Co. did not exist; it was not incurred until after the payment, under the order of the subsequent March, of his unauthorized indorsement. There is nothing in the pleadings or findings showing that Charles W. Grannis had any interest in the partnership property not vested in the receiver, or why he assigned to the plaintiffs all his interest in the property and assets of the firm of Germain  Co.; but upon looking into the evidence it will be seen that, on the 14th of June, 1862, short of a month after the making and indorsement of the note for $304.90, and over a month prior to the making and indorsement of the note for $101, Charles assigned to Henry his interest in the business of the firm of Germain  Co., without making any apparent change in the business of the company, Henry appearing there only as a subordinate; what effect the taking, holding and disposing of the firm property by the receiver, without an assertion of any *Page 624 
interest in it by Henry, who seems to have been a dormant partner with knowledge of the acts of the receiver, may now be out of place to discuss; it is enough for the purpose of determining whether or not the judgment should be reversed, that Charles had no possible interest in the liability of Rollin, growing out of his indorsement of the note for $304.90 not vested in the receiver. These views lead me to the conclusion that the judgment should be reversed and a new trial ordered.
For affirmance, EARL, HUNT and LEONARD, CC.
For reversal, LOTT, Ch. C., and GRAY, C.
Judgment affirmed.