Court Opinion

ID: 6685840
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:32:31.610131+00
Date Added: 2024-06-11T16:00:57.903850
License: Public Domain

Corson, J.
From the year 1880 to the 1st of January, 1885, Charles E. McKinney, the defendant, was a partner in the firm of McKinney & Scougal, engaged in the business of banking in the cities of Sioux Falls and Yankton. At the last mentioned date the partnership was dissolved, and the business was continued in Yankton by Scougal, one of the said partners, at the same place, using the same kind of bank checks, bills, drafts, certificates of deposit, and letter heads, excepting the ommission of the name of C. E. McKinney on one corner of the letter heads, and retaining the same sign on the bank and building that the firm of McKinney & Scougal had used. *56There was evidence tending to prove that the plaintiff, Catherine To-bin, in June, 1884, deposited $40 in the bank at Yankton, and in September deposited $35 more, which sums were withdrawn therefrom in the fall of 1884, and spring of 1885. Certificates of deposit with the name of “McKinney & Scougal, Bankers,” printed at the top, and the firm name of McKinney & Scougal signed at the bottom, were given to the plaintiff for said deposits. On the 16th' day of July, 1889, she deposited in said bank $500, for which a certificate was issued as follows: “No. 2,599. McKinney & Scougal, Bankers, Yankton, Dakota, July 16th, 1889. Certificate of deposit, not subject to check. $500. Catherine Tobin has deposited in this bank five hundred dollars, payable to the order of herself in current funds on return of this certificate properly indorsed. With interest at 6 per cent, per annum if left 6 months. McKinney & Scougal.” Upon this certificate interest was paid semi-annually "from 1890 to 1892, inclusive. The plaintiff had resided in Yankton from 1877 to the time of the trial. Scougal was a resident of Yankton, and the defendant, McKinney, was a resident of Sioux Falls. It was claimed that no personal notice of the dissolution of the firm was given to the plaintiff, and that she had no actual notice or knowledge of the dissolution of the firm until after the death of Scougal, in January, 1893. Notice of such dissolution was published in January, 1885, in a newspaper in Yankton and in one in Sioux Falls. The plaintiff brought this action in July, 1898, to recover of the defendant the amount of said certificate of deposit. The case was tried to a jury, and on motion of the defendant a verdict was directed in his favor. From the judgment the plaintiff appeals to this court.
The motion for a direction of a verdict was made upon the following grounds, among others : That the plaintiff has failed to show that she was a customer of the bank, or had had business transactions *57with it to the extent of giving credit to the bank prior to 1885, or that she continued such business upon the faith that this defendant remained a partner of said Scougal subsequent to that time; that the claim in question is barred by the statute of limitations, the certificate having been issued in July, 1889. The court directed a verdict upon the latter ground, but, as there are other grounds stated in the motion, this court is not precluded from affirming the judgment if it finds either of the grounds stated, well taken, though it may not be the ground upon which the verdict was actually directed.
The case as we view it presents two questions: (1) Was the action barred by the statute of limitations? (2) Did the plaintiff have such dealings with the partnership during its existence as to entitle her to personal notice of its dissolution, and in the absence of such notice enable her to maintain this action? The first question is substantially disposed of by the decision in Cornwall v. McKinney, 12 S. D. 118, 80 N. W. 171. In that case this court held in effect, that an action upon a cerifícate of deposit issued by a bank in the usual form cannot be maintained until payment of the same has been demanded, adopting the view of Mr. Daniel in his work on Negotiable Instruments. Upon the subject of the statute of limitations Mr. Daniel says: “The better opinion seems to us to be that the statute of limitations only begins to run when there is an actual demand of payment in due form, and that such demand must precede a suit.” Daniel, Neg. Inst. § 1707a. There is a conflict in the authorities, but the rule as stated by Mr. Daniel is fully sustained by the courts of New York, Pennsylvania, Vermont and Maryland (Munger v. Bank, 85 N. Y. 587; Howell v. Adams, 68 N. Y. 314; McGough v. Jamison, 107 Pa. St. 336; Bellows Falls Bank v. Rutland Co. Bank, 40 Vt. 377; Institution v. Weedon, 18 Md. 320), and is, in our opinion, the better rule. In Howell v. Adams, supra, the court of appeals of *58New York uses the following language: “The defendant insists that the cause of action on the certificate issued in 1863 was barred by the statute of limitations. The action was commenced in 1871, and it is claimed that the right of action accrued immediately upon the issuing of the certificate without previous demand. This question has been settled by authority. Downes v. Bank, 6 Hill, 297; Payne v. Gardiner, 29 N. Y. 146. We think it is in accordance with the general understanding of the commercial community that a bank is not liable to depositors except after a demand of payment. The fact that a certificate is given upon a deposit being made, payable on the return of the certificate, instead of leaving the deposit subject generally to check or draft, does not change the reason of the rule that the banker must be first called upon for payment before an action can be Maintained.” As no right of action accrued upon this certificate of deposit before a demand, and the statute of limitations not commencing to run until demand is made, this action was not barred, as no demand was made until a short time prior to the commencement of the action.
The second question involved'in this case is one of more difficulty. Upon this subject our code provides as follows: “The liability of a general partner for the acts of his copartners continues, even after a dissolution of the partnership, in favor of persons who have had dealings with, and given credit to, the partnership, during its existence, until they have had personal notice of the dissolution; and in favor of other persons, until such dissolution has been advertised in a newspaper published in every county where the partnership, at the time of its dissolution, had a place of business; to the extent, in either case, to which such persons part with value, in good faith, and in the belief that such partner is still a member of the firm.” Section 4059, Comp. Laws. The first question arising under this section is, what construction is to be placed upon the clause, “in favor of *59persons who have had dealings with, and given credit to, the partnership, during its existence, until they have had personal notice of its dissolution?” It is contended on the part of the appellant that the plaintiff in this action, by making the two deposits of $40 and $35 in 1884 brought herself within the provisions of the section, and is entitled to recover in this action unless she had actual notice of the dissolution of the partnership. The respondent, on the other hand, contends that these two deposits do not constitute evidence that she was in the habit of dealing with the partnership, and that by reason of these acts she cannot be said to be a person who has “had dealings with, and given credit to the partnership,” within the meaning of the section above quoted. Section 4059 of our code is a verbatim copy of Section 1315 of the civil code prepared by the commissioners for the state of New York. In a note to that section the commissioners refer to Vernon v. Manhattan Co., 22 Wend 183, and Clapp v. Rogers, 12 N. Y. 283, as decisions upon which the section is based. In Clapp v. Rogers, supra, it appears that the firm of Rogers & Co., on the 13th of November, 1847, purchased a small bill of goods of the plaintiff, amounting to $11.03, which were paid for in the spring of 1848; that the firm purchased another small bill of goods in the spring of 1848, amounting to $20.40, and paid for the same in December, 1848; that on the 1st of January, 1849, ^e copartnership was dissolved; that between the 25th of January, 1849, and April, 1850, the plaintiff sold and delivered to said firm goods to the value of $1,175.42. The action was brought to recover of the withdrawing partner the amount of the last mentioned bill on the ground that the plaintiff had no actual notice of the withdrawal of said defendant from the firm. The court held that the plaintiff was entitled to recover. It will be noticed that the transactions in that case between Rogers & Co. and Clapp were very similar to the transactions in the *60case at bar. In that case the court said: “What shall constitute a dealing with a firm which will make it requisite to give a personal notice of the withdrawal of a partner has not often been the subject of discussion. The question was considered in Vernon v. Manhattan Co., 22 Wend. 183, but that case does not in its particular facts, bear very strikingly upon the present question. We are disposed, however, to adopt the rule laid down in that case by the chancellor. He said that the word ‘dealing/ when used in reference to this question, was a general term ‘to convey the idea that the person who is entitled to actual notice of the dissolution must be one who has had business relations with the firm by which a credit is raised upon the faith of the copartnership / and he refers to Bell’s Commentaries, where it is said that ‘a credit already raised upon the faith of the partnership is presumed to be continued on the same footing unless special notice of a change shall be given.’ 2 Bell, Comm. 640. * * * But, as before remarked, I am of opinion that a credit was given in this case, though it was not for any definite time; and this brings it within the rule stated by the chancellor. * * * The rule requiring notice proceeds upon a general presumption that one giving credit to a mercantile firm does so upon the responsibility of the individual partners; and we cannot annex to it a distinction based upon the amount of the credit without destroying that certainty which is essential to its utility.” It would seem, therefore, that the commissioners, in recommending this section, intended to lay down a general rule, embracing all persons who have had dealings with, or given credit to, the partnership, without regard to the amount of the credit. And we must presume that the codifiers of our own code, and the legislature that adopted it had the same rule in view. If, as claimed by the appellant, she did make the deposits mentioned, receiving therefor certificates of deposit signed in the firm name, we must' presume that credit *61was given upon the responsibility of the individual members of the firm, and that she had a. right to assume that the firm continued as it then existed at the time she'deposited the $500; and if she, in good faith, believed, when she made that deposit, that the defendant was still a member of said firm and she had no personal notice to the contrary, her previous transactions with the firm would entitle her to recover if in fact those deposits were actually made as claimed by appellant. Upon this question there is a conflict in the evidence, and vhe case should have been submitted to the jury.
It is contended on the part of the respondent that to entitle the appellant to recover she must have been in the habit of dealing with the firm. It is true this language is used in Story or. Partnership (§ 161), and by Mr. Justice Brewer in delivering the opinion of the supreme court of Kansas in Merritt v. Williams, 17 Kan. 287; but it will be noted that this is not the language of our statute, and we cannot so construe it as to embrace such language without interpolating into the statute other words, which in this case we are not authorized to do. We are inclined to say, in the language of the court in. Clapp v. Rogers, supra, that this case does not afford a very striking exemplification of the rule, for the dealing was so limited in amount that there is no great reason to believe that' the plaintiff would have taken the trouble to ascertain' who the partners were. We cannot, however, say positively that she did not. It would be dangerous for this court to attempt to graft upon this section exceptions or limitations that have not been provided by the legislature. These views lead to the conclusion that the learned circuit court erred in directing a verdict, and the judgment of that court is reversed, and the case remanded for a new trial. .