Court Opinion

ID: 6240452
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:43:13.53629+00
Date Added: 2024-06-11T08:58:10.949060
License: Public Domain

*62Opinion,
Mr. Justice Williams:
The plaintiff is the indorsee of a draft drawn by E. S. Wheeler & Co., on the Howard Rolling-Mill Company, Limited, payable to their own order. The drawee is a joint-stock association or limited partnership, organized under the act of June 2, 1874. An acceptance was written across the face of the draft, and executed in the name of the drawee, “ per Bernard Lauth, Chairman.” The plaintiff seeks to charge Lauth personally with the amount of the draft, alleging that his execution of the acceptance was not enough to bind the company, and a judgment against him was recovered in the court below. The ground of the recovery is found in the following provision of the fifth section of the act of 1874: “No debt shall be contracted or liability incurred for said association except by one or more of the said managers, and no liability for an amount exceeding five hundred dollars except against the person incurring it shall bind said association, unless reduced to writing and signed by at least two managers.” The signing of the acceptance, “per Bernard Lauth, Chairman,” was treated as an attempt to bind the company for a debt exceeding five hundred dollars contrary to the provision above quoted, which imposed no liability on the company, but rendered him personally liable for the amount of the draft.
The first question presented by these facts relates to the duty to inquire resting on the purchaser of a bill or note. When a note is offered, the bank or other party to whom it is presented is bound to take notice of the instrument, and to know whether it is negotiable. Notice must also be taken of the maker or drawee, and whether such maker or drawee is a private person, a firm, a corporation, or an unincorporated association. The purchaser must also know, at his peril, what is necessary 'to constitute an acceptance or an indorsement, and, in the case of an artificial person, who is the proper person to bind it. When this draft was presented at the counter of the plaintiff for discount, it came from E. S. Wheeler & Co., who were drawers, payees, and indorsers. Their indorsement was an affirmance that the acceptance was properly executed, and an engagement that the drawee would pay, or they would do so for it: Chitty on Bills, 266; Wood’s Byles on Bills, 156. If the acceptance was not sufficient to bind the company, be*63cause not made as required by law, it was an unaccepted bill, which the purchaser could only take on the credit of the drawer and indorser: Byles on Bills, 168. Strangers dealing with a limited partnership or joint-stock association, organized under the act of 1874, are bound by the limitations imposed upon it by the act. This was distinctly ruled in Pittsburgh Melting Co. v. Reese, 118 Pa. 855. The bank was bound to know, therefore, what was necessary to a valid acceptance by the Howard Rolling-Mill Company, Limited. It discounted this draft with knowledge that it was not accepted by the company until two managers had signed the acceptance on its behalf, and is in no position to complain that it was misled by Lauth, whatever ground of complaint it may have against its indorsers, from whom it derived its title. What the acceptance lacked, as the plaintiff alleges, was the name of another manager. If it had intended to rely on the responsibility of the drawee, it should have returned the draft that the acceptance might have been completed, but, as it did not do this, it is fair to presume that it was satisfied to take the draft on the credit of the drawers and indorsers.
But, if this position could be regarded as doubtful, the defendant had a right to go to the jury on the question of fact. He denied that he desired or intended to bind the company by his signature to the acceptance. He testified that, although a manager and chairman of the board of managers, he was not engaged in the active business of the company; that Bancroft, who brought the draft to him, and told him that it would be protested and the credit of the company injured, unless it was accepted that day, was “the head man” in the management and direction of the business, and was also a manager. In regard to the signing of the acceptance, he testified: “ I was under the impression they needed two signers, and I signed as one of them.” Again, speaking of the same subject, he said: “I see I signed it across the draft, but I thought he (Bancroft) was to go and sign his name also.” He did just what it was necessary to do, as he understood it. He signed as one of the two managers needed, expecting Bancroft would sigh as the other. If Bancroft had done so, then the acceptance would have borne the names of two managers, and Lauth’s act in signing first would have imposed no personal liability. The forgetfulness *64of Bancroft in enclosing the draft before the acceptance was completed, cannot be held to change the character of Lauth’s act, and render him liable as a matter of law. His liability depends on the fact which he so stoutly denies. If he made use of this draft as the means of incurring a debt in the name of the company, and binding the company for its payment by his single act of acceptance on its behalf, then it may be that the plaintiff has a just cause of action against him. But, if he signed, as he testifies that he did, so that his name should be one of the two that were needed, then, instead of disregarding, he was complying with the law; and, if the acceptance was not completed by the other manager, before sending the draft away, we do not see how Lauth can be charged with the whole debt because of the neglect, intentional or unintentional, of his fellow-manager to complete the acceptance.*
The judgment is reversed, and a venire facias de novo awarded.

 This opinion was filed in the Supreme Court, to both causes.