Court Opinion

ID: 6128034
Source: CourtListenerOpinion
Date Created: 2022-02-04 20:44:07.336327+00
Date Added: 2024-06-11T08:43:01.335803
License: Public Domain

Learned, P. J.:
The agreement and the acts of the parties under it made them copartners. This is not such a case as that of Burckle v. Eckhart (1 Denio, 337), cited by defendant, where there was no community of interest in the capital stock; where Eckert acted only as agent or servant; subject to orders of his employers; having nothing to do with losses; but taking his share of profits in lieu of wages. On the contrary, in this agreement, each person was to share equally in losses as well as profits. It is expressly said that, in case of loss, Toll was to contribute ratably. The capital was the avails of the discounted notes. And Toll had a community of interest therein. Toll was not only interested in the profits, as such, but he was the active partner in the business. And between all the persons interested there was a community of interest as to profits and losses. (Leggett v. Hyde, 58 N. Y., 272.) Nor did the defendants offer to give evidence that their motive in what they did was to aid Toll by way of friendship or the like. (Tracy v. McManus, 58 N. Y., 257).
The agreement shows that the business was to be done in the name of Toll. He was to purchase and to sell — in whose name, if not in his own \ He was to insure expressly in his own name. Therefore his name was the partnership name. (Bank of Rochester v. Monteath, 1 Denio, 402 ; Nat. Bank of Watertown v. Landon, 45 N. Y., 410; Ontario Bank v. Hennesy, 48 id., 545.)
Again, the notes in question were given by the makers in payment of brooms belonging to the defendants, which brooms were sold to the makers by that one of the defendants who had charge of the business, and were sold by their directions. The notes therefore were the property of the defendants, payable to them, under the name by which they were conducting the business. Hntil the rights of Iona fide holders should intervene, the defendants might claim that these notes were their property and were not the property of Toll individually.
When therefore Toll indorsed the notes, the indorsement was that of the partnership. Because the notes were payable to the partnership and belonged to the partnership. The liability, then, *192of the defendants to the plaintiff does not rest upon the plaintiff’s knowledge, but upon the fact that by the indorsement the defendants’ property was transferred to the plaintiff. If Toll had sold brooms belonging to the defendants, they would have been bound by the terms of the sale; for instance, to guaranty the title or the quality. He sold to plaintiffs two notes which belonged to the defendants, and they are bound by the terms of that sale, one of which was the guaranty of indorsement. (Winship v. Bank of U. S., 5 Peters, 529.)
This is not a case where a partner, whose name is assumed by the firm, borrows money only on that name, and where extraneous proof may be needed to show whether the transaction was that of the individual or of the firm. The difference is that there is no doubt that, in this case, Toll was dealing with partnership property. Whatever he received on the sale or discount belonged necessarily to the firm, because it was the avails of the firm property.
But it is insisted by the defendants that Toll misappropriated the avails of the notes and applied them to his individual account. That does not appear. There was no application made of the discount to the overdraft; and even if the account of Toll was overdrawn before the discount, we must .remember that such account was the firm account as well as Toll’s individual account. The overdraft may have been caused by payments for the firm as well as.for him as an individual. And again, deducting the second discount, October fifteenth, Toll’s account was, on that day, good for over $600, so that the temporary overdraft of October eleven had been more than made up. Further, on the thirtieth of October Toll drew from his account $550 and paid therewith a note of the defendants. So that they actually had the benefit of the greater part of these discounts.
Nor can it be said that Toll, by the discounting, misappropriated the notes or the avails, since, according to the agreement of the parties, he was to keep the account and do the business in his own name. He deposited the avails, therefore, to the credit of the account where the firm money was kept. Had he deposited the avails in the name of all the defendants, he would have violated the arrangement between them, which imposed secresy. And indeed the alleged misappropriation could only be made by indors*193ing the firm name, since, as we have seen, the notes were payable to the firm. Hence, when the notes were discounted, they had the firm name indorsed thereon, and the avails were deposited to an account, in which, according to the arrangement, the money of the defendants had been kept. If Toll afterwards, from the mixed account, used money for his own purposes, which should have been used for the partnership business, that was an act to which the plaintiffs were in no way a party, and for which the plaintiff is not responsible.
We see no error in the refusals of the court, and think that the case was properly decided.
Judgment and order affirmed, with costs.
Present — Learned, P. J., Boardman and Bocees, JJ.
Judgment and order affirmed, with costs.