Sanford v. Mickles — 4 Johns. 224

Majority

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Sanford against Mickles and Forman.

NEW-YORK,

May, 1809.

Headnote

Where a note, payable on demand, was negotiated, 5 months after its date, and there were several payments indorsed prior to its transfer, in an action by the indorsee, the maker was not allowed to set up any defence, as against the payee, or to impeach the amount due on the face of the note, at the time of its transfer.

aOne Partner, fter’a ^lissolution of the co-partnership,can-notes Or bills, given, before to the firm, though he is authorised to scltlc the copartnership concerns.

THIS was an action of assumpsit. The declaration contained two counts ; one on a promissory note, dated the 14th June, 1806, given by the defendants to Brown and Olmstead, for 1,249 dollars and 56 cents, payable on demand, and indorsed by Brown and Olmstead,, to the plaintiff. The second count was for money had and received, to the use of the plaintiff. Plea, non assumpsit, with nqtice of set-off. The cause was tried at the Onondaga circuit, in September, 1808. The note was signed S. Broxvn, jun. for Mickles & Co. and his authority to make the note was proved.

The indorsement on the note was in the hand-writing of . Olmstead, and in the words following : “ November 15,1808. corrtents to Benjamin Sanford. William Olmstead, for ^he late firm of Brown and OlmsteadThe partner-1

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ship of Brown and Olmstead had been dissolved by mutual consent, before the indorsement was made; At the time of the dissolution, it was agreed, that Olmstead should take the Stock in trade, collect and receive the outstanding debts; and pay the debts due by the partnership ; but no authority to indorse notes, or to use the name of the firm in any manner, was shown. The defendants’ counsel objected, that Olm stead having no authority to indorse the copartnership name, after a dissolution of partnership, the plaintiff could not recover on the note, but this objection was overruled* The defendants then offered to prove, that the note was given by Brown, the clerk of Mickles & Co. for the balance of accounts adjusted by him, and in which he included not only the demands of Brown & Olmstead against the firm of Mickles & Co. but also what was due from the defendants individually, and that the clerk had no authority to adjust any demands against the defendants, in their separate capacities, but this evidence was objected to and overruled. The defendants then offered to prove; that in the adjustment of the accounts for which the note was given, there were several errors, which, if corrected, would materially reduce the balance, and the amount due on the note, but this testimony was objected to, and overruled by the judge. Several payments were indorsed on the note, the last of which was on the 25th October, 1806. The jury found a verdict for the plaintiff, for the balance due on the note, after deducting the payments indorsed.

On the motion to set aside the verdict, and for a new trial, two questions were raised:

1. Whether one partner, after a dissolution of the partnership, can indorse a note given to the firm, so as to enable the indorsee to maintain an action in his own name against the firm?

2. Whether a note, payable on demand, indorsed five months after date, on which sundly payments are indorsed at the time, is to be considered as due at the time of its being negotiated, so as to entitle the makers to set up any de

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fence against the indorsee, which they might have done in an action brought by the original payee?

Kirkland, for the defendant,

as to the first point, cited Lansing v. Gaine & Ten Eyck, ( 2 Johns. Rep. 302 .) Hack ley v. Patrick, ( 3 Johns. Rep. 536 .) Kilgour v. Finlyson and others, (1 Hen. Black. 155.) and Abel v. Sutton, (3 Esp. Cases, 108.)

As to the second point, he contended, that the payments indorsed on the note, between its date and the time of its transfer, showed that payment had been demanded, and that the note was actually due; and that this was sufficient to put the plaintiff on the inquiry. In the case of Furman v. Haskin,^[1] the court decided, that a promissory note, payable on demand, negotiated by the payee, eighteen months after it was made, was to be considered as due and dishonoured, and that the indorsee took it on the credit of the indorser, and subject to all the equities existing, between the original parties. A note, payable on demand, must be presented in a reasonable time, otherwise it will be considered as dishonoured, and what is a reasonable time, is a question of law,^[2] arising from the facts found by the ju ry.

Gold, contra.

1. The indorsement in the name of the or the payees, by one of the partners, was merely to enable the plaintiff to recover in his own name. It created no new responsibility on the part of the partners. The objection does not lie in the mouth of the party, who is subjected to no new responsibility. The authority of Olmstead to indorse the copartnership name, necessarily arose from the transfer of the partnership stock and outstanding debts to him. In the cases cited, the indorsement went to create a new responsibility.

2. In the case of Furman v. Haskin, the note was negotiated 18 months after it was made; in the present case, 5 months only had elapsed. It is true, that payments are indorsed on the note ; and the last indorsement is strong

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evidence that all prior payments were correctly indorsed, 1 1 7 1 . and that the defendants had really no ground to object to the payment of the sum due as it appeared on the note.

delivered the opinion of the court. 1. It has been decided in the case of Furman v. Haskin., (2 Caines, 369.) that a note payable on demand, indorsed after a lapse of eighteen months, was to be considered as dishonoured and over due, and that the indorsee took it liable to every defence which might have been made by the payee. It is, however, not decided, that a note payable on demand, and indorsed within a shorter period than eighteen months, would not be attended with the same consequences; each case ought, perhaps, to be governed by its own peculiar circumstances. In the one now before us, a number of payments have been indorsed, and the last but a few days prior to the assignment, and about five months "after its date. From the last indorsement, it may be presumed, that all antecedent payments had been noticed and entered in the same manner ; the plaintiff Had a right to consider the amount due at the time of the transfer, after deducting the payments to be the true balance ; the defendant was, therefore, properly prevented from impeaching the note, as given for too large a sum.

2. The authority which exists during the continuance of a partnership, from one partner to bind his copartner, ceases on its dissolution; and with respect to antecedent debts contracted during the partnership, the power to receive payments and give discharges, rests on the same principle with that of joint obligees or payees of a note, not otherwise connected as partners. The cases cited have been determined with a view of protecting one partner from a responsibility which might be created against him, in consequence of the negotiation of bills by the other, after the dissolution. It is impossible to separate the right to indorse a bill by one, passing the title, from the legal responsibility on all those having an interest in it.

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The decided manner in which Lord Kenyon^[1] denies the right of one partner, after a dissolution of the partnership, to indorse bills given before, if he even had authority to settle the partnership accounts, induces me to believe the doctrine as settled. It would be a peculiar hardship to put a partner, retired from the whole concern, so completely in the power of the other, as to charge him, by negotiating bills given during the partnership, This power being denied, it follows, that they must all join in the transfer of a bill negotiated after the dissolution, for the purpose of vesting the title in the indorsee. The court are, therefore, of opinion, that the verdict must be set aside, and a new trial be granted.

New trial granted.

* Esp. Cas. 111.