Onondaga County Bank v. De Puy — 17 Wend. 47

Majority

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Onondaga County Bank vs. De Puy and others.

Headnote

Wtw? it- is the course' of Business of a Bank to place its Bills in the hands of its customers to cxviiauge for other Bills, and to take an acknowledgment for such, advance in tlie form of vhbvlt, called an exchange check, and such check is given By a member of a firm who are customers of the Bank in the partnership name, all the members of the firm are bound where there is no fraud in the transaction.

All the members cf &tirm are liable where money is Borrowed By one member of the firm on the credit of thefr-^i, whether the money he applied to the Business of the firm, or be misappropriated,^[1]

This was an action of aisumpsit, tried at the Onondaga circuit in October, 1834, before the Hon. Daniel Moseley, one of the circuit judges.

The suit was brought on a bank check in these words: “ Syracuse, January 31, 1831. Cashier of the Onondaga County Bank, pay to exchange or bearer, five hundred dollars.” Signed “Edwards, De Puy & Co.” The defendants were Henry Edwards, Fiederick Pratt and Jacob B. De Puy, who constituted a firm and transacted the business of purchasers of grain in the county of Onondaga, under the name of “ Edwards, De Puy & Co.” De Puy was the active member, and geneially transacted the whole bank business of the firm; he affixed the partneiship name to the check in question, which was accepted by the bank, and the amount thereof paid to him, although at the time the defendants had no funds in the bank. The defendants were dealers at the Onondaga County Bank, v/lxo from time to time discounted their drafts to a large amount for the purchase of grain. It was the course of business at the Onondaga Bank for the dealers with the bank to take its bills and put them into circulation, and return bills of other banks, paying no interest for the bills taken to be exchanged if at the time of receiving bills to be exchanged, other bills were not left in lieu of those received, the person receiving the bills signed an exchange check, that is a check payable to exchange, and of such transaction a separate account was kept. De Puy, whilst the partnership existed, frequently exchanged bills with the bank, and on the occasion of the giving the check in [48] question, received $500 in the bills of the bank. The check in question was not charged at the bank in the general account of the defendants. De Puy was in the constant habit of exchanging the hills of the Onondaga Bank for the bills of other banks, and said that his firm did so to accommodate the bank, in order to obtain their necessary accommodations at the bank. There was some evidence to show that the money received on the check went to the benefit of the firm.. In 1843, payment of the check in question was demanded by the hank, and the defendants refusing to pay, this suit was commenced. The judge charged the jury that the check in question

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being drawn to exchange, did not bind the firm; that it was not an ordinary transaction or business of the firm, and it was not competent for one member of the firm to borrow money for exchange on the credit of the firm, and if he did so, the firm was not bound; and that the plaintiffs were not entitled to recover unless the jury were satisfied that the money thus borrowed went to the benefit of the firm, with the knowledge and assent of all the members of the firm. The plaintiffs excepted to the charge of the judge, and the jury found a verdict for the defendants. The plaintiffs move for a new trial.

J. Wilkinson, for the plaintiffs.

S. Stevens, for the defendants.

By the Court,

If this had been the individual debt or transaction of Be Buy, the judge would have been right in saying that the plaintiffs could not recover without proving the money went into the business of the firm, with the knowledge and assent of his co-partners (Jaques v. Marquand, 6 Cowen, 497; Whitaker v. Brown, 11 Wendell, 75); but there was a general partnership and the money was borrowed on the credit [49] of the firm. Whether the money actually went into the partnership business (of which fact there can be little doubt upon the evidence in the case), or whether it was misapplied to other purposes, was a matter of no moment on this trial. Be Buy, as a general partner, had ample authority to bind the other members of the firm for all loans and other contracts made on their credit (Church v. Sparrow, 5 Wendell, 223; 15 Mass. R. 75 , 331; 5 Cowen, 710.) No fraud on the part of the plaintiffs is pretended; and the fact that the money was advanced on what is called an exchange check, does not alter the case from what it would have been, had the money been paid on any other partnership draft. The plaintiffs accommodated the defendants by giving them large discounts, paying the short drafts without charging discount, and advancing them money for exchanges, which might in the mean time be used, without charging interest; and the defendants on their part gave drafts which were paid in current funds, and aided the bank by making exchanges, and thus giving a wider circulation to their bills. These arrangements were mutually advantageous to both parties. The advances for exchange as well as the discounts, wore made on the credit of the firm, and I can see no reason to doubt that all the partners were as much bound in the one case as in the other.

New trial granted.