94 Mich. 429 | Mich. | 1892
Lead Opinion
I think the judgment in this case should be reversed.
It appears that the two defendants joined in a letter to the plaintiff, instructing it to pay no checks on the part of defendants unless they were countersigned by Robert C. Sheehan, son of the defendant Sheehan, and the bookkeeper of the firm. Notwithstanding this direction, the plaintiff paid 22 checks, for the amount'of which defendants deny liability. There was no showing by the plaintiff that the defendants derived any benefit from the moneys received upon these checks. It rests its claim of liability upon the contract implied from' the signing of the checks in the firm name.
It is suggested that the burden of -proof would rest upon the defendants to show that the moneys did not go to the benefit of the firm. In my judgment, this is not the correct rule in such a case. The plaintiff seeks to recover, notwithstanding it appears affirmatively that the money was paid out by it upon checks which were drawn without the requisite authority of the firm. There can be no doubt about the power of either member of a copartnership to protect himself by stipulating that the other member shall not have the authority to bind the firm by signing checks, if notice is given to the bank Avhich is the depository of the firm; and when, on the affirmative showing of the bank, as in this case, it appears that the bank has disregarded the notice, how can it be said that a prima facie case is shown, without further showing that some benefit
It is also suggested that the defendants are estopped from relying upon this defense, for the reason that there was an opportunity for an examination of the account and checks, and that the defendants should have examined these checks, and notified the plaintiff of the excess of authority and of the invalidity of the checks; and the case of Bank v. Morgan, 117 U. S. 96, is cited to sustain this position. But in the case cited the party drawing the check had prima facie authority to draw it; the bank acted in good faith in making the payment; the check passed back into the hands of the drawer, with opportunity to examine and observe the error; it appeared charged in the account of the drawer. Under these circumstances, it was held that there was a duty to notify the bank, in order that it might protect itself. But what notice was requisite in this case to enable the bank to protect itself ? The moment it paid one of these checks its officers knew from direct notification that they were violating the ■express instructions and directions of defendants. Why notify them of what they already knew? If either party was entitled to notice of this transaction from the other, it was certainly the two defendants, as individuals, who were entitled to notice from the bank that some person connected with the firm was assuming to violate the express instructions of the firm, of which the bank as well as the defendants was apprised.
As to the other questions discussed, I agree with Mr. Justice Grant.
Concurrence Opinion
The defendants were partners, and took a contract for the construction of a system of water-works for the village of Gladstone. Keating was the managing
The main controversies in the case arise upon these three points.
I. The only error assigned in regard to the check for 1809.55 is that the court erred in admitting in evidence deposit checks for other deposits made by the defendants; it appearing that, contrary to the usual custom, no deposit check was made for this item. The record shows that, they were objected to as incompetent. They were competent as part of the plaintiffs case, to show the amount received from the defendants. Whether counsel for plaintiff made an improper use of them in his argument to the jury does not appear. If competent for any purpose, they were properly admitted. But it is not entirely clear that, they were not competent evidence bearing upon the disputed question in regard to this city check.
III. It is unnecessary to determine, under the facts in this case, whether the plaintiff was justified in cashing checks signed by the firm, but not countersigned by their bookkeeper. Two considerations are, in my judgment, conclusive against this defense. Defendant Sheehan testified that he learned on August 4 that checks were being cashed which were not countersigned by the bookkeeper; that he then wrote the bank to cash no more checks unless so countersigned, and none so drawn were afterwards paid. It is apparent that he obtained this information either by a letter from the bookkeeper or from the pass-book and checks which had been returned by the bank to the firm. He went to Gladstone August 15, and then certainly the pass-book and checks were subject to his inspection. About this time difficulty evidently arose between the defendants, but what it was does not appear. It was then the duty of defendant Sheehan to examine the account and checks, and
“ While it is true that the relation of a bank and its depositor is one simply of debtor and creditor, and that the depositor is not chargeable with any payments except such as are made in conformity with his orders, it is within common knowledge that the object of a pass-book is to inform the depositor from time to time of the condition of his account as it appears upon the books of the bank. It not only enables him to discover errors to his prejudice, but supplies evidence in his favor in the event of litigation or dispute with the bank. In this way it operates to protect him against the carelessness or fraud of the bank. The sending of this pass-book to be written up and returned with the vouchers is therefore, in effect, a demand to know what the bank claims to be the state of his account. And the return of the book with the vouchers is the answer to that demand, and, in effect, imports a request by the bank that the depositor will, in proper time, examine the account so rendered, and either sanction or repudiate it.”
The authorities on this subject are there collated and discussed in a long and able opinion. Of course, errors and mistakes are at any time subject to correction as between the bank and its depositors; but where checks issued, though without authority, are paid by the bank, and returned to the depositor, he must seasonably object and notify the bank. This rule is founded in good sense and
The burden of proof, under the circumstances of this case, even if the above defense were open to defendants, was upon them to show that the checks were not used for the benefit of the firm. Defendant Sheehan admits that some of these checks were drawn and used for partnership purposes, and specifies two, — one issued to one Hammer, the other to one Jackson. He does not know but that all were so used. One of the disputed checks specifies that it was for' labor. Presumably Mr. Keating was honest, and made a proper use of the funds. The evidence was peculiarly within the knowledge of the defendants. They had the checks with the payees’ names indorsed thereon. They did not produce their books of account, nor make any effort whatever to show that the money was not honestly used. The checks were for small amounts, were such as would naturally be issued in the prosecution of business, and were properly signed.