111 N.Y.S. 820 | N.Y. App. Div. | 1908
In the opinion of this court on a former appeal (106 App. Div. 557) the main facts involved are set forth, and it is now necessary
The appellant Bacon and one Allen composed the copartnership firm of I. N. E. Allen & Co., lumber commission merchants doing business in the city of New York. Bacon claims to have retired, Allen continuing the business alone but under the copartnership name.
By the dissolution agreement Allen assumed the liabilities and was to wind up the partnership affairs, but legal notice of Bacon’s withdrawal was not given. Allen became interested in the North State Lumber Company, Ltd., operating near Durham, N. C. It became the custom for the First National Bank of Durham to permit the lumber company to overdraw its bank account, and to draw on Allen & Co. in New York to make good such overdrafts. Either to meet these overdrafts or to furnish money to the lumber company, Allen sent to the bank or to the lumber company the notes in suit, payable to the order of the lumber company, signed “ I. N. E. Allen & Co.” When the cashier of the bank received them some of them were blank as .to date, time of payment and amount, and he or some one under his direction filled in these blanks as occasion required, and the lumber company indorsed them and the bank placed the proceeds to the credit of the company. This was the general practice and the precise situation as to the notes known as the August fourth notes.
It is claimed that authority to fill out these blanks came from Allen through the president of the lumber company, who was instructed to .authorize the cashier to fill up the notes for as large an amount as the bank would take. The notes not having been paid they were transferred to the plaintiff after their maturity.
The plaintiff, amongst other claims, insists that the bank was a bona fide holder and that, therefore, he is entitled to be so considered. The appellant Bacon conteúds that the bank was not a bona fide holder as matter of law, and that they were accommodation notes as to himself given by Allen & Co. after his retirement from the firm, and that he cannot be held liable on them because the giving of accommodation paper was not any part of the copartnership business.
We think it is very clear that the bank was not a bona fide
The notes purported to be made in Hew York State and were payable there, and by the express provisions of the negotiable Instruments Law (Laws of 1897, chap. 612, § 91, subd. 1) one can be a holder in due course of a negotiable instrument only where the instrument is “ complete and regular upon its face.” This statutory provision is but a codification of the rule of the law merchant, which was that a party buying commercial paper which remains in some essential particular incomplete and imperfect, doés not acquire the character of a bona fide holder. ' (Davis Sewing Machine Co. v. Best, 105 N. Y. 59.)
The situation is not such as existed in Chemung Canal Bank v. Bradner (44 N. Y. 680). In that case a draft'containing blanks was in the possession of the holder, and it was held that authority on his part to fill them in could be assumed from hiS' possession. The decision was based on the doctrine that because apparent authority had been given it would be»a fraud upon innocent parties to permit an assertion to the contrary. (Town of Solon v. Williamsburgh Savings Bank, 114 N. Y. 136.) In the present case as to the August fourth notes, the blank notes were sent to the bank and filled' in by the bank officer. There was no reliance on possession as evidencing authority to complete the instrument.
On the former appeal this court in effect held that the bank was not a. bona fide holder, and it is conceded that plaintiff by his purchase after maturity acquired no such right unless he obtained it through the bank itself. The trial court was requested by the appellant in various forms to hold and to charge the jury that neither the bank nor the plaintiff was a bond fide holder, and his refusal was error for which the judgment must be reversed.
On the trial and on the argument on appeal the parties treated all'the notes as practically within the same legal status. But if it be assumed that the August twenty-second notes are legally different because .they were received by the bank from the maker
On the former appeal, however, this court held that there was a question of fact as to whether the notes were as to Bacon in fact accommodation paper, or whether they were given in the course of the business of Allen & Co. Even if the notes were accommodation paper because they were given outside the business of the firm, the appellant Bacon would be liable if he authorized them to be given or if he ratified the giving of them with knowledge of the facts or omitted to stop their issue after knowledge. (Bank of Monongahela Valley v. Weston, 159 N. Y. 201.) The plaintiff Claims that they were not accommodation notes given outside the business, but were given in the business of the firm of Allen & Co., and he also insists there is evidence of knowledge or ratification and that in fact there was no dissolution of the firm.
The appellant insists that there is no evidence sufficient to sustain a verdict upon any of these issues and asks that the complaint be dismissed.
We think the plaintiff has a right to have a jury pass upon these questions. On a new trial with the question as to either the bank or plaintiff being a bona fide holder eliminated, or the jury properly instructed as to the August twenty-second notes as the facts shall appear, the jury can intelligently pass upon the questions of fact unembarrassed by that feature of the case.
The judgment and order should be reversed and a new trial granted, with costs to appellant to abide the event.
Ingraham, McLaughlin, Clarke and Scott, JJ., concurred. .
Judgment and order reversed, new trial ordered, costs to appellant to abide event.