86 Mich. 632 | Mich. | 1891
This action was brought in the Wayne circuit court upon the following promissory note:
“ $2,000. Detroit, Aug. 21, 1889.
“ Three months after date I promise to pay to the order
“E. K. Roberts.”
Indorsed: “Barnes Bros.”
William H. Barnes and Cyrus B. Barnes filed separate pleas with affidavits attached denying the execution of the note, and averring that, if the note was indorsed by Barnes Bros., it was indorsed and delivered by one of said copartners without the authority, express or implied, of these defendants, and against the express agreement upon which the copartnership was created, and without the knowledge or consent of said defendants, and for purposes outside the partnership business. It appears that after the note was indorsed by Barnes Bros, it was presented to the Mechanics’ Bank by Roberts, the maker, and was discounted by that bank for- Roberts, on August 28, 1889, the avails being paid directly to Roberts; the note having been indorsed by Barnes Bros, purely for the accommodation of Roberts. The cause was tried before a jury, who rendered a verdict in favor of the plaintiff for the amount of the note and the interest, upon which judgment was entered. Defendant William H. Barnes alone brings the case to this Court by writ of error. On the trial it was practically conceded that Cyrus B. Barnes was liable with Charles 0., who indorsed the firm name on the note, as Cyrus was shown to have full knowledge of the note and its indorsement, and had promised to pay it.
It appears that Barnes Bros, carried on a wholesale paper business in Detroit for many .years. They also had a paper-mill at Rochester, this State. Cyrus B. and Charles 0. Barnes conducted all the business in Detroit, handled all the money, paid all the bills, borrowed money when necessary, and apparently had full authority in the conduct and charge of the Detroit business. William H.
“ I live in Rochester, and have lived there for about 20 years. I look after the mill; run the paper-mill. The mill belongs to Barnes Bros. I have been running it. Some portion of it has been running all the time. I take general charge of the mill. The title to the mill has been in the name of Barnes Bros. Cyrus B. resides in Detroit; Charles 0., in Ypsilanti. Cyrus B. and Charles 0. have been in Detroit running the store. I sometimes came every two or three months, and perhaps every week, and sometimes perhaps six months. My part of the business has been principally in looking after the mill. The books have .been kept at the store. I suppose you might say that Cyrus B. and Charles 0. have almost the entire charge of the financial part of the business, as-the books were kept there, and the money taken in on collections and sales. I presume the firm has borrowed money. I do not know about it. Cyrus B. and Charles 0. had full authority to borrow money for running the business. I did not know anything about it. They had authority for borrowing money, if they did borrow it, so far as running the business was concerned.
“I do not know of any notes they have made within the last five years. I do not know of any instances where they have indorsed the firm's name within the last five years, except the cases that have been presented here. I do not know of any other case of any character, where they have indorsed the firm name either for my benefit or otherwise. I did not keep the books, and had nothing to do with them. I very seldom examined them. I have not examined them within the last five years. I have taken and looked into them sometimes to look up some particular account. But to examine the books they have a regular book-keeper there. I relied upon them in the conduct of the business to a certain extent. I have the fullest confidence in Cyrus B. and Charles 0. I always thought they were straight in regard to that, to carry out our agreement and arrangement. * * *
' “ Cyrus never had authority to do anything outside of*637 the firm, not from me. I never knew anything about the firm raising any money by making paper and getting indorsements from anybody else. I never knew of the firm getting any money bv their own indorsement of some other person’s paper. • I have not examined the books at any time to see whether they were doing that or not, and within the last five years I have only examined particular accounts. *******
“In 1875 I was told that they had indorsed some paper for somebody else. I did not know the party that was indorsed for, or the bank, and never heard of it afterwards, but was told what had been done. I did not know whether it was ever put in circulation, or whether it was ever released, but I was told by outside parties. So I wrote them a letter and asked about it afterwards. I did not look on the books, to see 'what it was. They claimed they did not indorse any at that time. I did not look on the bills-gayable book. I-did not go around to the banks, and attempt to find out what the paper was. I do not know that there was any paper. I was simply told that by outside parties.
“In 1889, I think the firm was banking at the Dime Savings Bank. I can’t tell where the firm was banking in 1888. It might have been at the Dime Savings Bank, or it might have been at some of the others. I presume, if a note had been protested upon -which the firm were the indorsers, taken in the usual course of business, and otherwise, and a notice had been sent, it would come to the firm here in Detroit, and, if it was delivered at the store, either Cyrus or Charles 0. would take care of it. I do not know that it would be very likely to come to-my attention. I suppose if a protest was received on a note it would be likely to go to the firm of Barnes Bros, at their place of business, and I would not be very likely to see it. In 1889, I presume there were four or five months, and perhaps six months, I was not in. I was sick at the time. I have been out of health a good deal. I did not come to Detroit in from one to six months. During that time I attended to the business out there, manufacturing of paper. I do most of the business of buying of stock for the mill. I pay no attention to the paper stock, and the collection of accounts. I paid no attention to the banking of paper in the course of trade, and the taking care of the paper when it became due.
*638 “Redirect:
“I had confidence in my brothers to attend to the firm business in Detroit. I did not mean to say that I understood they had any authority, or that I intended to give them any authority, to do anything outside of the firm business.
“ Q. I call your attention to letter under date of January 19, 1875.”
The letter was produced and shown to the witness, and the witness said that the letter was transmitted to his brothers. Said letter was thereupon offered and admitted in evidence, and marked “ Exhibit D,” and is as follows:
“Rochester, January 19, 1875.
“ Messrs. Barnes Bros. — Gents: When I was out to Ypsilanti last week I was told by Lambert that you were exchanging checks and notes with 'parties in the city. If that is the case, it has got to be stopped at once. I suppose you know what our agreement is, and, if you will do it, I shall withdraw from the firm, for I will not allow anything of the kind. Not but what the parties may be all right, but it is no way to do business, and it must be stopped.
“Yours, W. H. Barnes.”
It is claimed by counsel for the plaintiff that it is thus made apparent that W. H. Barnes gave up the financial end of the business to his brothers, and, if the necessities required it, Oyrus B. and Charles 0. had full power to do whatever they chose towards raising money. It is also contended that Barnes Bros, were under obligations to Roberts to indorse his paper, for the reason that Roberts had been accustomed to indorse for Barnes Bros.; that is, that the parties had been exchanging credit by indorsing for each other.
Roberts was president of the Citizens' Savings Bank. He testifies that Cyrus B. Barnes made a note of 11,000 to his order. Charles 0. was present, and they asked him to indorse it and get the money on it, which he
At the close of the testimony counsel for defendants submitted the following special findings to the jury, to which they returned answers:
“1. Do you find that the defendant William H. Barnes had any knowledge of the indorsement of Barnes Bros, upon the note in suit at the time such indorsement was made?
“A. No.
“ 2. Do you find that the defendant William H. Barnes ever assented to th'e indorsement of the name of Barnes Bros, upon the note in suit, if such indorsement was made?
“A. No.
“3. Do you find that the note in question was given by Roberts for his own use and benefit, and that such note was indorsed by Barnes Bros, for the accommodation of Roberts, and that Roberts personally received the money upon the same?
“A. Yes.
“ 4. Did William II. Barnes authorize his partners to-sign the firm name as accommodation indorsers to. promissory notes for third persons?
“A. Don’t know.”
The jury returned a general verdict for plaintiff for the amount of the note and interest. Defendants thereafter moved to set aside the general verdict, and to enter verdict on the findings for the defendants, which was refused. The court entered judgment on the general verdict in favor of plaintiff for the amount claimed.
By the answers to these special questions .the jury found that William H. Barnes had no knowledge of the indorsement of the firm name upon the note in suit, and never assented to its being placed there, but whether he ever authorized his partners to sign the firm name as accommodation indorsers to promissory notes for third persons they were unable to find. They did find that the note
The court instructed the jury, at the request of counsel for the plaintiff, as follows:
“1. If one or more of the defendants were in the habit of indorsing notes in the name of the firm, made by E. K. Eoberts, for his accommodation, you are entitled to infer that the members of the firm who indorsed on behalf of the firm had authority to do it.
“2. If the firm of Barnes Bros, received the avails of, and paid in due course, notes made by Eoberts and indorsed by the firm, they cannot repudiate notes of like kind subsequently made, the proceeds of which Eoberts received.
ff3. If the firm of Barnes Bros, became the indorsers of notes made by Eoberts, which were negotiated for the firm’s benefit, it became liable upon the like note in suit, although the same was negotiated by Eoberts for his own ^benefit.
“4. By receiving the avails of notes made by Eoberts indorsed by the firm, which notes were negotiated by Eoberts in person, the firm authorized the plaintiff to deal with the note in suit as the obligation of the firm, with respect to which the several members of the firm were liable.
“ 5. It is a principle of law that, when one of two innocent persons must suffer, the loss falls upon the one who has put it within the power of the guilty person to perpetrate the .fraud; and if in this case you believe that W. H. Barnes could, with ordinary care, either by the examination of the books of Barnes Bros, or by inquiry, have ascertained. there was paper outstanding, made by Eoberts and indorsed by Barnes Bros., similar to the paper in suit, and he failed to make any such inquiry or investigation, but left the entire financial management of the business to his partners, Charles 0. Barnes and Cyrus-B. Barnes, then any claim on his part of ignorance of such transactions can be no defense to this case, and the plaintiff would be entitled to recover.”
Following these requests of plantiff’s counsel the court instructed the jury as follows:
*642 “The evidence shows that the note in suit was made or executed by Roberts for his personal use and purposes, and that he. secured the indorsement of Barnes Bros, as an accommodation for his (Roberts’) use and benefit, and that such note was taken to plaintiff’s bank by said Roberts, and discounted by said bank for the use and benefit of Roberts, and the avails of said discount given directly to said Roberts. Barnes Bros, had no actual or pecuniary interest in said note. Under these circumstances, it must be presumed that said indorsement was purely an accommodation indorsement, and any member of Barnes Bros, not assenting to such indorsement is not bound by it. There is no evidence in the case that plaintiff, at the time of discounting the note, took said note upon any other understanding than that expressed in the note itself; and said note having been made by said Roberts, and indorsed by said Barnes Bros., and the same having been presented and discounted by said bank, and for the benefit of said Roberts, such facts and circumstances show that said indorsement was an accommodation indorsement only, and I will leave it to you to say, under all the evidence, if all the partners knew of its indorsement.”
The principal contention of defendants’ counsel is that the burden rested with the plaintiff to prove the authority or consent of the defendant William H. Barnes to the indorsement of the firm name upon the note, or that the firm of which he was a member was interested in the loan; that the firm was not interested in the loan, and that the jury were unable to find, and did not find, that William H. Barnes ever authorized the use of the firm’s name thereon, or assented to its use; and that, therefore, the court was in error in not entering judgment for the ■defendants. This is assigned as error.
It will be seen from what took place on the trial, in the rulings of the trial court and its general charge, that the theory adopted by the court was, and the jury were led to follow it in finding their general verdict, that one or more of the defendants had been in the habit of
It is contended by counsel for the plaintiff that the special findings of the jury should not have the construction given them by counsel for the defendants; that the finding of the jury that William H. Barnes had no knowledge of the indorsement of Barnes Bros, on the note in suit was limited to the fact that he had no actual knowledge, and the finding that he never assented to it is simply a finding that he did not expressly assent. This claim is based on the testimony in the case, which it is claimed abundantly shows that Cyrus B. and Charles 0. impliedly had this authority. We think the jury must have taken this view of the case under the charge of the court, and answered the special questions in this view,
It is said by counsel for the defendants that, the jury being unable to determine ■whether William H. Barnes ever authorized his partners to sign the firm’s name as accommodation indorsers to promissory notes for third persons, they should have returned a general verdict for the defendants, and the court should have so directed, as the burden of proving the authority rested upon the plaintiff; that this fact is not proved, and under the evidence the jury were unable to find it.
The general rule is that, if a party takes negotiable paper, either made or indorsed by one of the partners of a firm in the partnership name, knowing that the name of the firm was indorsed merely as a surety, he takes it at his peril, and he cannot charge the members of the firm who have not assented to the transaction. It must be admitted that Mr. Butler, acting for the bank, knew that the firm of Barnes Bros, were merely accommodation indorsers. The note was made payable to their order, and indorsed by them in blank, and Mr. Roberts, the maker, presented the note for discount, and received the avails. The fact of the possession of the note by Roberts, the maker, after the indorsement of the name of the firm, was sufficient to charge the bank with notice that the indorsement of Barnes Bros, was that of accommodation indorsers, and the payment of the avails of it to Roberts was of itself evidence that the transaction was purely for Roberts’ interest, and not for the indorsers.
These facts being known to the bank, the legal presumption arises against the assent of all the partners to such use of -the firm’s name, and the burden of proving it is cast upon the bank. Insurance Co. v. Bennett, 5 Conn. 574; Williams v. Walbridge, 3 Wend. 415; Hen-
It is also claimed that it was error for the court to ■direct the jury that their findings must agree with their general verdict. It appears tbat after the jury had deliberated for a time they came into court, and asked if the special questions could be answered, “We do not. know,” as well as “Yes” or “No,” and were told by the court that they could be answered in that way, but that the special questions answered must agree with their .general verdict. It was said by Mr. Justice Campbell
“ Is to enable the court to know what view the jury take of the material issues, and to correct their possibly wrong inferences from the facts which they find to exist. ”
In that case the jury found a general verdict, and then announced that they were unable to agree upon the special questions, and they were told by the court that, having found a general verdict, they were bound to-answer these questions in harmony with it.- This was held to be error. This case was cited and approved in Maclean v. Scripps, 52 Mich. 250. The court was therefore in error in this direction to the jury.
We shall not discuss the other errors assigned upon this record.
The verdict and judgment must be reversed, with costs, and a new trial ordered.
I do not think that William. H. Barnes is liable under the facts proven, and the judgment should have been in his-favor.
