first the existence of the copartnership and that the signature is in the handwriting of one of the partners; if nothing further is shown the plaintiff is entitled to recover. But if the defendants here take up the case and prove that the note was signed and delivered to the holder as accommodation paper, they establish a defense to the note; and the plaintiff, in order to recover, must then show that the note was executed with the consent of the other members of the concern, or that he is a bona fide holder of the note." 4 Where commercial paper is signed or indorsed by one partner with the firm's name, as a surety or for the accommodation of third persons, without the knowledge of the other partners, but with the knowledge of such third persons that the name of the firm as so used was without authority, it is a fraud upon the firm, and has him to take some public action for in the future what he had repeatedly the protection of innocent persons. done in the past, to their knowledge, Weed v. Carpenter, 4 Wend. (N. Y.) it would meet with the same treatment 219, and 10 Wend. (N. Y.) 404. If only in the future that it had in the Abijah and Orren Weston, knowing past? When they threatened dissoluthat the public was liable to be injured, tion or exposure if he indorsed without preferred that William should keep on authority again, why did they not keep indorsing rather than disgrace him by their word if they were sincere? Why exposure, they must take the conse- did they have the same stereotyped quences, for the sanctity of commercial conversation every few months, for paper and respect for the rights of year after year, accept the same promthird persons will not permit the busi- ise and condone its violation, with ness community to be imposed upon by unvarying regularity, if they were acttheir negligence if a jury finds, under ing in good faith? Did they prefer all the circumstances, that the negli- that innocent persons should suffer gence was so persistent as to amount loss rather than hurt their brother's to ratification. Failing to stop him, or feelings? Did they keep silent when to give notice of any kind, after re- it was their duty to speak? peated offenses, is evidence of acquies- they making evidence to protect themcence in and ratification of his course, selves if William finally went too far They cannot rest upon their objections and they concluded to repudiate? and his promises, under the facts dis- Was their story, as a whole, probable, closed, without subjecting their good and was the jury bound to believe faith to the scrutiny of a jury. Resist- it? These inquiries, which bear upon ance may be so feeble as to be evidence the main question of good faith, acof acquiescence, and persistent acquiesc- quiescence and ratification, were for ence is evidence of implied consent. the consideration of the jury, and we They knew that it did no good to think the trial court erred in not subtalk to him upon the subject, and that mitting the case to them for consideraoutside parties were liable to be vic- tion. Juries have a right to look betimized by their failure to act. If tween the lines of the evidence and inthey had not given him six months' fer what a man's intention was from time in the spring of 1891, the plain- his conduct, beyond the positive testitiff could not have acquired the paper mony in a case." See also on this in suit. If they meant what they said, question Second Nat. Bank v. Weston, why did they not act accordingly? 161 N. Y. 520, 55 N. E. 1080; Citizens' Did not mere remonstrance finally be- Nat. Bank v. Weston, 162 N. Y. 113, come submission? Did they not en- 56 N. E. 494. courage him to continue? Did not 4. Edwards on Bills and Notes, both his course and theirs lead him to p. 105; Citizens' Nat. Bank v. Weston, understand that if he continued to do 162 N. Y. 113, 56 N. E. 494. Were been so regarded in the English courts, where they put the defense of the partnership upon the distinct ground of fraud, committed upon it by the signing member and the holder of the paper. In this country the defense, for the most part, is placed upon the ground of a want of authority; and it is enough in the first instance for the firm to show that the instrument was given and received as accommodation paper." When a note or other negotiable paper is made or indorsed in the name of the firm for the accommodation of other parties, and negotiated or transferred to one who has no knowledge of the circumstances, it is as has been said, no defense for the other party to allege that it was made or indorsed out of the usual course of business, or without authority. But the rule is subject to this qualification: if the firm proves that it was made or indorsed as accommodation paper, the holder will then be required to show that he received it bona fide, and for a valuable consideration. Receiving it as security is not, but receiving it in discharge of a precedent debt, is receiving it for value.9 8 g. Negotiable paper in payment of individual debts of partner. -A partner cannot use the credit of his firm for the payment of his individual debts without the consent of the other partners; a note or other commercial paper executed by a partner in the name of the firm for such a purpose will not bind the firm, in the hands of the payee, or any other person, except a bona fide indorsee.10 5. Hope v. Cust, 1 East (Eng.), 52, 8 Ves. (Eng.) 544; Ridley v. Taylor, 13 East (Eng.), 175; Green v. Deakin, 2 Stark. (Eng.) 347. 6. See cases cited in preceding notes. 7. Bank of Rochester v. Monteath, 1 Den. (N. Y.) 402; Livingston v. Roosevelt, 4 Johns. (N. Y.) 251; Gano v. Samuel, 14 Ohio, 592. 8. Bank of St. Albans v. Gilliland, 23 Wend. (N. Y.) 311. 9. In the case of Bank of St. Albans v. Gilliland, supra, it was held that receiving a note for a precedent debt is receiving it for value within the law merchant, if it be taken in satisfaction of such precedent debt and the indebtedness he canceled. 10. Credit of firm used for private debts. If one member of a partnership makes a note in his own name payable to the order of his firm, indorses the name of such firm thereon, and requests a bank to place the proceeds of the note, after discount, to his personal credit on its books, the bank thereby has notice of such facts as puts it on inquiry, and prevents it becoming a bona fide holder, in case such indorsement is unauthorized. Brown v. Petit, 178 Pa. St. 17, 35 Atl. 865, 56 Am. St. Rep. 742. Where a note is given in the name of the firm by one of the partners for the private debt of such partner, and known to be so by the person taking the note, the other partners are not bound by such note unless they have been previously consulted and consent to the transaction. Dob v. Halsey, 16 Johns. (N. Y.) 38, 8 Am. Dec. 293; Livingston v. Hartie, 2 Johns. (N. Y.) 300, 3 Am. Dec. 422; Livingston v. Roosevelt, 4 Johns. (N. Y.) 251, 4 Am. Dec. 273. See, generally, on this proposition the following cases: Such a note is a gross fraud on the copartners." The partnership name affixed to a negotiable instrument is prima facie evidence of a partnership obligation, the presumption of law being that an instrument so drawn or indorsed is given for a partnership debt, and the plaintiff is not required to show, in the first instance, that it was given in a partnership transaction.12 But if it be shown on the defense, that the instrument was given by one partner for his private debt, and was taken by the plaintiff with knowledge of that fact, it is then incumbent on the plaintiff to show that such instrument was given with the previous authority or subsequent consent of the other partners.13 If this be not shown the plaintiff cannot recover. The consent of the partners need not be express, but may be implied from the facts and circumstances of the case, upon sufficient evidence.14 h. Partnership paper in name of individual members. Where the members of a copartnership agree that the business of the concern shall be carried on by and in the name of one of the copartners, such name, for the purposes of the business of the firm, is its partnership name, and by it the several members of the firm are bound.15 And where a partnership business is so conducted in the Illinois. Wittram v. Van Wormer, Tex. 177. 44 Ill. 525. Indiana.- Taylor V. Hillyer, 3 Blackf. 433, 26 Am. Dec. 430; Hickman v. Reinking, 6 Blackf. 387. Massachusetts.- Flagg v. Upham, 10 Pick. 147; Adams Bank v. Jones, 16 Pick. 574. Michigan. Roberts v. Pepple, 55 Mich. 367. Mississippi.- Robinson v. Aldrich, 34 Miss. 352. 11. Bates on Partnership, § 347. 12. Doty v. Bates, 11 Johns. (N. Y.) 544, 546; Vallett v. Parker, 6 Wend. (N. Y.) 615, 619; Waldo Bank v. Greely, 16 Me. 419; Barrett v. Swan, 17 Me. 180; Jones v. Rives, 3 Ala. 11; Knapf v. McBride, 7 Ala. 20, 27; McMuller v. McKenzie, 2 Iowa, 369. 13. Lansing v. Gaine, 2 Johns. (N. Y.) 300, 305; Dob v. Halsey, 16 Johns. Missouri.- Ferguson v. Thacher, 79 (N. Y.) 34, 38: Chazowines v. EdMo. 511. New Hampshire.- Davenport v. Runlett, 3 N. H. 386; Williams v. Gilchrist, 11 N. H. 535. New York.- Gale v. Miller, 54 N. Y. 536; Rust v. Hauselt, 41 N. Y. Super. Ct. 467; s. c., 76 N. Y. 614; Atlantic State Bank v. Savery, 82 N. Y. 291. Ohio.- Himelright v. Johnson, 40 Ohio St. 40. wards, 3 Pick. (Mass.) 5, 10; Davenport v. Runlett, 3 N. H. 386, 391; Lanier v. McCabe, 2 Fla. 32, 48 Am. Dec. 173. 14. Jones v. Booth, 10 Vt. 268; Hamilton v. Summers, 12 B. Mon. (Ky.) 11; Bank of Rochester v. Monteath, 1 Den. (N. Y.) 402, 43 Am. Dec. 681. 15. Where persons are doing business under the partnership name of 16 name of one of its members, and he indorses notes and bills in his own name the firm is liable thereon, if he procures them to be discounted as the paper of the concern; and his representations, as well as his acts, are binding upon his copartners. Presumptively, however, commercial paper signed in the name of one partner, notwithstanding the fact that it is the name under which the firm is transacting business, is the obligation of the partner who signs, especially where it appears that such partner is also engaged in business for himself.17 Where a partnership business is done in the name of an individual member of the firm, the burden is upon one, seeking to charge the copartnership upon a note given for money loaned, executed in the name of such individual member, one of them, all of the partners are of Appeal in The Yorkshire Banking liable on notes signed by the partner Co. v. Beaton, 5 C. P. D. (Eng.) 109, in whose name the business is trans- in which the law on this subject will acted. Moore v. Williams (Tex. Civ. be found exhaustively examined. In App.), 62 S. W. 977. Ordinarily where that case an accommodation accepta note is made in the name of one ance given by one partner in his own partner, which is not that of the name was held not binding on his partnership, it is not binding upon the dormant partner, as the acceptance partnership; but when the obligation was incurred for the benefit of the partnership and upon its credit, the note will be deemed collateral to the original debt, for which the partnership is liable. Fair v. Citizens' State Bank (Kan. App.), 59 Pac. 43. was not intended to bind him, and was, in truth, a private transaction, and was not entered in the books of the firm. The fact that the plaintiffs took the bill as the bill of the persons, whoever they were, who might be associated with the partner whose name A member of a firm, who usually was on the bill, was held immaterial. attended to the firm's contracts for The plaintiffs never knew of or gave loans, having agreed to borrow a credit to any one else." See also the sum of money of plaintiff for the firm, following English cases: Nicholson v. made his individual note therefor, Ricketts, 2 E. & E. 497; Miles' Claim, and indorsed upon it the name of 9 Ch. 635. the firm. The money received upon the note was placed by the maker to his private account, but it did not appear that this was known to the plaintiff; it was held that the note bound all the members of the firm. Reed v. Bacon, 175 Mass. 407, 56 N. E. 716. 16. U. S. Bank v. Binney, 5 Mason (U. S.), 176, 5 Pet. (U. S.) 529; Manufacturers, etc., Bank v. Winship, 5 Pick. (Mass.) 11; Mifflin v. Smith, 17, Serg. & R. (Pa.) 165; Scott v. Colmesnil, 7 J. J. Marsh. (Ky.) 416. 17. Strauss v. Waldo, 25 Ga. 641; Buckner v. Lee, 8 Ga. 285; Mercan It is said in Lindley on Partnership tile Bank v. Cox, 38 Me. 500; National (6th ed.), 192: "Again, persons may carry on business in partnership in Bank v. Ingraham, 58 Barb. (N. Y.) the name of one of themselves, and 290; Williams v. Gillies, 75 N. Y. 197; if they do they expose themselves to U. S. Bank v. Binney, 5 Mason (U. serious liability. Prima facie his ac- S.), 176. In the last case it was held ceptance will bind them, al- that, where a firm business has been though dishonestly given. At the carried on in the name of one partsame time if they can show that he gave the bills as his own and not as the bills of the firm, they will not be liable even to a bona fide holder for value. This was decided by the Court even ner, indorsements in the name of such partner will only bind the firm where they were received as its indorsements upon a representation to that effect, and were made in the firm name. to show that the money was borrowed for or appropriated to the use of the firm, or at least that the name was in fact used to denote the firm.18 i. Commercial paper given by partner for use of firm.-As a general rule it may be stated that if money is borrowed, or goods bought, or any other contract is made by one partner upon his own exclusive credit, he alone is liable therefor; and the partnership, although the money, property, or other contract is for their proper use and benefit, or is applied thereto, will in no manner be liable therefor.19 If money is loaned to a firm on the sole credit of one of its members, and a note is given therefor signed by such member, the obligation is that of the individual member and not that of the firm, and the fact that the proceeds thereof are used for the benefit of the firm is not material.20 If it can be shown that the 18. Gernon v. Hoyt, 90 N. Y. 631. that the note had been given for the In the case of Manufacturers' Bank v. use of the firm at the manufactory, Winship, 5 Pick. (Mass.) 11, 16 Am. the partners in that concern would Dec. 369, the court said: "The rule be liable. But the case at bar was that a note or draft given in a part- left without any evidence upon that nership name shall, in the hands of point, and the direction of the chief an innocent holder, be prima facie justice seems to have been perfectly considered as having issued for the correct. that the burden of proof was partnership account, must be confined upon the plaintiffs. The partners are to cases where the signatures or other not to be charged, unless upon their circumstances indicate a partnership contract, and no recovery is to be had concern. In such cases the burden of against them, so long as it remains proof would rest upon the defendants. doubtful whether they have or have They might show that the partnership not made the contract declared upon." name had been misapplied, and that See also U. S. Bank v. Binney, 5 the holder knew that the paper was Mason (U. S.), 176, where transacmade for the account of the individual tions by the same firm were under and without the knowledge of the consideration. other partners." it 19. Story on Partnership, § 134. As From the facts of this case it ap- stated by Justice Story this rule is pears that the firm business was trans- based upon the evident fact that acted under the name of "John Win- is entirely competent for one partner ship," who was one of the partners. to borrow money, or to buy goods, Winship also carried on business as or to enter into contracts on his own a merchant on his own account. The sole and exclusive credit with third jury found that the note in question was an accommodation note made by Winship for the benefit of a third per son, and that the plaintiff discounted it on the belief that the other members of the firm of John Winship were liable thereon; and that the note was not discounted to raise money for the business of the firm. The court in structed the jury that the burden of proof was on the plaintiff to show that the note was given for the use of the partnership. The court said as to this point: "If it had been proved persons; and, on the other hand, it is equally competent for them to rely to refuse to contract with the firm, on that exclusive credit, and either or to exonerate the firm from all liaotherwise bind the firm as being for bility upon any contract which would their account and benefit." 20. Note of one member not binding on firm. Where money is loaned upon the promissory note of one member of a copartnership, and upon his individual credit, the fact that the money was applied to the payment of the partnership debts does not constitute |