Dewey v. Warriner.

Crawford & Marshall, for appellant.

Blanchard & Silver, for appellee.

CRAIG, J. The main question presented by this record, as we view it, for consideration, is this: Is the indorser of negotiable paper a competent witness to impeach its consideration?

On the trial in the Circuit Court, on application of the plaintiff, the court excluded all the evidence of Dedrick, who was an indorser of the bill of exchange, that showed or tended to show a want of consideration of the draft, from the jury. The court also refused to permit Dewey, who was also an indorser of the draft, to testify what the original consideration of the draft was.

In this we perceive no error. We are aware that on this question the authorities are not uniform in the different States, but this court has several times held, and it may be regarded as well settled in this State, that an indorser of negotiable paper, having given it the sanction of his own name, shall not be permitted, by his own testimony, to impeach the consideration of it. Walters v. Smith, 23 Ill. 342; Walters v. Witherell, 43 id. 388.

The weight of authority in the States is in harmony with this doctrine, and it is fully sustained by the Supreme Court of the United States. The Bank of United States v. Dunn, 6 Pet. 51.

The reason of the rule is not on account of the interest the indorser may have in the event of the suit, but it proceeds upon the ground of public policy. It is contrary to every principle of justice as well as public policy, to permit a party to give credit to negotiable paper, by his indorsement, and then, in turn, defeat it by his own evidence.

Neither can the fact that Dewey was the maker, as well as indorser, change the rule as to his evidence. He was, nevertherless, indorser, and on that account, although he sustained other relations to the paper, his evidence was properly excluded.

No other witnesses were offered by the defendant to impeach the consideration of the bill of exchange. That defense was not established on the trial. It was, therefore, not error in the court to refuse defendant's 4th, 5th, 6th and 7th instructions, as they are drawn on the theory that there was no consideration for the draft, and upon this point there was no evidence before the jury on which to predicate the instructions.

The court properly refused defendant's 8th and 9th instructions

离

Dewey v. Warriner.

They are based upon the hypothesis that there was evidence before the jury that the draft had been altered, and hence was not the draft of defendant, and that an issue of that character had been formed, and was for trial by the jury.

The only plea filed by defendant was, the general issue, not sworn to, with notice, in writing, of special matters relied upon as a defense.

The same section of the statute which authorizes a plea of the general issue with notice, to be filed, declares, no person shall be permitted to deny, on trial, the execution of any instrument in writing, whether sealed or not, upon which any action may have been brought, or which shall be pleaded or set up by way of defense or set-off, unless the person so denying the same shall, if defendant, verify his plea by affidavit. Gross' Statutes, page 511, § 21.

Had the defendant desired to present to the jury the question of the alteration of the draft by evidence and instructions, he should have filed the proper plea sworn to. That issue did not and could not arise on a plea of general issue, with notice of special matters, in writing. Hunt et al. v. Weir, 29 Ill. 83.

We perceive no error in the modification of defendant's third instruction, or in the giving of plaintiff's instructions.

Upon the issue formed, the case seems to have been fairly presented to the jury, both as to the law and the fact, and we see no reason for disturbing the judgment. It will, therefore, be affirmed. Judgment affirmed.

NOTE. — That an indorser of negotiable security indorsed before it was due is not admissible to impeach its original validity, was held by Lord Mansfield in the case of Walton v. Shelley, 1 T. R. 296, and was adhered to in Hart v. McIntosh, 1 Esp. 298. But this doctrine has been overruled in England, and the indorser or other party held competent to prove any fact to which any other witness would be competent to testify. Jordaine v. Lashbrooke, 7 T. R. 601; 1 Phil. Evid. 89. And several of the American States hold the indorser admissible. In New York, Stafford v. Rice, 5 Cow. 23; Bank of Utica v. Hillard, id. 153; Williams v. Walbridge, 3 Wend. 415. In New Jersey, Freeman v. Brittin, 2 Harr. 191. In Maryland, Ringgold v. Tyson, 8 Harris & J. 172; Hunt v. Edwards, 4 id. 283. In Virginia, Taylor v. Beck, 3 Rand. 316. In Vermont, Pecker v. Sawyer, 24 Vt. 459. In Connecticut, Townsend v. Bush, 1 Conn. 260. Jackson v. Parker, 13 id. 342. In New Hampshire, Odiorne v. Howard, 10 N.H. 343; Haines v. Dennett, 11 id. 180. In Michigan, Orr v. Lacey, 2 Doug. 230. In Kentucky, Gorham v. Carroll, 8 Litt. 221. In North Carolina, Guy v. Hull, 3 Murph. 150. In South Carolina, Knight v. Packard, 3 McCord, 71. In Georgia, Slack v. Moss, Dud. 161. In Alabama, Todd v. Stafford, 1 Stew. 199. In Texas, Parsons v. Phipps, 4 Tex. 841. In Missouri, Bank of Mo. v. Hull, 7 Mo. 278; St. John v. McConnell, 19 id. 8.

Smith v. Knight.

On the other hand, the rule of exclusion, as stated in the principal case, is adopted in the Supreme Court of the United States. Bank v. Dunn, 6 Pet. 51; Bank v. Jones, 8 id. 12; United States v. Leffler, 11 id. 86; Scott v. Lloyd, 12 id. 145; Henderson v. Anderson, 8 How. 73; Saltmarsh v. Tuthill. 13 id. 229; Taylor v. Luther, 2 Sumn. 235.

In Massachusetts, Churchill v. Suter, 4 Mass. 156; Fox v. Whitney, 16 id. 118; Thayer v. Crossman, 1 Meto. 416. In Maine, Deering v. Sawtel. 4 Greenl. 191; Chandler v. Morlon, 5 id. 374: Clapp v. Hanson, 15 Me. 345; Franklin Bank v. Pratt, 31 id. 501; Lincoln v. Fitch, 42 id. 456. In Pennsylvania, Harding v. Mott 20 Penn. St. 469; Pennypacker v. Umberger. 22 id. 492; Gaul v. Willis, 26 id 259. In Ohio, Treon v. Brown, 14 Ohio, 482; Bodkins v. Taylor, id. 489; Rohrer v. Morning Star, 18 id. 579. In Iowa, Strang v. Wilson, 1 Morris, 84. In Mississippi, Drake v. Henly, Walk. 541. In Tennessee, Smithwick v. Anderson, 2 Swan, 573.

In those States where the rule of exclusion is adopted it is usually only where the security has been put in circulation in the usual course of business and indorsed before maturity. Baird v. Cochran, 4 S. & R. 397; Parke v. Smith, 4 Watts & S. 287: Thayer v. Crossman, 1 Meto. 416; Smithwick v. Anderson, 2 Swan, 573.

The rule does not apply where the indorser is called to prove a fact not going to the original validity of the instrument, as payment or fraudulent alteration. Work v. Kase, 34 Penn. St. 138; Zeigler v. Gray, 12 8. & R. 42; Buck v. Appleton, 14 Me. 284: While v. Kibling, 11 Johns. 128; Tuthill v. Davis, 20 id. 285.

An indorser's declaration that the note was without consideration, or is paid, or is infected with other vices, is admissible against an indorsee, where the note was overdue when indorsed. Peckham v. Potter, 1 C. & P. 232; Beauchamp v. Parry, 1 B. & Ad. 89; Hatch v. Dennis, 10 Me. 244; Bond v. Fitzpatrick, 4 Gray, 89; Wheeler v. Walker, 12 Vt. 427; Roe v. Jerome, 18 Conn. 138; Curtiss v. Martin, 20 I11. 557; Cleveland v. Davis, 3 Mo. 331. But a contrary rule was held in a learned judgment in Paige v. Cagwin, 7 Hill, 361, and in Bailey v. Wakeman, 2 Denio, 220. Paige v. Cagwin was approved in Booth v. Swezey, 8 N. Y. 276, wherein it was held that, in an action brought by the assignee of a bond and mortgage against the mortgagor, the latter cannot give in evidence the declaration of the mortgagee, made prior to his assignment of the mortgage, to show that it was given upon a usurious loan. When the note is received bona fide, without notice and before it is due by the indorsee, he cannot be charged with such admissions. Matthews v. Houghton, 10 Me. 420: Fitch v. Chapman, 10 Conn. 8; Smith v. Shank, 18 Barb. 844; Lester v. Boker, 6 Blackf. 439.— REP.

SMITH, appellant, v. KNIGHT.

(71 Ill. 148.)

Partnership - what constitutes.

▲ agreed to advance money to B from time to time up to a certain amount te enable B to carry on business; and B agreed to pay interest to A on the average balance advanced, and also to divide the profits after deducting a

Smith v. Knight.

fixed sum for expenses; but A was not to bear any losses. Held, that A and B were not partners as to third persons.

A

CTION of assumpsit by Smith against Knight and others. The opinion states the case.

George C. Fry, for appellant.

F. W. S. Brawley, for appellees.

BREESE, C. J. This was an action of assumpsit, brought to the Superior Court of Cook county, on the common counts, against sppellees as partners. There was a default regularly taken again st Cobb and Hennersheets, and issues made up by the other defendants, Knight and Baker, which were tried by the court without a jury, resulting in a finding and judgment in favor of the defendants.

The plaintiff appeals, and makes the points that the court excluded proper evidence offered by him, admitting improper evidence on the part of the defendants, and overruling a motion for a new trial.

The issues were non-assumpsit, and a plea, accompanied by affidavit, denying the alleged partnership and joint liability.

The plaintiff, to prove the partnership, introduced in evidence a written agreement, showing the terms on which appellees did business with Hennersheets, which we have examined, and are of opinion, with the court trying the cause, that it fails to establish a partnership relation between these parties. It recites that Hennersheets was doing, at the time the agreement was executed, a general commission business in Chicago, and to aid him in the prosecution of his business, Knight, Baker & Co. agreed to make certain advances to him. They agreed to advance, from time to time, such sums of money as they might deem proper, provided such advances should not exceed in the aggregate, at any one time, seven thousand dollars. For these advances Hennersheets agreed to pay this firm of Knight, Baker & Co. interest, at the rate of ten per centum per annum, on the average balance advanced, and, also, after deducting a certain amount for office expenses, to divide the balance of commissions equally between them, share and share alike – Hennersheets to have one-half and Knight, Baker & Co. the other

*But see Parker v. Canfield (87 Conn. 250), 9 Am. Rep. 817; Leggett v. Hyde (58 N. Y. 272), 17 Am. Rep. 944.

Smith v. Knight.

half; but the latter were not to be liable for any loss incurred in the business or otherwise. And, as further and additional security for these advances, Hennersheets assigned to this firm his books, accounts, notes, drafts or claims which he then had or might thereafter have against any person or persons, for advances, commissions or otherwise, and, upon request, to deliver them over to the firm of Knight, Baker & Co., giving them authority to collect, compromise or settle the same, as the firm may deem best, and out of the proceeds to pay all costs and expenses of collecting, and the amount due this firm for advances, interest, and their proportion of the commissions, to pay the overplus to Hennersheets, his heirs or assigns. This agreement was entered into the 1st day of November, 1869, and to continue until the 1st day of January, 1871, if mutually satisfactory. There is no proof how long this agreement continued, but whilst it was in existence the plaintiff did business with Hennersheets, and now seeks to charge Knight, Baker & Co. on the ground of a partnership.

In determining this question, the intention of the parties must be considered. Written articles of copartnership may be so expressive as to leave no room for doubt. So far as these articles of agreement are concerned, we discover nothing in them evidencing an intention to form a partnership.

A case similar to this in many respects came before this court at the January term, 1868. Certain parties, partners, in Decatur, having an idea that money could be made in the manufacture of oultivators, but having no capital to engage in the business, induced a banker of that city to furnish the necessary funds. An agreement was entered into, by which the manufacture should be carried on by the parties applying for pecuniary aid, who should sell the machines, collect the proceeds, and return to the banker his advances, and account to him for one-third of the profits. The advances amounted to more than eight thousand dollars, exclusive of interest. The banker, having received no return for these advances, brought an action against the other parties, which was sought to be defeated on the ground they were partners, and that one partner could not sue his copartners at law, unless there was a balance struck, and a promise to pay it. The court held there was no partnership shown-that the agreement entered into was but a mode of getting compensation for the hire of money. Lintner v. Millikin, 47 Ill. 178.