Christian Feigenspan v. McDonald

• Decision Date: 01 March 1909
• Parties: CHRISTIAN FEIGENSPAN v. McDONALD.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

201 Mass. 341

87 N.E. 624

CHRISTIAN FEIGENSPAN v. McDONALD.

Supreme Judicial Court of Massachusetts, Suffolk.

March 1, 1909

COUNSEL

John H. Blanchard, Samuel O. Reinstein, and M. M. Harris, for plaintiff.

H. N Allin, for defendant.

OPINION

BRALEY J.

The nonjoinder of the defendant's co-promisor could be taken advantage of only by an answer in abatement, and was not available as a defense at the trial on the merits. Wilson v. Nevers, 20 Pick. 20, 22; Leonard v. Speidel, 104 Mass. 356, 359. If the plaintiff proved that he was a holder in due course, and that notice of nonpayment had been given to the indorser, Charles S. Gove & Co., then under the answer, upon proof of their indorsement as a firm, he was entitled to recover the face of the note with interest. Rev Laws, c. 73, §§ 33, 132, cl. 2. The notarial certificate, to control which no evidence was offered, furnished sufficient proof of the maker's failure to pay the note at maturity, and of notice of dishonor to the company, even if the partnership had been dissolved, and the defendant was not informed by his former partner of the protest. Rev. Laws, c. 73, §§ 13, 116, 122, 123. Nor is the defendant's bankruptcy a defense. While a court in which a suit in contract is pending against a bankrupt may after adjudication stay further proceedings pending the obtaining of a discharge, it is not required to do so, but can proceed to judgment. Bankr. Act July 1, 1898, c. 541, § 11, 30 Stat. 549 (U. S. Comp. St. 1901, p. 3426); Rosenthal v. Nove, 175 Mass. 559, 56 N.E. 884, 78 Am. St. Rep. 512.

But, while these defenses are ineffectual, the defendant urgently contends that the delivery of the note was unauthorized, and the plaintiff took with notice of the infirmity. The partnership was engaged in the business of bottlers and wholesale dealers in liquors. It was composed of the defendant and one Flynn, by whom the note was made and issued with the indorsement of the firm name. But the tenor of the note and the order of the indorsements raise no conclusive presumption that the indorsement in the name of the firm was for the accommodation of the maker, or that upon negotiation he received the money for his private use. Wait v. Thayer, 118 Mass. 473. Unless there are restrictions limiting his authority, one member of a commercial firm may borrow money for use in their business, and issue in payment the promissory note of the partnership, without knowledge of his associates, who will be bound by his action. Reed v. Bacon, 175 Mass. 407, 56 N.E. 716. But even where there are such private limitations they cannot affect a holder who takes the note without knowledge of them. Stimson v. Whitney, 130 Mass. 591, 594, 595. If there was substantial evidence that the proceeds of the note had been used by Flynn for his private benefit, and that he hired the money for this purpose, using the firm's indorsement to obtain credit, the plaintiff put its right of recovery on two grounds, either that it took the note without knowledge of a defect in the title, or of circumstances which should have put it upon inquiry, or that the defendant with knowledge of Flynn's use of the money had ratified his partner's act. Both questions were issues of fact upon which the plaintiff had the burden of proof. Fillebrown v. Hayward, 190 Mass. 472, 77 N.E. 45; Munroe v. Cooper, 5 Pick. 412. In the statements made by Flynn, and the plaintiff's agent, who were witnesses at the trial as to the negotiations which led to the making of the original note of which the note in suit was a renewal, there was evidence to be submitted to the jury that the plaintiff acted in good faith, and without notice of any infirmity. If they found these conditions, the plaintiff was a holder in due course. Rev. Laws, c. 73, § 73; Fillebrown v. Hayward, ubi supra; Buzzell v. Tobin, 201 Mass. 1, 86 N.E. 923.

There also was ample evidence of ratification. The defendant testified that he was first informed of the misappropriation after the firm books had been audited, and he had...