23 N.W. 321 (Mich. 1885), McLellan v. Detroit File Works

Citation:23 N.W. 321, 56 Mich. 579
Opinion Judge:[56 Mich. 581] COOLEY, C.J.
Party Name:McLELLAN v. DETROIT FILE WORKS.
Attorney:[56 Mich. 580] Henry M. Cheever, for plaintiffs. [56 Mich. 579] Wm. H. Wells, for defendant and appellant.
Judge Panel:CAMPBELL and CHAMPLIN, JJ., concurred.
Case Date:May 06, 1885
Court:Supreme Court of Michigan

Page 321

23 N.W. 321 (Mich. 1885)

56 Mich. 579

McLELLAN

v.

DETROIT FILE WORKS.

Supreme Court of Michigan

May 6, 1885

Error to Wayne.

[56 Mich. 580] Henry M. Cheever, for plaintiffs.

[56 Mich. 579] Wm. H. Wells, for defendant and appellant.

[56 Mich. 581] COOLEY, C.J.

The plaintiffs, who are private bankers in the city of Detroit, bring suit on two promissory notes, signed "DETROIT FILE WORKS, S. HAYES, Pres't," one dated July 1, and one July 14, 1884. The defendant is a corporation, and the execution of the notes on its behalf is denied by affidavit. On the trial of the case the following facts appeared: Prior to the incorporation of the defendant, Solomon Hayes and Zenas Rowe constituted a partnership in the city of Detroit, doing business under the firm name of "Detroit File Works, Rowe & Hayes, Proprietors." The partnership did its banking business with the plaintiff, and on March 2, 1884, the plaintiffs discounted for the firm a note for $475, made [56 Mich. 582] in its name by Hayes, and on March 22, 1884, another like note for $200. The notes were on short time, and before either of them fell due the defendant corporation was formed. In organizing the corporation all the shares of stock except two were taken by the partners, Rowe & Hayes, in equal interests, and the partnership assets were transferred to the corporation in consideration of the stock issued to the partners. One share of stock was taken by Mervan J. Hayes, a son of Solomon Hayes, and one by Alexander Delano.

In forming the corporation a note made by Rowe & Hayes for $125 to Thomas Fairbairn was expressly assumed by it, but the notes to the plaintiff were not assumed. Hayes, nevertheless, who was made president of the corporation, assumed to renew them as notes of the corporation three or four

Page 322

times, making small payments upon them at the times of renewal. The avails of the original notes were transferred with the other partnership assets to the corporation, but there is evidence that the other corporators were not aware that Hayes was giving corporate obligations in the place of obligations of the firm, and when the fact came to their knowledge Hayes resigned as president, and his stock was transferred to another person. This suit was afterwards instituted on the last notes given in renewal, and in the circuit court the plaintiff recovered judgment.

1. The case was...

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