Moore v. Foote

Decision Date04 October 1876
Citation34 Mich. 443
CourtMichigan Supreme Court
PartiesFranklin Moore, impleaded with others, v. Ellen L. Foote. [*]

Submitted on Briefs June 21, 1876 [Syllabus Material]

Error to Superior Court of Detroit.

Judgment affirmed, with costs.

Meddaugh & Driggs, for plaintiff in error, argued that the firm due-bill in Foote's hands was at most but evidence that he had advanced to the partnership the amount thereof, and his right of recovery thereon would depend upon and be subject to an accounting between him and the firm; and his transfer of the due-bill to his wife, in payment of his antecedent indebtedness to her, would in legal effect operate only as an assignment to her of the firm indebtedness to him and would give her no greater right as against his co-partners than he had; that in the transaction of giving Mrs. Foote the firm note in lieu of the due-bill and other notes, Foote represented all the parties to it, and was the agent of both the firm and his wife; that the law presumes him to have had knowledge of the facts that his firm was insolvent and that he was largely indebted to it, and his knowledge was under the circumstances her knowledge; that neither her rights nor her remedy therefor, as to so much of the note as represented the due-bill, was altered or affected by the giving of the note; that the essence of the transaction was nothing else than an attempt by Foote to pay his individual debt with the partnership obligation; and they cited: Pars. on Part., 202, notes c and d, 285-6, note r; Simrall v. O'Bannon, 7 B. Mon., 608; 1 Pars. on Bills and notes, 211; Wilson v. Forder, 20 Ohio St., 89, and cases cited.

William Jennison, for defendant in error, to the point that when one partner has made a firm note payable to himself for money loaned by him to the firm, the assignee of that note may sue and recover upon it, cited: Davis v. Brigg, 39 Me. 304; Thayer v. Buffum, 11 Metc. 398; Temple v. Leaver, 11 Cush. 314; and that even where such note was given for the individual debt of a partner, an endorsee without notice could recover against the firm: Chagvernes v. Edwards, 3 Pick. 5; Story on Part., § 133, p. 226-7;Edwards on Bills, p. 100 (Marg.); Pars. on Part., 208, 212; Haldeman v. Middleton, 28 Penn. 440; Munroe v. Cooper, 5 Pick. 412; 19 Pick. 102; that the chief clerk had authority to give the firm due-bill: Tillier v. Whitehead, 1 Dall 269; Gow. on Part., 55 and note; that the due bill, though non-negotiable, was transferable, and the assignee could sue in her own name: 2 Comp. L., § 5775; that the prior indebtedness of Foote to plaintiff made her a bona fide purchaser subject to equities, of which there were none here: Bostwick v. Dodge, 1 Doug. 413; Outhwite v. Porter, 13 Mich. 533; that it cannot be said that plaintiff took the due bill or the note with notice that it was a payment of the private debt of the firm to Foote, for the due-bill represented the debt of the firm to Foote, which he merely transferred to plaintiff, and the payment to her was in no sense a payment with the funds of the firm: Smith v. Lusher, 5 Cow. 688; that the transaction between Foote and the firm, when he received the firm due-bill for the New York draft, was evidently intended as a specific temporary loan, not a payment or a contribution to the general partnership affairs; that if Mrs. Foote had sued upon the note before the dissolution of the firm, evidence of Foote's indebtedness to the firm would be incompetent on the grounds, (1) that until an accounting was had no balance in law existed and (2) that no set-off could be allowed, even had there been a balance, for there being several defendants, the demand set off must be due to all of them jointly: 2 Comp. L., § 1679, Sub. 5 and 6; 14 Mich. 152, 170; Waterman on Set-off; that even if the plaintiff could not have sued on the due-bill, yet the surrender of it to the firm, and the giving of a new firm note with full knowledge of the transaction, and before dissolution, was a waiver by the firm of any claim against the due-bill; that Foote, being a partner, clearly had authority to give the firm note for the firm debt; that the firm having enjoyed the proceeds of every dollar included in the new note, could have waived any set-off to the due-bill, and so could one of the partners: Pars. on Part. (Marg.), 200-2; 12 B. Mon., 11; that the plaintiff was therefore a bone fide purchaser of the note in suit on the day of its date and while the firm was in existence, and the consideration was surely valid, consisting as it did of a debt the firm had long owed her, and a debt it owned her husband and which he was willing and had the right to transfer; that the subsequent dealings between Foote and Moore, of which the plaintiff had no knowledge, whereby Foote received credit for the amount of the New York draft, could not prejudice the plaintiff, whose rights had before been fixed; that when Foote delivered to plaintiff the firm note in suit, his agency in the transaction ceased, and she cannot be bound by the subsequent acts of the firm; and that it was through the negligence of the clerk, and not from any fault in Foote that the transaction was not properly entered up in the firm books.

OPINION

Cooley, Ch. J.

This case is brought to this court for review upon the following finding of facts and law:

"In the above entitled cause I find the following facts:

"1. On the 13th day of June, 1874, the defendants were partners in trade, and had been such for more than eight years prior thereto, doing a wholesale grocery business in the city of Detroit, under the name of Moore, Foote & Co.

"The plaintiff is the wife of the defendant Foote. On the date above mentioned, the defendant Foote signed and executed in the said firm name a certain promissory note, for the sum of three thousand two hundred and thirty-six dollars and ten cents, bearing date June 13, 1874, payable on demand to the order of said Ellen L. Foote, with interest at the rate of ten per cent. per annum, after maturity.

"2. On the 6th day of December, 1870, the defendants being indebted to the plaintiff in the sum of one thousand two hundred and three dollars and three cents, gave to her their promissory note, signed in the firm name, bearing date the day and year last aforesaid, and for the last mentioned sum, payable on demand.

"The amount due on this note was reduced by successive endorsements, as follows:

January 5, 1871

$ 100 00

December 12, 1872

25 00

December 20, 1872

145 00

Total of endorsements

$ 270 00

"Leaving a balance on the note at that date, of nine hundred and thirty-three dollars and three cents. On the 2d of December, 1862, the defendants' firm executed and delivered to plaintiff its certain other promissory note, payable on demand, for two hundred and fifty-two dollars and sixty-three cents, being for interest due and unpaid on the last mentioned note.

"The two last notes remained unpaid, and were in the hands of and owned by the plaintiff on the 13th of June, 1874.

"Sometime in 1873, the defendant Foote, being the holder and owner of a draft on New York for one thousand seven hundred dollars, less exchange, being one thousand six hundred and ninety-seven dollars and four cents, loaned the same to the firm and received a non-negotiable due-bill at one day therefor, signed, by the chief clerk of the defendants, in their firm name. This loan was credited to Foote upon the cash blotter of the firm. Foote was at the time indebted to his wife, the plaintiff, for money previously loaned to him by her, in an amount exceeding the amount of said draft, and transferred the due-bill to the plaintiff in part payment of his indebtedness to her.

"The defendant Moore had no knowledge of such due-bill, or of its transfer.

"3. On the said June 13th, said two last mentioned notes and the due-bill being still unpaid, Foote received the same from the plaintiff, and procuring the interest to be calculated by said clerk, surrendered up to him the notes and due-bill, and himself executed a new...

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