Back Bay Nat. Bank v. Brickley

• Decision Date: 05 January 1926
• Parties: BACK BAY NAT. BANK v. BRICKLEY et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

254 Mass. 261

150 N.E. 11

BACK BAY NAT. BANK

v.BRICKLEY et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Jan. 5, 1926.

Report from Superior Court, Suffolk County; R. F. Raymond, Judge.

Action of contract by the Back Bay National Bank against Charles E. Brickley and others to recover damages for failure to pay notes at maturity. Trial judge directed verdict for plaintiff against all defendants and reported case. Judgments to be entered for defendants Warren Ackerman, William J. McGlinn, and J. Russell Butler.D. M. Lyons, of Boston, for plaintiff.

D. J. Lyne and S. L. Kaplan, both of Boston, for defendants.

CROSBY, J.

This is an action brought to recover the amount of three promissory notes, each for $5,000, dated January 3, 1921, and signed by ‘Charles E. Brickley & Co.,’ payable to the order of Charles E. Brickley and indorsed in blank by Charles E. Brickley and S. M. Smith.

The partnership of Charles E. Brickley & Co. consisted of Brickley and the defendants Ackerman, McGlinn and Butler. The case was tried before a judge of the superior court and a jury and is before us on a report. It is conceded that Brickley is liable on the notes. The question before us is whether it could have been rightly ruled that the other defendants were liable upon the facts presented and the law applicable thereto. The report recites that the judge made the following ruling:

‘I ruled as a matter of law that there was no evidence introduced or offered which would put a reasonable man upon inquiry as to the authority of the defendant Brickley to bind the remaining three defendants as makers of the notes. I therefore directed a verdict for $18,143.61 for the plaintiff against all four defendants with the stipulation as to the three defendants other than Brickley that if my ruling directing a verdict for the plaintiff as against them was wrong, or if any of my rulings or refusals to rule during the trial, excepted to by said three defendants, injuriously affected the substantial rights of the said three defendants, in the issues raised by the pleadings, final judgment is to be entered for the defendants Ackerman, McGlinn and Butler; otherwise the plaintiff to have judgment on the verdict and the verdict as against the defendant Brickley in any event to stand.’

The defendant Brickley, called by the plaintiff, testified that the four defendants were members of the firm of Charles E. Brickley & Co., which was engaged in the brokerage business; that he signed the notes on behalf of the firm as maker; that similar notes had been given by the company to assist in financing the Ziegfield Cinema Corporation, of which the other indorser, Smith, was the fiscal agent; that he (Brickley) had assisted in financing that company on notes similar to those in suit to the extent of about $65,000, and that the other partners had told him all such notes had been paid; that the company, in return for services in making such notes and loans, had received stock of the Ziegfield Cinema Corporation to the value of $100,000, which was turned over by him to the partnership. There was evidence that none of the other partners knew of the giving of the notes in suit until the partnership was dissolved in March, 1921. Under the partnership articles, it was provided that:

‘Neither the partnership nor any partner on its behalf shall without the written consent of all partners engage in any other business than a strict stock and bond brokerage business in well recognized securities; nor shall the said partnership nor any partner on its behalf without the written consent of all the partners take any share or participate in any syndicate or underwriting or commit the partnership thereto; neither shall the partnership nor any partner on its behalf borrow any money for any purpose unless the same shall be secured by recognized stock exchange collateral sufficient at all times to afford at current market quotations a margin of at least 20 per cent.’

Brickley testified that the notes in suit were not secured by Stock Exchange collateral.

Arthur L. Potter, called by the plaintiff, testified that, when the notes were taken by the bank, he was its vice president; that the notes were executed and delivered to him and that Brickley signed them in his presence; that Smith, the other indorser, with whom he had negotiated previous transactions relating to the Ziegfield Cinema Corporation, was present; that certificates of deposit were issued to Smith at Brickley's request; that, previously to making the loans, representatives of the bank had investigated the financial standing of the members of the firm and found it to be satisfactory. He further testified that the loans were applied for by Smith two weeks before they were made; that he had not known the partners other than Brickley, and that none of them had ever done any business with the bank; that when Smith applied for the loans he stated that he intended to give the plaintiff a note signed by Charles E. Brickley & Co.; that he did not make any inquiry of the partners as to whether Brickley had authority to make the loans although there was ample time to have done so.

The defendant McGlinn, in answer to interrogatories, stated that Brickley was a general partner in the firm; that in the course of its business it was customary to make loans at banks in the firm name; that it had made loans at banks before the time when the loans in question were made, and that all the partners had authority to make loans in the firm name.

[1][2][3] It is well settled that a member of a trading or commercial partnership, engaged in buying and selling merchandise, may give or indorse notes in the name of the firm. Where the partnership articles prohibit a partner from making or indorsing notes without the assent of the other partners, such a restriction will not affect those who, without knowledge of it, give credit to the partnership. Stimson v. Whitney, 130 Mass. 591. Such authority may often be inferred from the nature of the partnership business. Worster v. Forbush, 171 Mass. 423, 50 N. E. 936. Whether in the conduct of a brokerage business by a partnership it is the practice of the firm to borrow money and give notes as security therefor does not appear. Although one of the defendants testified that it was customary for the firm to make bank loans in the firm name, it does not appear that such was a general custom of partnerships engaged in a similar business. In Worster v. Forbush, supra, it was held that an attorney at law who was a member of a partnership of lawyers, had no implied...