Blake v. Third Nat. Bank

• Decision Date: 13 April 1909
• Parties: BLAKE v. THIRD NAT. BANK OF ST. LOUIS.
• Court: Missouri Supreme Court

118 S.W. 641

219 Mo. 644

BLAKE v. THIRD NAT. BANK OF ST. LOUIS.

Supreme Court of Missouri.

April 13, 1909.

Rehearing Denied May 1, 1909.

1. PARTNERSHIP (§ 181)—PAYMENT OF INDIVIDUAL DEBT WITH PARTNERSHIP ASSETS.

A partner cannot apply assets of the firm to his individual debt, and the creditor acquires no title as against the firm, irrespective of whether he knows it is its property.

2. BANKS AND BANKING (§ 102)—AUTHORITY OF AGENT.

The manager of a private bank conducted by a partnership is without authority to bind it by the payment of the individual debt of a partner out of firm assets.

3. PARTNERSHIP (§ 181)—RIGHTS AND LIABILITIES AS TO THIRD PERSONS—PAYMENT OF INDIVIDUAL DEBT OUT OF FIRM ASSETS.

A note was executed to a member of a firm of private bankers, individually, who so indorsed it, and was then sent to another bank, with a letter stating that the maker wanted more money than such banking firm could spare, and asking that the bank handle the note and pass the amount to the credit of the banking firm, which would guarantee the note. The bank to which the note was sent placed the amount to the credit of the banking firm, which gave a like credit to the maker of the note. Subsequently the manager of the private bank and the partner who had indorsed such note issued a new note in discharge thereof, without the knowledge of the other partner, in the name of such firm, and it was paid out of assets of the firm. Held, that the liability on the original note was that of the individual partner who indorsed it, and not of the banking firm, and that the payment of the note in discharge thereof out of the firm assets was a fraud upon the firm, rendering the other bank liable to return the amount received.

4. PARTNERSHIP (§ 157)—RIGHTS AND LIABILITIES AS TO THIRD PERSONS—RATIFICATION.

A partner who has given the firm's note to pay his individual debt cannot alone ratify it so as to make it binding on the firm.

5. PARTNERSHIP (§ 157)—ACTS OF PARTNER— RATIFICATION—AUTHORITY OF AGENT.

The manager of a private bank conducted by a partnership cannot ratify a note given by a partner in the firm name to pay his individual debt.

6. BANKRUPTCY (§ 304) — PARTNERSHIP — RIGHTS AND LIABILITIES AS TO THIRD PERSONS— PAYMENT OF INDIVIDUAL DEBT WITH FIRM ASSETS—TRUSTEES—ACTIONS — QUESTIONS FOR JURY.

A note was executed to a member of a firm of private bankers, individually, who so indorsed it, and was then sent to another bank, with a letter requesting the latter bank to favor the firm by cashing the note and passing the amount to the firm's credit, and that as collateral it might hold another note then in its possession. The bank to which the note was sent credited the firm with the amount thereof, and it gave a like credit to the makers of the note. Subsequently the manager of the bank and the partner who had indorsed the note issued a new note in discharge thereof, without the knowledge of the other partner, in the name of such firm, and it was paid out of assets of the firm. Held, that the fact that the partner alone was the indorser and not the banking firm, coupled with the issuance of the new note when the bank knew that the other partner was not present, was sufficient to take the right to recover the amount paid in satisfaction of the note to the jury or to the court sitting as a jury, as having been a payment of the individual debt of the partner out of firm assets.

Burgess and Lamm, JJ., dissenting.

In Banc. Appeal from St. Louis Circuit Court; Matt G. Reynolds, Judge.

Action for money had and received by Daniel F. Blake, trustee in bankruptcy of the estate of George Y. Salmon and another, copartners, against the Third National Bank of St. Louis. Judgment for defendant, and plaintiff appeals. Reversed and remanded.

I. P. Ryland, Edward C. Crow, and Mann & Daniel, for appellant. Lyon & Swarts, for appellee.

GRAVES, J.

For a long time prior to May 5, 1903, and on said date, there was in Clinton, Mo., a copartnership composed of G. Y. Salmon and H. W. Salmon, engaged in the banking business as private bankers, under the firm name of Salmon & Salmon. At all the dates of the transactions involved in this suit Thomas M. Casey was the man in charge and manager of the banking business of the said Salmon & Salmon. For a long time prior to May 5, 1903, and thereafter up to October 20, 1903, there existed a copartnership, composed of G. M. Casey and W. A. Towers, under the firm name of Casey & Towers, which said firm was engaged in the cattle business. June 26, 1905, the banking business of the said firm of Salmon & Salmon was placed in the hands of a receiver by the state court. On the same date proceedings in bankruptcy were instituted in the United States District Court at Kansas City, and later an adjudication of bankruptcy followed, and the plaintiff, Daniel F. Blake, was made trustee in bankruptcy of the estate of Salmon & Salmon, and all property, books, and papers were turned over to him by the receiver of the state court. The plaintiff in this action, as trustee as aforesaid, instituted suit against defendant to recover more than $40,000 as for money had and received. The petition is in 34 counts, but as all are practically identical, save as to amount and dates, one count thereof will fairly state the petition. Count No. 30 reads: "And for still other and further cause of action against defendant, plaintiff states that defendant is indebted to plaintiff, as trustee in bankruptcy of the estate of George Y. Salmon and Harvey W. Salmon, partners as Salmon & Salmon, in the sum of five thousand dollars, on account of money had and received from said banking firm of Salmon & Salmon by defendant, on the 23d day of September, 1904, to the use of said banking firm of Salmon & Salmon, which sum of money defendant agreed to repay to Salmon & Salmon. Wherefore plaintiff prays judgment against defendant in the sum of $5,000, together with interest and costs." Defendant, after having unsuccessfully demurred to the petition, and after having unsuccessfully moved to make said petition more definite and certain, answered by way of general denial, with an admission of its corporate existence. Trial was had before the court without the intervention of a jury, and the court, upon the conclusion of plaintiff's evidence, gave a declaration of law, in the nature of a demurrer to the testimony, as to each count, except Nos. 1, 2, 14, 16, 17, 18, 25, 26, 27, and 28, which were dismissed by plaintiff. Judgment was entered for the defendant, and from this judgment, after an unsuccessful motion for new trial, the plaintiff appeals to this court.

The evidence in the record is short, and in substance shows the following: On May 5, 1903, Casey & Towers executed and delivered to G. Y. Salmon the following note:

                              "Clinton, Mo., May 5th, 1903
                

"On demand after date we promise to pay to the order of G. Y. Salmon ten thousand & no-100 dollars for value received, and payable at the banking house of Salmon & Salmon, Clinton, Mo., with interest from date at the rate of eight per cent. per annum; and if interest be not paid annually to become as principal and bear the same rate of interest.

                "10,000.00.               Casey & Towers
                  "P. O. ____.            G. M. Casey
                  "Due.  ____.            W. A. Towers."
                

Indorsed as follows:

                "Demand, protest and notice waived
                                     "G. Y. Salmon."
                

On the same day, the following letter was addressed to G. W. Galbreath, the cashier of defendant, at St. Louis, Mo.:

"Dear Sir: We enclose herewith note $10,000.00 Casey & Towers, et al, endorsed by our G. Y. Salmon, with the request that you please favor us by cashing same and passing to our credit the amount thereof. As collateral thereto you can hold the $20,000.00 real estate note now in your possession. Note is made on demand for the reason that parties expect to pay same soon.

                     "Yours very truly
                                  "Salmon & Salmon. C."
                

The evidence shows that the note was indorsed by G. Y. Salmon, the payee, and the proceeds were credited to Salmon & Salmon on the books of defendant, and that, upon receiving notice of this credit, Salmon & Salmon gave Casey & Towers credit on their books for a like amount.

On September 12, 1903, Casey & Towers made another note to G. Y. Salmon, as follows:

                "No. ____.
                          "Clinton, Mo., Sept. 12th, 1903.
                

"On demand after due we promise to pay on the order of G. Y. Salmon twenty thousand & no-100 dollars, for value received, and payable at the banking house of Salmon & Salmon, Clinton, Mo., with interest from date at the rate of eight per cent. per annum; and if interest be not paid annually to become as principal and bear the same rate of interest.

                "$20,000.00.              Casey & Towers.
                  "P. O. ____.            G. M. Casey.
                  "Due.  ____.            W. A. Towers."
                

Indorsed on back as follows:

                  "Demand, protest and notice waived.
                                       "G. Y. Salmon."
                

This note, so indorsed, was sent to Mr. Galbreath in St. Louis, Mo., with the following letter of date September 12, 1903:

"Dear Sir: Enclosed herewith we send you demand note of Casey & Towers, G. M. Casey and W. A Towers for $20,000.00, endorsed by our G. Y. Salmon, which we ask you to please handle and pass the amount thereof to our credit. Casey & Towers are shipping into their farm in this county a large lot of steers to sell to feeders, and in so doing are drawing on us for more than we can carry them for. And hence we ask that you please handle this note as a special favor to us. It will only run for a short time, as they are going to sell the steers right away, and out of the proceeds thereof take up this note. If you will kindly handle some for us, we hereby guarantee that during the time you carry it our credit balance with you shall not fall below $25,000.00, and that it shall be kept up to at least that amount as security for the payment of said note, and if it should fall...