Carpenter v. Greenop

• Decision Date: 24 April 1889
• Citation: 42 N.W. 276,74 Mich. 664
• Court: Michigan Supreme Court
• Parties: CARPENTER v. GREENOP ET AL.

42 N.W. 276

74 Mich. 664

CARPENTER v. GREENOP ET AL.

Supreme Court of Michigan

April 24, 1889

Error to circuit court, Mecosta county.

Action by Charles D. Carpenter against John Greenop and another. Judgment was given for defendants, and plaintiff appeals.

SHERWOOD C.J., dissenting.

L. took a note from a firm of which he was a member, for money loaned to it. Held that, as payment of the note was not by its terms, nor by the nature of the transaction, to be postponed until the dissolution of the firm and final accounting, L. had a remedy at law against the firm on the note before the accounting; and L. having indorsed the note to the plaintiff during the continuance of the firm, though after the maturity of the note, the latter had the same right of action against the firm.

Glidden & Bates, for appellant.

M Brown and Frank Dumon, for respondents.

CAMPBELL J

Plaintiff purchased in good faith, but after maturity, a note of John Greenop & Co., payable to the order of Robert A Lavery, and indorsed by Lavery, Lavery was a member of the firm of John Greenop & Co., and made the note, with Greenop's consent, for money lent by Lavery to the firm. The note was dated January 21, 1883, payable in six months. It was transferred to plaintiff in 1884 while the firm was still in business, and about a year before it ceased doing business. There was no evidence of the state of accounts, or that Lavery was in any way a debtor to the firm when the transfer was made, or that there were any equities existing against him which did not exist when the note was made. The court below held that plaintiff could not recover. The reason assigned was that the note could not be transferred after maturity, so as to enable the indorsee to sue upon it, if suit could not have been brought by the assignor, and that Lavery could have brought no suit on it. The decision also seems to have been based partially on the idea that a partner can have no dealings with his firm which are not subject to the final accounting, and that the equities of such an accounting attach to such claims as he may hold against the firm.

I do not think this doctrine is tenable. It certainly has not been directed in this court. The only case that is seriously claimed as bearing in that direction is Davis v. Merrill, 51 Mich. 480, 16 N.W. 864. That case has no resemblance to this. One member of the firm, named Eastwood, received from the firm in October, 1874, a note due in one month after date. In 1875 the firm was dissolved, and the affairs were put into the hands of George W. Merrill, one of the partners, to wind up. Merrill's credit in the firm accounts was larger than Eastwood's, and Eastwood had been credited on the books with the amount of the note, which had never been presented or demanded during the period after dissolution. In May, 1881, Eastwood, who had lost the note by accidental fire in January of the same year, assigned to the plaintiff in general terms whatever claims he had against the firm, with no reference to the note as such. It is plain enough that there could have been no recovery in such a case. Even had the note been described, the statute does not authorize the assignee of a negotiable note, who is not an indorsee, to sue in his own name on it. But, furthermore, there was no attempt to transfer the note as such. The assignment was one which transferred nothing but Eastwood's claims generally against the company, and must therefore be subject to the partnership settlement. There was no firm in existence for nearly six years before the assignment. In the present case the note was transferred by regular indorsement a considerable time before the firm went out of business. It was due already as an independent claim against the firm for money lent, and not for money invested in the business. It was not by its terms, or by the nature of the transaction, to be postponed until the future dissolution of the concern, and there is no accounting in advance of dissolution, unless by agreement.

While there is a difficulty in a suit at law in the name of a party against himself, yet, if this is the only difficulty, it goes only to the form of the remedy, and not to its existence. There never was any legal or equitable reason why a partner should not have specific dealings with his firm as well as any other person; and unless those dealings, from their nature, are intended to go into the general accounting, and wait for their adjustment till dissolution, they give a right to have a remedy according to their exigency, and can be dealt with like any other claims. The only reason why they must, under the old practice, be prosecuted at equity instead of at law, arose from the necessity at law of having plaintiffs capable of suing the defendants. In such a case the failure of a remedy at law justified a resort to equity. But equity could grant relief in such cases, and under our present rules there can be no difficulty at law. Where partners have seen fit to deal with each other without reference to the final accounting, the transaction is not subject to the necessity or delay of such an accounting.

This note was by its terms negotiable. It is elementary doctrine that negotiability does not cease when paper matures. It is only subject to such equities as exist against the paper at the date when it is negotiated. And the equities which affect the indorsee are only such as attach directly to the note itself, and do not include collateral matters. This is very old doctrine, and is laid down without qualification. Lord...