Cecil Bank v. Heald

• Decision Date: 19 July 1866
• Citation: 25 Md. 562
• Parties: THE CECIL BANK v. WILLIAM HEALD, G. SPURRIER, ET AL.
• Court: Maryland Court of Appeals

25 Md. 562

THE CECIL BANK v. WILLIAM HEALD, G. SPURRIER, ET AL.

Court of Appeals of Maryland

July 19, 1866

In the process of the trial certain evidence having been offered by the plaintiff and objected to by the defendants, and the objection sustained, was not pressed, but prayers were submitted on both sides. In the argument on the prayers, the plaintiff's counsel stated, that before the jury he would rely upon the said evidence, which being objected to by the defendants, and the objection sustained, the plaintiff excepted. Held that the exception was not taken in proper time, and it will be presumed that the objection was waived.

APPEAL from the Superior Court of Baltimore city.

This was an action brought by the appellant against the appellees to recover the sum of $3,438.85 alleged to be the proceeds of certain promissory notes sent by them to Josiah Lee & Co. endorsed, "for collection," which sum it was also alleged the said Lee & Co. had paid over, when collected, to the appellees, in payment of their own pre-existing debt. The facts are sufficiently stated in the opinion of this Court. The questions which have been passed upon by this Court on this appeal, arise upon exceptions taken by the plaintiff to the rulings of the Court below, (MARTIN, J.,) as to the inadmissibility of certain evidence offered by the plaintiff and rejecting the prayers of the plaintiff, and granting those of the defendant.

The cause was argued before BOWIE, C.J., BARTOL, GOLDSBOROUGH COCHRAN, and WEISEL, J.

J Mason Campbell and George H. Williams, for the appellant, argued:

That the Act of 1836, chap. 97, authorizing special partnerships in this State, prohibits any such as to banking, and that the business of the appellees having been proved to be that of banking, all the appellees are liable as general partners that even if the terms of the partnership were known to the appellant prior to the payment over of the check, it would make no difference, but that of such knowledge there was no evidence; and that the money of the appellant having been carried into the funds of said banking house in payment of a debt due to it, theretofore existing, all the partners are equally liable for its return.

That in collecting said notes, Lee & Co. were special agents of the appellant for the purpose of collection, and had no other power or duty in regard to them but to collect and pay over; and that no knowledge of Lee & Co., as to a special partnership of the appellees, affects the appellant, unless the partnership was specially connected with, or had reference to, the matter of the special agency.

That their fraud in appropriating the property of the appellant to pay therewith a debt antecedently existing from them to the appellees, could not transfer the property to the appellees, and the withholding of the same by the appellees, after demand, makes them participants in the fraud.

That to obtain a title to the funds of appellant, the appellees must, at the time of so receiving, have given some consideration therefor, or some new credit, or extended some old credit on the faith of such payment; and that receiving it simply in payment of an antecedent debt, will not enable them to acquire title. T. Wilson & Co. vs. Smith, 3 How., 763. (Id.,) 1 How. S. C. Rep., 235. Bank of Metropolis vs. New England Bank, 6 How., 212. McBride vs. The Farmers Bank, 25 Barb., 658. Cecil Bank vs. Farmers Bank of Md., 22 Md. Rep., 148. 4 Abbott's Dig., 88. Wieser vs. Dennison, 6 Selden, 68, 76. 3 Kent's Com., 27. Girard vs. Pratt, 2 Stark., 57. Buller vs. Harrison, Cowp., 565. Cranch vs. White, 27 Eng. C. L. Rep., 438. Coddington vs. Bay, 20 Johns., 637. Farrington vs. Franklin Bank, 31 Barb., 187. Bramwell vs. Becket, 31 Maine, 205. Lawrence vs. Stonington Bank, 6 Conn., 521. Goodman vs. Simonds, 20 How., 370. Andrews vs. Shott, 10 Barr., 447.

That Lee & Co. having failed and closed their banking house on the 30th, and having the next day transferred their business and mail matter to the appellees, anything received thereunder was not received in due course of business; it was rather received in an unusual and extraordinary course of business; and their knowledge that Lee & Co. were bankers and collecting agents sufficed of itself after their failure to put the appellees, to whom everything was transferred, upon enquiry as to true ownership.

For the aforegoing reasons, the Court erred in admitting the evidence, to which the appellant objected in the first bill of exceptions, and in rejecting the appellant's prayer, and granting the prayers of the appellee.

Also, that the Court erred in rejecting the evidence of Gerard Gover set forth in the third bill of exceptions. The whole was rejected, part was certainly good; it brought home the knowledge of the failure of Lee & Co., and the transfer of all the business, on the very day this check was received and paid to the appellees, and thereby rebutted the proof that it was received either in good faith or in due course of business by them; and the Court, in denying the right of the plaintiff to give this proof, denied the right to disprove what the appellees, in their second prayer, considered vital to their defence, and what the Court, in like manner, considered vital in granting the prayer. The proof was admissible whether the witness knew of his own knowledge or not, any thing of the delivery over of the check in question; the transfer of all the business of the day carried with it, either full knowledge of everything relating to the business of the day, or put them upon enquiry; and the accepting the transfer of Lee & Co's business on that day, obliged the appellees to do, with regard to the business of that day, everything that Lee & Co. should have done; this check, that day received, instead of sending to its lawful owner, they wilfully and fraudulently appropriated, with what the law imputes as full knowledge, and the evidence of said Gover was directly to establish this point.

Thomas S. Alexander and Theo. B. Horwitz, for the appellees:

1st. The appellee, Heald, was a special partner in the firm of Spurrier, Honeywell & Evans. But it was claimed on the part of the plaintiff, that a limited co-partnership, for the purpose of banking, was not legalized by the Code, Art. 72, and that by the general rule of law, Heald was responsible, as general partner, for all the debts of the partnership. To meet this pretension the defendants proved, that at the time of the commencement of business relations between the two firms, the firm of Josiah Lee & Co., (through whom the plaintiff was obliged to claim,) had notice of the terms of agreement of co-partnership of Spurrier, Honeywell & Evans. This evidence was objected to by the plaintiff, but the objection was overruled, and the evidence was given to the jury.

And at a later stage of the cause, the Court, by rejecting the plaintiff's prayer and granting the first prayer on the part of the defendants, virtually instructed the jury that at the time of dealing between the two firms, Josiah Lee & Co. had notice of the terms of agreement under which the firm of Spurrier, Honeywell & Evans was carrying on business, and that neither the former firm, nor any person claiming through that firm, could charge Heald with any greater responsibility than he had assumed by said agreement. Story on Agency, secs. 140, 451. Weiser vs. Dennison, 10 N.Y. Rep., 77. Story on Contracts, secs. 203, 206. Gow. on Part., 4. Story on Partnership, secs. 128, 74 & 18, 19. Collyer on Partnership, secs. 98, 387, 388, 389. Winship and others vs. The Bank of the U. S., 5 Peters, 561, 564. Willis vs. Dyson, 1 Starkie, 164, (2 Eng. C. L. Rep., 340.) Galway vs. Matthew, 1 Campbell, 405. Leavitt vs. Peck, 3 Conn. Rep., 128. Hastings et al. vs. Hopkins et al., 28 Vt., 116, 117, (2 Williams.)

2nd. In response to the second instruction given, the jury have found that the check remitted by the Merchants and Traders Bank to Josiah Lee & Co., was endorsed and paid over by the said firm to the defendants, and that said payment was accepted by the defendants in good faith, in due course of business, and without any notice of the pretended right or claim of the plaintiff to said check.

The plaintiff's prayer (which was rejected) insisted, that if the notes offered in evidence were specially endorsed by the plaintiff to Josiah Lee & Co., and that said firm received from its correspondent in New Jersey, on account and in part of the proceeds of said notes, the check in question, and that said check was paid over to the defendants, and that the defendants received the money therefor, then the plaintiff was entitled to the verdict, although the said payment over was on account of an indebtedness of the said Josiah Lee & Co. to the defendants, theretofore existing, and by necessary implication, although such payment was received in good faith, in due course of business and without notice of the pretended right or claim of the plaintiff.

The appellees insist, that the plaintiff's prayer was rightly overruled, and the second prayer offered on the part of the defendant was rightly granted. It is not to be overlooked, that the check in question was payable to Josiah Lee & Co., and was remitted expressly in payment of a balance due to that firm by the Merchants and Traders Bank.

That a payment made in discharge of a pre-existing indebtedness received in good faith, in due course of business, and without notice of the right or claim of the third person to the money so paid, will be a good payment as against such third person. Goodman vs. Simonds, 20 Howard S. C., 371, 372. Magee vs. Badger, 35 Barbour, S. C., N. Y., 264. McCreedy vs. Robert Cann, 5 Harrington, (Del.,) 175. Dixon vs. Dixon, 31 Vt., 455, (2 S...