Haldeman & Grubb v. Bank of Middletown
| Decision Date | 01 January 1857 |
| Citation | 28 Pa. 440 |
| Parties | Haldeman & Grubb versus The Bank of Middletown. |
| Court | Pennsylvania Supreme Court |
Kline, for plaintiff in error.
Parke, and Hazelhurst, for defendant in error.
Peter Haldeman and Edward B. Grubb were partners in manufacturing iron at the Henry Clay Furnace in Lancaster county, from June, 1853, to November, 1854. On the 21st October, 1854, Peter Haldeman, in his own name and that of his partner, E. B. Grubb, made a draft for six thousand dollars at sixty days, directed to Haldeman Brothers, Philadelphia, payable to the order of Peter Haldeman, and by him endorsed. The draft was discounted by the Bank of Middletown, and the proceeds paid to Peter Haldeman. It was protested for non-payment, and this suit was brought by the bank against Haldeman and Grubb, to recover the amount due and unpaid upon the draft.
Edward B. Grubb defends upon the ground that the draft, although in the name of Peter Haldeman and himself, was really made by Haldeman for his own use, and that the proceeds were not used in the business of Haldeman and Grubb; but were appropriated by Haldeman to his individual purposes. The case depends upon the question whether the bank was bound to inquire as to the authority of Haldeman to draw the draft in the firm names. It is not pretended that the bank had actual notice that the discount was for Haldeman's separate use; but it is alleged that the form of the draft was sufficient to put the bank upon inquiry. The draft was made payable to Peter Haldeman's order. Was this an indication that it was not drawn by the firm in the usual course of its business? Certainly it was not; for although it may not be the ordinary form in which bills are drawn, it is by no means an unusual transaction, when the object of drawing a draft is to raise money for a firm, that it should be made payable to the order and endorsed by one of the members of the firm. The law merchant, founded as it is upon the usage and custom of merchants, should conform to the business habits of the people where it is to be applied, rather than compel the business community to follow arbitrary rules not in conformity with the common understanding of business men. Where a draft or bill drawn in the name of a firm by one of the partners is offered for discount, the presumption is that drawing the draft was a partnership transaction, even although it was made payable to the order of one of the members of the firm.
Actual knowledge that a bill or note purporting to be drawn or made by a firm was given without the consent of some of the partners, is a good defence as to the non-consenting partners, but the presumption that the paper is what it purports to be, cannot be overthrown upon a mere matter of form in inserting the name of one of the members of a partnership as payee. Where a firm note is given for an individual debt, the person to whom the debt was due is affected with notice that the note was not...
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...in suit and Gardner is bound by their action: Sedgwick v. Lewis, 70 Pa. 217; Investment Co. v. Russel, 148 Pa. 496; Haldeman & Grubb v. Bank of Middletown, 28 Pa. 440; Lancaster County Bank v. Garber, 178 Pa. Moorehead v. Gilmore, 77 Pa. 118; Miller v. Consolidation Bank, 48 Pa. 514; Hoskin......
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