Meriden Nat. Bank v. Gallaudet

• Decision Date: 29 April 1890
• Citation: 24 N.E. 994,120 N.Y. 298
• Parties: MERIDEN NAT. BANK v. GALLAUDET.
• Court: New York Court of Appeals Court of Appeals

120 N.Y. 298

24 N.E. 994

MERIDEN NAT. BANK

v.GALLAUDET.

Court of Appeals of New York, Second Division.

April 29, 1890.

Appeal from superior court of New York city, general term.

Action by the Meriden National Bank against Peter W. Gallaudet. From a judgment affirming judgment entered on verdict for defendant, and from an order denying motion for a new trial, plaintiff appeals.

William H. Arnoux, for appellant.

C. Elliott Minor, for respondent.

HAIGHT, J.

This action was brought to recover damages for a breach of warranty in the sale of a promissory note purporting to be made by Franklin Farrell & Co. to the order of W. M. Babbott, and indorsed by him; the plaintiff claiming that there was no such firm as Franklin Farrell & Co., and that consequently the note was not genuine. The defendant claims that he sold the note to the plaintiff as the agent of Babbott, that there was such a firm, and that the note was a genuine note thereof. A person who sells commercial paper as his own is understood to warrant his title thereto to be good, and that the instrument is genuine. Littauer v. Goldman, 72 N. Y. 506;Bank v. Jarvis, 20 N. Y. 226;Fake v. Smith, 7 Abb. Pr. (N. S.) 106. Assuming, therefore, that the note was sold by the defendant as his own, and that the law implies a warranty on his part that the note was genuine, it becomes necessary to determine whether or not it was the genuine note of Franklin Farrell & Co.

The evidence is that the name of Franklin Farrell & Co. was signed by W. M. Babbott, and it is claimed that Franklin Farrell and William M. Babbott were copartners engaged in business, that the note was given to raise money to carry on such business, and that Babbott had lawful authority to so execute the instrument. This question was submitted to the jury, and it remains for us to determine whether there was sufficient evidence to justify such submission. It appears that business relations commenced between Farrell and Babbott about the month of February, 1879, that they then had some conversation in reference to the manufacture and sale of ice refrigerating machines. The first arrangement which appears in writing was made with one Thomas Cook, in which Cook was to apply for and assign all of his patents relating to or growing out of the business to the company; that he was to put his one-third interest in the Pennsylvania Company into the Cook Ice and Refrigerating Machine Company, and to use his influence to combine all interests for the benefit of the company. He was to teach Farrell and Babbott the business in all its branches, and at the earliest possible moment to complete drafts and specifications for small machines, and adapt them to transportation, and was to put Farrell and Babbott on the board of dircetors, ‘Mr. Farrell and Mr. Babbott to have transportation to work on moiety of profits, on the same terms as proposed by the Philadelphia parties when called for,’ etc. This instrument is signed by Thomas Cook, Franklin Farrell, and W. M. Babbott. The next instrument is a contract dated the 22d day of March, 1879, between the Cook Ice & Refrigerating Machine Company, of the first part, and Franklin Farrell, of Ansonia, in the state of Connecticut, and W. M. Babbott, of the city of New York, of the second part. It recites certain letters patent issued by the United States for certain improvements in ice refrigerating machines and apparatus, and that the parties of the second part are desirous of acquiring certain rights which are therein specfied, and then, among other things, provides: ‘ First. The said parties of the second part shall, with all diligence and dispatch and without expense or charge to the party of the first part, manufacture a refrigerating machine under the said patents, and, for the purpose of aiding and benefiting the business hereinafter mentioned, shall run the said machine at least for two months succeeding the time of its completion; and, second, the said parties of the second part shall use their best endeavor to introduce machines and apparatus containing said patented improvements to public notice, and create a demand therefor, and shall use reasonable diligence to build, or cause to be built, said machines and apparatus, to fill any bona fide orders which may be given for the same by responsible parties, for such prices, and upon such terms and conditions, as shall from time to time be agreed upon by the parties hereto, and shall also use reasonable diligence, and their best endeavors, to effect sales of interests, rights, or licenses in or under said letters patent,’ etc. The next contract executed by the parties bears date July 1, 1879, and is in the form of a letter addressed to David Smith, Esq., in which Franklin Farrell and W. M. Babbott agree to pay him $175 per month for nine months, with the privilege of extending the time to October 1, 1880, for the purpose of developing as they may think best the Cook principle of manufacturing cold air by refrigerating machines, etc. It is true that these instruments are executed by each of the parties thereto in their own own name, and that Farrell and Babbott may be said to be joint contractors; but these instruments establish the fact that they had engaged in a joint enterprise and business, and had made contracts with other parties. Numerous letters, telegrams, and talks took place between them in reference to the contemplated business. They had agreed to construct a trial machine, and to run it for a specified time, so as to test its practicability, and create a demand for it in the market. Babbott testifies to...