Steuben Co. Bank v. Alburger

• Citation: 101 N.Y. 202,4 N.E. 341
• Parties: STEUBEN CO. BANK v. ALBURGER and others.
• Decision Date: 19 January 1886
• Court: New York Court of Appeals

101 N.Y. 202

4 N.E. 341

STEUBEN CO. BANK

v.ALBURGER and others.

Court of Appeals of New York.

Filed January 19, 1886.

John C. Hubbell, for appellants.

Spencer Clinton, for respondent.

RUGER, C. J.

The sole ground of error alleged in the judgment appealed from is that there was not sufficient evidence to sustain the finding of the referee, that John L. Alburger was authorized to use the firm name of J. L. Alburger & Co. as accommodation indorser upon the notes of S. W. Nash. The findings of the referee, as well as the proof, showed that on the fourth day of November, 1873, the plaintiff held two notes for $5,000 each, made by J. L. Alburger & Co., and upon which they were unquestionably liable as principal debtors. One of said notes was past due and unpaid, and the notes in suit were made by S. W. Nash, and indorsed by J. L. Alburger & Co., for the purpose of retiring the former ones, and they were used in doing so. The notes for $5,000 each, held by the plaintiff as described, were made by J. L. Alburger on behalf of his firm, and exchanged with said Nash for his notes of a similar date and amount, for the purpose of enabling Nash to borrow money thereon, and he did obtain the money on them from the plaintiff. Said Nash and the firm of J. L. Alburger & Co. both resided and carried on business at Buffalo, and had been for several years prior to the execution of the notes in suit in the habit of exchanging notes with each other for their respective accommodations. Samuel F. Alburger had knowledge of this course of business, and, so far as appears, approved the same. It further appeared that John L. Alburger had charge of the financial business of his firm, gave its notes, and provided funds for their payment, borrowed money and notes for its accomodation, and attended generally to the business of raising funds with which to meet its obligations. Under these circumstances the notes in suit were indorsed in the firm name by John L. Alburger, without the knowledge of his partner, Samuel F. Alburger, for the purpose stated.

We do not doubt but that the making of the indorsements in question was entirely within the general authority of the financial partner of the firm to provide funds to meet its liabilities. The notes for which those in suit were exchanged were given by the firm for value, and constituted obligations upon which the firm were unquestionably liable; and, in making the indorsements in question in the firm name, John L. Alburger was simply performing the duty which he had always exercised in the management of the affairs of the firm of providing funds to meet its liabilities.

The notes in question were actually used in retiring the obligations of the firm, and, so far as the case showed, no limitation was ever placed upon the power of John L. Alburger to provide funds for such a purpose. In this case he procured the extinguishment of their liability as principal debtor, by substituting therefor a conditional liability as indorsers, and imposed the primary duty of paying the indebtedness upon another; and such an exercise of power was, we think, within the authority previously exercised by him as the financial member of the firm. Commercial Bank of L. E. v. Norton, 1 Hill, 501.

The judgment should be affirmed.

(All concur, except MILLER, J., absent.)

NOTE.

One partner in a non-trading partnership cannot bind his copartner by a promissory note, made by him in the firm name, unless he had express authority therefor, or the giving of such note is necessary to the carrying on of the business, or is usual in similar partnerships. Levi v. Latham, (Neb.) 19 N. W. Rep. 460.

It is said in Smith v. Sloan, 37 Wis. 285, that one partner in a non-trading partnership (attorneys at law in this case) cannot bind his copartner by a bill or note drawn, accepted, or indorsed by him in the name of the firm,-not even for a debt which the firm owes,-unless he have express authority therefor from his partner, or unless the giving of such instrument is necessary to carry on the firm business, or is usual in simpilar partnerships. See Pooley v. Whitmore, 10 Heisk. 629;Deardorf v. Thacher, 78 Mo. 128;Judge v. Braswell, 13 Bush. 69.

Attorneys at law, who were partners in the practice of their profession, have no authority to bind the firm by becoming parties to negotiable instruments, unless such authority is given by the terms of partnership, or expressly given or recognized by both, or may be implied from the general habits of the partners in their business transactions. Friend v. Duryee, 17 Fla. 111.

It is said by Judge BERRY in Osborne v. Carr, (Minn.) 13 N. W. Rep. 922, that mere partnership relation does not authorize a partner to guaranty the obligation of a third person.

In Star Wagon Co. v. Swezey, (Iowa,) 3 N. W. Rep. 421, where defendants, as copartners, were appointed agents for the sale of plaintiff's wagons, the contract providing, among other things, that where notes were taken for sales made they should be made payable to the...