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    WILLIAM E. COFFIN, et al., Respondents v. THE PRESIDENT AND DIRECTORS OF THE GRAND RAPIDS HYDRAULIC COMPANY, Appellant.

      Promissory notes, defences thereto.

    Three actions, to recover on three promissory notes, the facts in each of which are similar, so that all the questions involved in the three cases are considered and disposed of by a decision in one.

      Held, that the issues in these actions were simple, and all the complications arose from the efforts of the defendant to present facts and questions in defence of the action that are not raised by the pleadings nor germane to the controversy before the court, yet requiring the court to state all the issues raised and the points claimed by the defence, that the propositions involved may be intelligently considered and understood.
    After such statement, and a full review of the facts and points, the court held, that the plea of payment and satisfaction set up in the answer was not proved, and apart from the complications of fact and law, thrown into the case by the defendant, there does not seem to have been a shadow of a defence established.
    The objection that the plaintiff could not maintain the action is untenable. If the defendant intended to raise the objection that the plaintiffs were not the real parties in interest, it should have been pleaded in defence. There was no real substantial or meritorious defence to the action, and the verdict directed by the court in each case merely gives effect to the legal rights and obligations of the parties.
    Before Sedgwick, Ch. J., and McAdam, J.

      Decided May 2, 1892.
    There are three actions, the facts in each of which are similar, except, as to date of the obligation, time when due, amount, and parties plaintiff, so that the questions involved in the three cases may be disposed of by the decision of one. The trial judge directed verdicts in favor of the plaintiffs. In the first action for $83,096. In the second for $34,860, and in third for $1,985.40. The defendant appeals from the judgments entered on the verdicts, and from orders denying motions for a new trial. The opinion will be directed to the facts presented by the record in the first action, as the disposition made of that disposes of the other two appeals.

      E. T. Lovatt, attorney, and Frederick R. Coudert and David Keane of counsel, for appellant, argued.
    I. The plaintiffs were not in a position to sue or successfully maintain an action upon the note herein, since they had not averred nor proved the performance of the condition precedent contained in said note. The condition precedent in the note: “One month after date, and upon the return of security given, we promise to pay Coffin & Stanton, agents, etc.,” imposed upon the plaintiffs the duty of alleging and the burden of proving that they had offered to u return ” the “ security given or had returned the same.” Plaintiffs failed to do either; hence the action would not lie and the court should have granted the motion to dismiss the complaint. If the payment of the note is “ conditional, maturity arrived upon the performance of the condition.” 2 Am. and Eng. Ency. of Law, p. 397; Henry v. Coleman, 5 Vt., 402; Brewster v. Williams, 2 So. Car., 455; McNinch v. Ramsey, 66 No. Car., 400. This is not a negotiable promissory note, hut is a conditional promise or agreement, and performance must be alleged and proved or the action will not lie. u Where the c certificate is payable on the return of i this certificate,’ it is negotiable, because that merely requires, as in case of any note, the return of the evidence of debt (Frank v. Wessels, 64 N. Y., 158); but if there be added 6 and the return of my guaranty of a certain note ’ it would en-graft a Collateral condition which would defeat the negotiability of the instrument.” Vol. 1, Daniel on Neg. Instr., § 45; Cushman v. Haynes, 20 Pick., 132; Tooker v. Arnoux, 76 N. Y., 397; Benedict v. Cowden, 49 Ib., 396; Smilie v. Stevens, 39 Vt., 316; Blood v. Northrup,. 1 Kansas, 29. “ The acceptors could not take up the
    note until it was presented, nor were they bound to pay the money till the plaintiff was ready, and offered to enable them to take up the note. It seems to me, therefore, that substantially this instrument is payable upon a contingency, and is the same as if it had said ‘ Pay W. C. $400 on his giving up our note/ etc. Had such been the form it would clearly not be technically a bill of exchange. The holder, in declaring upon it, should aver his readiness to deliver up the note.” Cook v. Satterlee. 6 Cow., 109. “ An instrument, by which an individual, ninety days after the dissolution of the copartnership between C. & P. and the settling of the books of the said firm, promises, in behalf of P., to pay to C. $550, the interest to be paid annually by P., is not a promissory note; it being payable after the happening of two events, one of which—viz., the settling of the books—may never happen. Such an instrument is an agreement.” Sackett v. Palmer, 25 Barb., 179. u Note payable ‘ when all appeals shall have been disposed of and the right to appeal has expired/ in a certain action, is not due while there is a possibility of judgment which might be the subject of an appeal.” Clute v. McCrea, 12 N. Y. St. Rep., 648. “ An accepted order for the payment of money forty days after date, ‘ on account of contract when completed and satisfactory/ is not a bill of exchange absolutely payable at the end of forty days whether the work is completed or not.” Home Bank v. Drumgool, 109 N. Y., 63. “ A writing in the form of a promissory note was endorsed ‘ The within to be paid when M. pays the note of $70 to L. or bearer, dated Dec. 19, 1878.’ Held, that the instrument was not a promissory note, but a mere conditional promise.” Stout
      v. Liddell, 20 Week. Dig., 247; Van Wagner v. Terrett, 27 Barb., 181; Seacord v. Burling, 5 Den., 444; Austin v. Burns, 16 Barb., 643; Costello v. Crowell, 127 Mass., 293; Crippen v. Rowley, 2 Albany L. J., 394; James v. Hagan, 1 Daly, 517.
    II. Before suit could have been maintained by plaintiffs, defendant had the option to pay said note upon one of two conditions arising’ from the acts of the plaintiffs, to wit: (a.) “ Upon the return of or offer to return the security given,” etc.; or (b.) “In case of deficiency to pay the said Coffin & Stanton, agents, the amounts thereof forthwith after such sale, with legal interest.” Neither of these contingencies had happened, and the burden of causing them to happen rested upon the plaintiff ; hence the time for payment had not arrived. Therefore this action was prematurely brought and the judgment should be reversed. “ The promissor had the right of election to pay at either time specified.” Sackett v. Palmer, 25 Barb., 182.
    III. The note and the syndicate agreement, exhibit “ A ” were contemporaneous papers, and must be read and construed together; and the court erred in refusing to allow exhibit “A” to be read in evidence, since, in addition to the testimony, Mr. Norwood admitted that this note was the one referred to in said agreement. “ Note and contemporaneous paper must be read together.” Watson v. Blossom, 18 N. Y. St. Rep., 726; Benedict v. Cowden, 49 N. Y., 396 ; Dinsmore v. Duncan, 57 Ib., 573, 579. The syndicate agreement, exhibit “ A, ” which explains and sets forth the note sued on in this action, and which was only made, executed and delivered by virtue of said agreement, was as much a part of it as the agreement itself. There can be no question that this required the trial court to have them both read together. Rogers v. Smith, 47 N. Y., 324. “ Where two instruments are intended to embody a contract between the parties they must be read and construed together.” Knowles v. Toone, 96 N. Y., 534; Marsh v. Dodge, 66 Ib., 537. This syndicate agreement being fully set forth in the answer, it would not be considered a proper thing to plead the legal effect of the agreement or the conclusions of law to be derived therefrom, or the legal theory upon which the defendant based its defence. The agreement having been pleaded gave the right to put it in evidence, and then the right to ask the court to give it due effect. Springer v. Dwyer, 50 N. Y., 19 ; Hemmingway v. Poucher, 98 Ib., 281; Trimble v. Stillwell, 4 E. D. Smith, 512. It having been admitted by plaintiffs’ counsel and proven by the defendant’s witness, Mr. Crow, “ that is the note mentioned and referred to in the syndicate agreement marked ‘ Defendant’s Exhibit A, for identification,’ ” the court was bound to receive said exhibit “ A ” in evidence as the note and syndicate agreement were part and parcel of the same transaction, and one without the other would be incomplete. It was the duty of the trial court to have permitted the “ syndicate agreement ” to have been read in evidence, since that was the only way in which the court and jury could have arrived at what the transactions were between the parties. The importance of this “ syndicate agreement ” will be apparent to this court by reading the following extracts therefrom, to wit: “ In the event of the non-purchase of the water-works system of the city of Grand Rapids, Mich., and non-payment of the notes by the Grand Rapids Hydraulic Company or its assigns, then the syndicate shall act as a unit for their mutual interests. It is also agreed that each firm or individual signing this agreement shall take up, pay for and carry their or his proportionate amount of loan made to, and bonds purchased of, said The Grand Rapids Hydraulic Company, as stated herein.” To more clearly outline the position of the defendant I now refer your Honors to its answer. I quote from the case; “ And that the said note was not made otherwise than under the said agreement, and that it was only delivered to the plaintiffs under and pursuant to the terms of said agreement hereinbefore referred to and marked ‘ exhibit A.’ That the plaintiffs are not entitled to maintain this action under the terms of the said agreement i exhibit A,’ hereto annexed, but have brought and are prosecuting this action in violation of the terms of said ‘ exhibit A ’ and of the agreement made and signed by all of the plaintiffs on June 11, 1890.” These allegations in the answer make an issue which can be explained or understood only when the said “ exhibit A ” has been read in evidence (which was not permitted by the court below). Tour Honors will observe, “ that each firm or individual signing this agreement (exhibit A) shall take up, pay for and carry their or his proportionate amount of loan made to, and bonds purchased of,” etc. This they did not do, and defendant claims that this action cannot he maintained between the original parties, since it was the plaintiffs’ duty, they being members of the syndicate, to u take up, pay for and carry their proportionate amount of said loan,” and, .therefore, they had no right to sue.
    IV., The plaintiffs had no right to sue upon this note, as they were not the principals ; they were simply the agents of the syndicate, which consisted of five individuals and firms, and the action should have been in the names of the several members of the syndicate, or as .agents of the said syndicate, if they had such authority. .And the court in excluding evidence upon this proposition erred.
    , V. The court erred in refusing to receive exhibit A .(syndicate agreement) in evidence after plaintiff’s counsel had used it in cross-examination. The court had heretofore refused the defendant the right to use it as evidence ; but now the plaintiff having used it, referred to it, and had testimony given from it, as a matter of law we had a right to read it in evidence.

      VI. The court did not properly exercise its discretion when it refused defendant permission to amend its answer at the trial. “ Mr. Briggs : I move for leave to amend the answer, under the ruling of the court, upon such terms as your Honor shall deem proper to impose.” Then follows the proposed amendments and a renewal of the offer. It does not seem as if it was an exercise of sound discretion or in furtherance of justice to refuse such amendments as were requested. Certainly defendant’s counsel could not suggest or offer anything fairer than he did. He was perfectly willing to accept such terms as the court might impose and on such conditions, no matter what they were. That the court had the power to grant the amendment asked cannot he disputed, and it should have done it. “ The court must, upon application, allow a pleading to he amended at any time during the pendency of the action, even on appeal, if substantial justice will be promoted thereby,” etc. Enright v. Seymour, 8 N. Y. St. R., 356 ; Hunter v. Hudson R. I. & M. Co., 20 Barb., 493.
    VII. This action could not be maintained by the plaintiffs as against the defendant, since they were not the owners of the note,, nor were they entitled to the full amount, their interest being* only “ three-fifths,” and it was error for the court to direct a verdict in their favor for the full amount against defendant’s objection. It appears from the testimony in this action that Moses R. Crow was the owner of one-fifth interest in this note and in the syndicate agreement, and that he had advanced one-fifth of said loan of $100,000. D. F. Cameron had signed said syndicate agreement for one-fifth, and had assigned his interest to Moses R. Crow, and the plaintiffs herein recognized Mr. Crow as assignee of such one-fifth. With these facts undisputed how can this judgment stand ? By what right or authority can a judgment of $1,985.40 be directed against us, when all the interest that the plaintiffs had therein was three-fifths. If they were entitled to anything it would be a judgment for only three-fifths of the sum claimed.

      Norwood & Coggeshall, attorneys, and Carlisle Norwood of counsel, for respondents.
   By the Court.—McAdam, J.

The issues were enough, and the complications attempted to be interjected into the case arise from an effort on the part of the defendant to litigate questions not raised by the pleadings nor germane to the controversy, before the court. This circumstance requires us to state the issues raised, that the propositions involved maybe intelligently understood.

The complaint alleges three causes of action, each based upon a promissory note.

The copartnership of the plaintiffs as bankers in the city of New York, under the firm name of Coffin & Stanton, was alleged and admitted by non-denial. The complaint then alleged that the defendant was and is a foreign corporation, duly incorporated under the laws of the State of Michigan, and that its principal place of business is at Grand Rapids, in that State. These allegations were also admitted by non-denial. Then the complaint alleges, as the first cause of action, that on or about the 15th day of May, 1889, the defendant, at the city of New York, made its certain promissory note in writing, whereby it promised, one year after date, to -pay Coffin & Stanton, agents, etc. (the plaintiffs), or order, the sum of thirty thousand dollars, with interest at six per cent, per annum, and that the defendant duly delivered said note to the plaintiffs.

The amended answer expressly admitted the making of the note described in paragraph fourth of the first cause of action,” but alleged as new matter that the same was made and delivered pursuant to an agreement between the plaintiff and defendant April 12, 1889, known as the syndicate ” agreement, a copy of which is annexed to and made part of the answer.

The amended answer then alleged that the note was not delivered to the plaintiffs other than as copartners or members of a syndicate as mentioned and set forth in said agreement and that the plaintiffs are not entitled to maintain this suit on said note for the reason that the same has been satisfied and paid, and should be delivered up and canceled to the defendant, and that the said note was not made otherwise than under the said agreement and that it was only delivered to the plaintiffs under and pursuant to the terms of said agreement therein before referred to. The complaint contained similar allegations as to the second and third causes of action. The admissions, denials and new matter in the defenddant’s amended answer relating to the second and third causes of action, are the same as those affecting the first cause of action.

The amended answer then alleges additional matter by way of defence, to the several causes of action, reiterating the defence of payment and satisfaction, and further stating that the plaintiffs by an instrument in writing, bearing date J une 11, 1890, known as the bondholders’ ” agreement, agreed to surrender and cancel said notes, and were given and allowed full satisfaction and payment therefor pursuant to such agreement, but they had failed, neglected and refused to deliver the notes and had wrongfully brought this action in violation of the terms and conditions of said agreement, a copy of which is also annexed to and made part of the answer.

The amended answer then alleges that the defendant fully carried out and performed all the parts of the syndicate agreement ” binding or obligatory upon the defendant up to the date of the commencement .of the action, but that the plaintiffs herein failed to perform and carry out the parts of the agreement binding and obligatory upon them to the damage of the defendant, etc.

As an offset and counterclaim, the amended answer further alleges that pursuant to the syndicate ” agreement and the bondholders’ ” agreement, the plaintiffs became bound unto and liable to the defendant to account for the funds and property of this defendant in the hands of the plaintiffs to the value of upwards of sixty thousand dollars; that plaintiffs, although the defendant has duly demanded such accounting, have failed and neglected to make the same or cause the same to be made; that on such accounting the plaintiffs should be adjudged and ordered to deliver over to the defendant herein the notes sued in this action and such cash and bonds received by the plaintiffs and withheld from this defendant after demand as may be found or decreed to be in the hands of or withheld by the said plaintiffs from this defendant. These allegations were controverted by the reply.

The amended answer also alleged that by reason of the failure of the plaintiffs to carry out their part of the syndicate ” agreement, the defendant had suffered loss, damage and expense for which the plaintiffs are liable to the defendant under said agreement and under the bondholders’ ” agreement. This matter was controverted by the reply.

Judgment was prayed for dismissing the complaint; for an accounting; and for whatever might be found due upon such accounting, and for sixty thousand dollars damages.

The plaintiffs proved the interest on the several notes, and rested their case. The defendant then moved to dismiss the complaint, on the ground that the execution of the notes sued upon was not proved. The court inquired if the defendant did not admit the making of the notes, to which the defendant’s counsel replied, that it admitted the notes were made subject to the two agreements mentioned, and the court properly held, that as they were not referred to in the complaint, but were pleaded in defence, the onus of proving the agreements was on the defendant.

The defendant then offered in evidence, the syndicate ” agreement. Its execution was admitted, but it was excluded for the reason that it contained nothing that operated as a bar to the action, and was therefore immaterial. The “ bondholders’ ” agreement was next offered in evidence and excluded as irrelevant and immaterial, and as not sufficiently proven. These rulings were proper.

First. Als to syndicate agreement. The parties thereto are the defendant-company on the one part, and a syndicate, composed of the plaintiffs, together with Stanton D. Loring, of Boston, Mass.; Woodbury & Moulton, of Portland, Me.; Eliott, Johnson & Co., of Wilmington, Del.; and Duncan F. Cameron, of New York; of the second part. The agreement was not merely joint as to the syndicate, but several for the respective interests or amounts, for which they (the members) severally signed their names.” The syndicate agreed to loan the defendant one hundred thousand dollars on its notes as specified therein. The notes in this and the two other suits are the notes given on the loan, and aggregate the entire amount thereof. There is no claim that the moneys thereon were not advanced, nor the sums claimed actually due, if the terms of the notes are to control the time of payment. That they were to control (subject to certain contingencies that have not happened) is apparent. The agreement provides that the notes are to run one year ” at six per cent, interest, with two hundred thousand dollars par value of the bonds of the company attached thereto .as collateral. The notes were the principal obligation, tíre bonds merely incidents in the nature of security for their payment.

The defendant had the liberty of substituting as collateral for the notes, a certain new contemplated issue of bonds, and the syndicate was to take such new issue, and pay for the same at ninety cents on the dollar, at or before the maturity of the loan. This portion of the agreement did not become operative, because the new mortgage was not made, nor the new bonds issued, so that this phase of the case need not be pursued. So with other provisions of the contract which require no special reference. They are not in the nature of conditions precedent on the part of the syndicate, for they depended on the prior performance of certain duties by the defendant, which formed the executory consideration for the acts the syndicate was to perform, and the failure of the defendant to execute such prior duties relieved the syndicate from fulfilling the promises which made it dependent on such performance. The law in this regard is settled.

There are covenants which are conditions and dependent, in which the performance of one depends upon the prior performance of another, and until this prior condition is performed, the other party is not liable to an action on his covenant. The dependence or independence of covenants is to be collected from the evident sense and meaning of the parties, and however transposed they may be in the deed, their precedency must depend on the order of time in which the intent of the transaction requires their performance, Addison on Cont., 2d Am. from the 4th Eng. ed. p. 865. “ In all executory contracts,” observes Holt, C. J., “ if the agreement be that one shall do an act, and for the doing thereof the other shall pay, the doing of the act is a condition precedent to the payment, and the party who is to pay shall not be compelled to part with his money till the thing be performed for which he is to pay,” Thorpe v. Thorpe, 1 Salk., 181; and, therefore, if two men should agree, one that the other should have his horse, the other that he will pay him £10 for it, no action lies till the horse be delivered. Ib.; Peters v. Opie, 2 Saund., 350. Tested by these rules, it is evident that the execution of the new mortgage and issuing of the new bonds by the defendant was to precede any duty or liability on the part of the plaintiffs or the syndicate to do any act concerning them, and as neither was made nor issued, the covenant of the syndicate concerning them never became the subject of default on the part of the plaintiffs or any other member of the combination. See Dunham v. Pettee, 8 N. Y., 513.

The plaintiffs were not the disbursing agents of the defendant, but of the syndicate. They were to get in the necessary contributions from members, and pay the moneys over to the defendant, and that they performed this duty is evidenced by the promissory notes, which are the written acknowledgments for the money. The amount paid over by the plaintiffs to the defendant became its property as soon as it entered the treasury of the company, and the duty of disbursing such funds within the restrictions imposed by the agreement devolved upon its officers.

There was no breach of condition or duty by the plaintiffs and no default by them and consequently no reason why they should not he allowed to enforce the obligations owned by them, or why they should be held to have incurred any present liability to the defendant.

No evidence was given in support of the defendant’s counter-claim, and no legal basis for its existence appeared in any form.

The defendant lays great stress upon the clause in the syndicate ” agreement, that “ In the event of the non-purchase of the water works system of the city of Grand Eapids, Mich., and non-payment of the note by the Grand Eapids Hydraulic Company, or its assigns, then the syndicate shall act as a unit for their mutual interests.”

The purchase was not made, and the defendant urges that the loans could be enforced by the syndicate only after all the members thereof had voted to enforce them, and that there was a want of unanimity, because Moses R. Crow, who succeeded to the interest of Duncan F. Cameron, in the syndicate, opposed the enforcement thereof. Crow was the president of the defendant company, and his interests like those of the corporation he represented, were antagonistic to the syndicate. It is but reasonable to hold that the provision requiring the members to act as a unit in certain contingencies does not mean that one member of it may transfer his interest to a hostile party, and thus prevent unanimous action. To decide otherwise would be to permit the president of the defendant company to postpone the payment of the notes in suit until such time as he (Crow) saw fit to permit their enforcement.

The unity of interest for concerted action was destroyed when Cameron, who was disinterested, went out, and Crow, who was interested and hostile, came in. The other members of the syndicate could not be expected to consult him as to their interests, when they knew in advance that his advice and judgment were biased by interests hostile to their own. The compact as to mutual advice and united action, was by the withdrawal of Cameron abrogated or changed to such an extent, at least, that Crow, representing the adverse interest, could neither dictate nor control the action of the other members of the syndicate.

The trial judge properly held that the “ syndicate ” agreement was not a bar to the action, that unanimity of purpose was no longer necessary, and though perhaps in a sense relevant to the issues, the agreement was immaterial as matter of defence, and refusing to admit it in evidence in no manner prejudiced the defendant.

Next, as to the “ bondholders’ ” agreement. This was offered-in evidence by the defendant and excluded. It was not executed by the defendant, was not sufficiently proved to have been executed by all who purported to have subscribed it, and by its terms, it was not to become binding until it was signed by all the bondholders, and until all the bonds and past-due coupons were delivered and deposited as therein provided, and there was no proof or offer to prove that these pre-requisites to a binding contract had been complied with. The evidence (both documentary and oral) excluded by the. trial judge would not have altered the result if it had been admitted. No error was committed in its exclusion. The defendant was technical at the trial, in regard to the plaintiffs’ proofs and their right to maintain the action, and the plaintiffs in turn were equally fastidious about the defendant’s mode of pleading, and insisted upon the rule that a defendant cannot avail himself at the trial of a defence consisting of new matter not pleaded, Code, § 500, subd. 2, and claimed, that the allegations in defendant’s amended answer, that plaintiffs have wrongfully brought this action in violation of their written agreement and in violation of the spirit, terms and conditions of the said other agreement hereinbefore mentioned,” etc., and the further allegation “ that the defendant fully carried out and performed all the portions and parts of the agreement thereto annexed, binding or obligatory upon the defendant, up to the date of the commencement of this action, but that plaintiffs herein failed to perform and carry out the parts and portions of the said agreement, binding and obligatory upon them to the damage of this defendant ” ; all were conclusions of law; no facts having been pleaded tending to show a breach of the agreement by the plaintiffs. Les Suc. D’Arles v. Freedman, 53 N. Y. Super., 518 ; Knapp v. City of Brooklyn, 97 N. Y., 520, 523 ; Van Schaick v. Winne, 16 Barb., 89; Butler v. Viele, 44 Ib., 166, 169; Chauviant v. Maillard, 4 N. Y. Supp., 126 ; Jennings v. Grand Trunk Railway Co., 52 Hun, 227, at pp. 232, 233, Affd 127 N. Y., 438.

The defendant’s amended answer is open to the criticism made, and to the objection sustained by the cases cited. The defendant now insists that the obligations sued upon were not promissory notes, but conditional agreements for the payment of money. The complaint declared upon them as promissory notes, and the amended answer did not dispute the allegations in that regard. The admission concluded the defendant. Code, § 522. The obligations were offered in evidence by the defendant, but no point was made that the securities should have been tendered before suit brought. That objection might have been obviated'then and cannot be urged for the first time upon appeal. Devoe v. Brandt, 58 Barb., 493 ; Newton v. Harris, 6 N. Y., 345 ; Binsse v. Wood, 37 Ib., 526 ; Jencks v. Smith, 1 Ib., 90; Lewis v. Ryder, 13 Abb., 1; Ferguson v. U. S. L. & I. Co., 33 State R., 425. But, aside from this, the defendant on paying the judgment will be entitled as of right to the collaterals given to secure the debt, and in no event would the defendant have been entitled to the securities until it tendered payment of the debt.

The plea of payment and satisfaction set up in the answer was unproved, and apart from the complications and technicalities imported into the case by the defendant, there does not seem to have been a shadow of defence established. The objection that the plaintiffs could not maintain the action is untenable. The obligations sued upon according to the complaint (and not denied by the answer), were absolute promises to pay to Coffin & Stanton, agents, etc.” (the plaintiffs), at times stated, specific sums of money, and according to the instruments themselves, they were promises to pay to them, in manner aforesaid, upon the return of the securities deposited as collateral. See Oatman v. Taylor, 29 N. Y., 649. If the action was not maintainable by the plaintiffs, as the real parties in interest, it was certainly maintainable by them as trustees of an express trust, for the -.contracts were made in their name. Code, § 449; Considerant v. Brisbane, 22 N. Y., 389; Slocum v. Barry, 34 How., 320; Hutchins v. Smith, 46 Barb., 235.

If the defendant intended to raise the objection that the plaintiffs were not the real parties in interest, it should have been pleaded in defence. Savage v. Corn E. F. Ins. Co., 4 Bosw., 15, 16 ; Hammond v. Earle, 58 How., 438; White v. Drake, 3 Abb. N. C., 134. A number of the rulings excluding testimony are sustained by the disposition we have made of the syndicate ” and bondholders’ ” agreements, some because facts were not pleaded, making the proof competent, others because the questions attempted to prove facts which according to the legal rights of the parties under the obligations sued upon and the agreements aforesaid, as we have interpreted them, were immaterial. It is not necessary to review these rulings in detail, as it would lead to useless repetition.

The defendant, appreciating the defective condition of the amended answer for the purpose of raising the questions it undertook to litigate, moved to amend it, but the trial judge in the exercise of judicial discretion refused to allow the amendment proposed. The discretion was not abused, and, therefore, the ruling cannot be assigned as ground of reversible error. We have examined the record with the aid of the elaborate briefs of counsel, and find no error that requires a new trial.

There was no real, substantial or meritorious defence to the action, and the verdict directed merely gives effect to the legal rights and obligations of the parties. It follows that the judgment entered on the verdict and the order denying the motion for a new trial, must be affirmed, with costs.

Sedgwick, Ch. J., concurred.


source: Caselaw Access Project

author: By the Court.—McAdam, J.

license: Public Domain

text:
    ANDREW W. SCHELLING, Appellant v. CORD BISCHOFF, et al., Respondents.

      Bill of sale, action to set the same aside on the ground of fraud.

    There were no material misrepresentations made by defendants to induce the plaintiff to execute the bill of sale in this case. Plaintiff intended to give defendants security for their demands against him, and it was executed in the form of a bill of sale, when a chattel mortgage might have been more appropriate for the purpose intended. After the defendants received the bill of sale, they asserted their rights under it, sooner than the plaintiff expected, and plaintiff’s store and stock in trade, etc., were sold to satisfy defendants’ claims. This action was to set aside the bill of sale on the ground of fraud.

      Meld, that the bill of sale was not procured by fraudulent representations as to material facts, and should not be set aside, and, therefore, the complaint was properly dismissed. Although' the bill of sale was absolute on its face, it was clearly intended as security for the debt by way of mortgage and not as a satisfaction thereof, and if this action had been to declare it as a mere security for the sum due and for an accounting of the proceeds of sale, it Would have been maintained ; but this action is founded on fraud to avoid the instrument altogether and for damages, as if no writing whatever had been executed or intended to be executed. The plaintiff is not entitled on the evidence in the case to the broad relief claimed.
    Before Freedman and McAdam, JJ.

      Decided May 2, 1892.
    Appeal by the plaintiff from a judgment entered upon dismissal of his complaint by direction of the judge presiding at the equity term after a trial thereat.

      James Forrest, for appellant, on the question considered, argued:—
    I. Intent or intention is an emotion or operation of the mind, and can usually he shSwn only by acts or declarations (“ as in this case the defendants represented to the plaintiff that they only wanted security, and that his business would not he disturbed ”); and, as acts speak louder than words, if a party does an act which defrauds another, his declaring that he did not by the act intend to defraud is weighed down by the evidence of his own act. Babcock v. Eckler, 24 N. Y., 632 : Newman v. Cordell, 43 Barb., 456. Fraud does not consist in mere intention, but in intention acted out, or made effectual by hurtful acts; in conduct that operates prejudicially upon the rights of others, and which was so intended. It is sometimes said to consist of “ any kind of artifice employed by one person to deceive another.” Billings v. Billings, 31 Hun, 65-69. The act of the defendants in obtaining the plaintiff’s property by false and fraudulent representations, valued by him at $3,000, to pay their debt of $700, was fraudulent in itself and shows an inference of fraudulent intent. An act innocent in the intention may be so injurious in the consequences that the law declares it to he a fraud and forbids it. Kisterbock’s Appeal, 51 Pa. St., 485; Lawson v. Funk, 108 Ill., 507. The court has gone so far as to hold that where there was no finding of a fraudulent intent, but, on the contrary, the finding that the whole transaction to be fair and honest, and, therefore, the transaction should stand. The court say, however, that the referee has found facts from which the inference of fraud is inevitable, and, although he has characterized the transactions as. honest and fair, that does not make them innocent, nor change their essential character in the eye of the law. Coleman v. Burr, 93 N. Y., 31. The defendants in that case, as in this case, must he deemed to have intended the natural and inevitable consequences of their acts, and that was to cheat and defraud the plaintiff out of his property. Cunningham v. Freeborn, 11 Wend., 241; Edgell v. Hart, 9
      N. Y., 213 ; Ford v. Williams, 24 Ib., 359; Babcock v. Eckler, 24 Ib., 623, 632. Equity endeavors to deal with the substance of affairs ; to look beyond the observance of mere forms ; to regulate its judgment according to the real purposes which controlled parties in the various matters brought before it for relief or correction. The Supreme Court of Illinois say: u Equity will penetrate beyond the covering of form, and look at the substance of a transaction, and treat it as it really and in essence is, however it may seem.” Wadhams v. Gay, 73 Ill., 415, 435; Gay v. Parpart, 106 U. S., 699 ; Fowler’s Appeal, 87 Pa. St., 454; Wright v. Oroville M. Co., 40 Cal., 20; Livermore v. McNair, 34 N. J. Eq., 482; Buck v. Voreis, 89 Ind., 117. In Buck v. Voreis, Judge Elliott said : “ Forms are of little moment ; for where fraud appears courts will drive through all matters of form and expose and punish the corrupt act.” Rules of pleading in equity are not so strict in matters of form as at law. Warner v. Blakeman, 4 Keyes, 507.
    II. If the defendants represented as true that which they know to be false, and make the representations in such a way, or under such circumstances, as to induce the plaintiff in this case (ór a reasonable man) to believe it is true, and the person to whom the representation has been made, believing it to be true, acts upon the faith of it, and by so acting sustains damage, there is fraud to support an action, and also ground for the rescission of the transaction in equity. There is a fraudulent intent if a man, either with the view of benefiting himself or misleading another into a course of action which may be injurious to him, makes a representation which he knows to be false. Taylor v. Ashworth, 11 M. & W., 413; Evans v. Edmonds, 13 C. B., 786 ; Thorn v. Bigland, 8 Exch., 725. A court of equity will always interfere to grant relief when settlements, contracts, agreements and even judgments have been obtained by means of fraud, misrepresentations and deceit. State of Michigan v. P. Bank, 33 N. Y., 25 ; Dobson v. Pearce, 12 Ib., 156 ; People v. Eddy, 57 Barb., 594, 603; Baker v. Spencer, 47 N. Y., 562 ; Brown v. Post, 1 Hun, 303; Ross v. Ross, 6 Ib., 83 ; Hardt v. Schulting, 85 N. Y., 625 ; I. & T. Bank v. Everett, 21 N. Y. St. R., 98, 102. Actionable fraud consisting in a false representation imports, ex vi termini, an intent to deceive. It may be committed by stating what is known to be false. It may be committed by professing knowledge of the truth of a statement which is untrue. But in either case falsehood uttered with intent to deceive are the essential ingredients. Chester v. Comstock, 40 N. Y., 575.

      Uriah W. Tompkins, for respondents, on the questions considered, argued:—
    I. Was any fraud shown ? Our answer, as well as the answer of the court in dismissing the complaint is, No. What are the facts? On January 3, 1890, the plaintiff says that he owed the defendants $750; did not know that it was $853.90. The defendants wanted security for the payment of the amount owed. Plaintiff says: “ I was told the paper (the hill of sale) was security for the amount I owed to the defendants.” He signed it at the office of the defendants; signed it in the morning and left it with Mr. Alexander. It will be seen from the above statement that the consideration for the hill of sale to the defendants was a substantial indebtedness of the plaintiff to them, and they had a right to secure payment of that indebtedness by all lawful means. That was accomplished by the plaintiff giving the bill of sale he now seeks to set aside. Fraud must be proved, it must not be left for inference or conjecture. Stowe v. Stacy, 9 N. Y. Supp., 2; Ladew v. Hudson R. B. S. & Mfg. Co., 15 Ib., 901. Careful scrutiny of the testimony will not disclose any fraudulent representations on the part of the defendants for the purpose of securing plaintiff’s indebtedness to them.
    II. The testimony óf plaintiff as to alleged fraudulent statements has reference only to securing the judgment. The judgment having been canceled before the commencement of this action, and no property having beeii taken under the execution issued thereon, no damages could be recovered nor equitable relief granted in this action on the ground of fraudulent obtaining of the judgment, even assuming that its procurement was fraudulent.
    III. If the contention of the plaintiff be that there was a fraudulent use of the bill of sale, then the answer is that there is no allegation in the complaint equivalent to an affirmance that at the time defendants obtained the bill of sale they intended to defraud the plaintiff.
   By the Court.—McAdam, J.

The evidence shows that there was no material misrepresentations made to induce the plaintiff to execute the bill of sale. He intended to give the defendants, who were creditors of his, security for their demand against him, and it was put in the form of a bill of sale, when a chattel mortgage might have been more appropriate for the purpose intended. After the defendants received the bill of sale, they asserted their rights under it, sooner than the plaintiff expected, and as a consequence his store, stock in trade, etc., were sold to satisfy their claim. The action is to set aside the bill of sale, and a confession of judgment thereafter obtained on the ground of fraud. The defendants removed their judgment from the records by satisfaction piece duly filed, and the acts done by them are justified solely under the bill of sale.- Nothing was taken under the judgment, and as it was canceled of record, before the commencement of this action, the plaintiff required no equitable relief to be discharged from. it. The bill of sale not having been procured by fraudulent representations as to material facts, the complaint was properly dismissed, not so much for the absence of allegations of fraudulent intent, as from the want of evidence of fraud in procuring the execution of the instrument. Though absolute on its face, the bill of sale was clearly intended, not as a satisfaction of the debt, but by way of mortgage only, and if the action had been to declare it a mere security for the sum due, and for an accounting of the proceeds of sale it would have been maintainable. Equity, it is true, will, in a proper case, penetrate beyond the covering of form, and look at the substance of the transaction, and treat it as it really and in essence is, and was intended to be and as it should have been declared in the papers, for, a a writing, like the phonograph, should record the true expressions and intentions of the parties as they made and proclaimed them. Where it does not, reformation is the remedy. There may be trouble in furnishing satisfactory proof of fraud or mutual mistake—none with the remedy if the required proof is sufficient. The difficulty here is, that if the bill of sale had been a chattel mortgage, the defendants might have done the same acts under it as were performed under the bill of sale, that is taking possession and selling the property to the highest bidder. The mortgagee would have been liable, however, to a suit in equity calling them to account for the proceeds of sale. Jones on Chatt. Mort's, § 353. The present suit is not for reformation and account, but is founded on fraud to avoid the instrument altogether, and for damages as if no writing whatever had been executed or intended to be executed. The plaintiff is not entitled to that broad relief on the evidence. As the instrument executed, and that intended to have been given, concerned personal property, and would in either event have produced the same result, the variance of form is in the present instance of no practical importance. It follows that the judgment appealed from must be affirmed, with costs.

Freedman, J., concurred.


text:
    LEROY M. LYON, Plaintiff v. HALSEY FITCH, Impleaded, Etc., Defendants.

      Promissory note—Bona ftAe holder—Partnership ; each partner can bind firm within the scope of its business only.

    The defendant Whitney made the $4,000 note in suit, May 1, 1889, payable to his own order, thirteen months from its date, and indorsed the note, first by his individual name and next by that of Fitch & Whitney, a firm of which he was a member, and delivered the same to one Hills in consideration of moneys loaned by Hills to Whitney long before the firm of Fitch & Whitney was formed. The plaintiff received the note from Hills before maturity and gave him (Hills) credit'for the amount of the same on an account due to plaintiff from Hills.

      Held, that the plaintiff having parted with nothing on the faith of the paper, he did not become a bona fide holder thereof for value under the rules established in this state. The plaintiff simply succeeded to the rights of Hills, subject to all the equities existing between him and the defendants. Hills could not have maintained an action on this note against Fitch, because he knew the note and its endorsement had no connection nor business relation whatever with the firm of Fitch & Whitney, or its firm business. It was exclusively and absolutely the private transaction and personal contract of Whitney, and the plaintiff stands in no better position than Hills stood. Each partner is the agent of the partnership in, and as to all matters within the scope of the partnership business, and can bind the firm by making, endorsing and accepting bills and notes in relation to such business; but a partner has no more authority than a mere stranger to execute such paper in his individual business or for the accommodation of others ; but as every partner has prima facie ■ equal power to execute paper, a note signed by the firm name, although made by a single partner, is presumably a firm note; but when it appears, as in this case, that the note was not indorsed in the course of partnership business, but for the benefit of Whitney, and this fact was known to Hills, then it was incumbent on Hills’ transferee to show that Fitch as well as Whitney assented to the endorsement, that Fitch was a party to the contract. His assent must be proved and will not be implied or presumed.' The exception to this rule exists only in favor of a bona fide holder for value without notice, for the giving of a note in partnership name by a partner, is a virtual representation that it is given in the partnership business and, if negotiable, this representation is deemed in law to have been made to every bona fide holder of the note, and the firm is estopped from denying the authority of the partner to execute and issue the instrument. The admissions made by one of a number of persons sought to be charged as partners, cannot be used against the others. Nothing short of the separate admissions of each is competent to establish a partnership between them.
    Before Freedman and McAdam, JJ.

      Decided May 2, 1892.
    The trial judge dismissed the plaintiff’s complaint, and directed that the exceptions be heard in the first • instance at genera,! term. The plaintiff moves for a new trial on the exceptions taken.

      Edward S. Clinch, for plaintiff, argued :—
    I. The answer of the defendant Fitch is clearly frivolous. The complaint alleges that the defendant Whitney made a promissory note; that the firm of Fitch & Whitney, composed of the defendants Whitney and Fitch, for a valuable consideration, endorsed the note and delivered it to William Hills; that he, for a valuable consideration, endorsed and delivered it to the plaintiff, and that, when the note became due and payable, it was presented for payment and payment thereof demanded and refused, and that of this demand and refusal of defendants had due notice, and that no part of the note has been paid. Among the things denied upon information and belief by the answer of the defendant Fitch is the allegation of the existence of the firm of Fitch & Whitney. Fitch certainly knew, when he verified his answer, whether he was a member of that firm, and whether the firm had any existence. If he did not know whether the firm endorsed the note for a valuable consideration, it was his duty to set out special facts showing why he did not know it. Thorn v. N. Y. Central Mills, 10 How., 20; Chapman v. Palmer, 12 Ib., 38; Warner v. U. S. Land Co., 53 Hun, 312; Richardson v. Wilton, 4 Sandf., 708. The answer is clearly frivolous. Cases cited above, and also Fallon v. Durant, 60 How. 178; Sherman v. Boehm, 15 Abb. N. C., 258; Edwards v. Lent, 8 How., 28; Mott v. Burnett, 2 E. D. Smith, 50; Lewis v. Acker, 11 How., 163; Hance v. Rumming, 2 E. D. Smith, 48 ; Sherman v. N. Y. Central Mills, 1 Abb., 187.
    II. On the trial, the plaintiff sought to prove, by declarations of the defendant Whitney, that the signature of the maker of the note was Whitney’s signature, and that the endorsement of Fitch & Whitney was the firm’s signature. Objection was made to the Avitness testifying to the conversation between him and Whitney, on the ground that the proposed evidence was not the best evidence of the execution of the note by Whitney. At the time the objection was made, it was conceded that Whitney was the maker, and that Fitch and Whitney Avere partners. The court sustained the objection. This was clearly error. The evidence was certainly competent to prove, by Whitney’s admission, that he made the note. It was better evidence than proof of the handwriting of Whitney, which would have been sufficient to prove the signature. The declaration by Whitney, that the signature was his, and his admission of liability upon the note, as maker, were certainly competent evidence against him. And his admissions, as the admissions of any partner Avith respect to a partnership transaction, are evidence against the firm, though not necessarily conclusive. Lindley on Partnerships, 128.
    III. The sustaining by the court of the objection, made by Fitch’s counsel, to any admissions made by the defendant Whitney, compelled the plaintiff to call the defendant Whitney as a witness, and thus to assume the responsibility for his evidence, and the burden of proof. The plaintiff could have made out a prima facie case, by producing and introducing the note in evidence, and by proving the declarations of the defendant Whitney, that the note was made by him, that the signature of Fitch & Whitney was made by him, and that he was a member of the firm of Fitch & Whitney. Collins v. Gilbert, 94 U. S., 753. The burden of proof would then have been upon the defendant Fitch. The shifting of the burden of proof upon the plaintiff was an error, substantial in its character, and justifying a sustaining of the exception of the plaintiff to the ruling of the court, which excluded the declarations of the defendant Whitney. National State Bank v. Richardson, 20 N. Y. State Rep., 52; Nickerson v. Ruger, 76 N. Y., 279.
    IV. It was competent for the plaintiff to show that the special partner, Pitcher, was consulted by the defendant Whitney, before the firm name was endorsed upon the note. By the act under which limited copartnerships are formed the special partner is given special authority to advise as to the management of the partnership concerns. 3 Rev. Stat., 7th ed., p. 2237, § 17. It was proper for him to consult the special partner, Pitcher, and to be guided by his advice, and if Pitcher did advise the endorsement, and thereupon it was given, the case is relieved of any suspicion that the endorsement was made secretly, or under circumstances which would call in question the honesty of the transaction. It is not necessary for each partner to assent to the issue of every note of the firm. Each partner has the implied authority to make or endorse commercial paper. Tiedemann on Com. Paper, § 95.
    V. It is also competent for the plaintiff to show that William Hills ■ surrendered the note which was due on May 1, 1889, and took the note in suit in reliance upon the endorsement of Fitch & Whitney, and that he would not have extended the time for the payment of the note which then fell due, had not a note been given with the endorsement of the firm, or some other endorsement equally good. The exceptions of plaintiff to the exclusion of testimony to this effect are well taken.
    VI. The plaintiff showed that, before its maturity, the note in suit was sold by William Hills to the plaintiff for $4,000, and that this amount was charged by William Hills to the plaintiff in an open account between them, which had existed for a number of years, and upon which the plaintiff was indebted, at the time of the trial, to William Hills, for a settlement of which account Mr. Hills could have called upon Mr. Lyon at any time. This transaction constituted a valid consideration for the note, and made the plaintiff the bona fide holder for value, and prevented the defeat of the recovery on the note on the ground of want of consideration. Tiedemann on Commercial Paper, § 163, Metropolitan Bank v. Loyd, 90 N. Y., 530, 2 Am. & Eng. Cycl. Law, page 369; Nat. Union Bank v. Landon, 66 Barb., 189.

      Harriman & Fessenden, for defendant Fitch, argued :
    I. The plaintiff had not parted with value for the note and was subject to any defences to which Hills was subject. “ Mere discount and credit do not of themselves constitute a bona fide purchaser, for value. To occupy that position a holder must actually have parted with something of value for the note.” Daniel Negotiable Instruments, § 779 b. Giving of credit by entering the amount in the books of a bank and not actually parting with a dollar on the strength of the endorsement, cannot be considered parting with value in the sense which the law contemplates. Central National Bank v. Valentine, 18 Hun, 417; McBride v. Farmers’ Bank, 26 N. Y., 450 ; Note to Clark v. Ely, 2 Sandf. Ch., 166. One who has given his note for a note is not bona fide holder for value, to keep out defects, if, at the time, his own note is in the hands of the seller of the original note. Carver v. Cornell, 75 N. Y., 91; Turner v. Treadway, 53 Ib., 650. The plaintiff in this action had parted with no value and cannot be considered a bona fide holder for value. The evidence showed that he took the note endorsed without recourse from his special partner. It does not appear to have been a transaction connected with his business, for the transaction had no effect on his business. In fact the only thing effected by the transfer was a change in the ownership of the note. No money passed to Hills ; no security was given. Only Lyon became Hills’ debtor by oral understanding between the men. Lyon has not parted as yet with a dollar, neither has he placed himself under a binding obligation to Hills or to anybody. Hills cannot compel Lyon to pay for the consideration if Lyon’s promise had failed. The note which formed the consideration of Lyon’s promise has been discovered to be valueless in a substantial particular, to wit, the endorsement of Fitch & Whitney. Hills in selling the note to Lyon, while he does not guarantee its collection, he does guarantee by implication that the endorsements are genuine and valid. It being shown that the endorsement of Fitch & Whitney is not the act of the firm, Lyon can tender the note to Hills and legally resist any effort of Hills to make him do more. Therefore Lyon has-not parted with value.
    II. The endorsement, Fitch & Whitney, was without consideration; it was not the act of copartnership ; it was void and it was not binding upon Fitch. The authority of one partner to bind his firm springs from the mutual agency of the partners to act for each other in matters pertaining to the business for which they are associated, and a person contemplating a partnership with another cannot bind him by a contract for the proposed partnership benefit without special authority. The partnership having been formed, however, the co-partner can bind his associates only in such transactions as pertain to the partnership business and the co-partnership business must be of such a character that the giving of negotiable paper would be the convenient and proper mode of conducting it in order to create a presumption of agency in a copartner to give a bill or note in the firm name. Persons taking the negotiable paper of a partnership from one partner may presume that he represents his associates, provided that it is in the course of a transaction usually or ordinarily incidental to the business. This paper in suit was taken by Hills with full knowledge of the business of Fitch & Whitney and its incidents, in payment of Whitney’s private debt to Hills, contracted prior to the copartnership association. It is testified, however, that there was another object accomplished by giving the firm endorsement and plaintiff looks to it to sustain the note against a partner ignorant of the note’s existence, that was, to relieve Whitney of using his interests in the firm to pay his own debts and give the firm the continued use of the money. This was not a purpose for which Hills could presume Whitney to be authorized by his general copartnership powers, nor an act sufficiently germane to the purposes of the partnership business to entitle Whitney to bind his partner without his express assent. A partner can bind his firm only in matters which, according to the usual course of dealing, have reference to the business transacted by the firm, and if a person deals with a partner in a matter not within the scope of their business, the intendment of law is that he deals with him on his private account. And this is so even where the copartnership name be used. Edwards Bill and Notes, 97 (2d ed.). Where one partner has a transaction with a third person which is neither apparently nor really within the scope of the partnership business, the partnership is not bound by his declaration or acts in the transaction. He cannot by his declaration make that a partnership transaction which really is not, and which is an individual transaction. In such a case the third person has notice that the transaction is outside of the partnership business and he cannot rely on the partnership credit. Union Bank v. Underhill, 102 N. Y., 340. Where the creditor of one partner receives for his debt an obligation of the firm, the law presumes that it is given and received in fraud, and no demand on the partnership is raised. A firm obligation given for the individual indebtedness of one partner without the express consent of the other partner is, in the hands of one who knew what it was given for, void. Farmers’, etc., Bank v. Butchers’, etc., Bank, 16 N. Y., 125.

   By the Court.—McAdam, J.

The action is on a $4,000 note made May 1, 1889, by the defendant Whitney to his own order, payable thirteen months after date. Whitney endorsed upon the note first his individual name, and next that of Fitch & Whitney, a firm of which he was a member, and delivered the note to one Hills, who thereafter transferred it to the plaintiff. The original consideration for the note was moneys loaned by Hills to Whitney, individually, long before the firm of Fitch & Whitney was formed. The plaintiff received the note from Hills before Maturity and gave him credit on account for the amount of it. The plaintiff parted with nothing on the faith of the paper, so that he did not become a bona fide holder thereof for value, within the rule as established in this state. Coddington v. Bay, 20 Johns., 637 ; Stalker v. McDonald, 6 Hill, 93; Farrington v. Frankfort Bk., 24 Barb., 555; Moore v. Ryder, 65 N. Y., 438, and other cases collated in 4 Lawson’s Rights and Remedies, § 1581.

He simply succeeded to the rights of Hills, subject to all the equities existing between him and the defendant. Hills could have maintained no action against Pitch, for he knew the note and the endorsement had nothing whatever to do with the firm business of Pitch & Whitney, and the plaintiff stands in no better position.

Each partner is the agent of the partnership, as to all matters within the scope of the partnership business, and can bind the firm by making, endorsing and accepting bills and notes in such business; but he has no more authority than a mere stranger to execute such paper in his own individual business, or for the accommodation of others, Farmers’ & M. Bk. v. Butchers’ & D. Bk., 16 N. Y., 135; such note can be enforced only against the partner making it, and the fact that the proceeds may have been used for firm purposes, does not render the non-assenting partner liable on the note. Union Bk. v. Underhill, 21 Hun, 178. Hills knew that the endorsement of Pitch & Whitney was not given for a partnership debt, or in the partnership business, but was written by Whitney, one of the firm, in a matter not relating to the firm’s business, but to a private transaction of his own, and it did not bind Pitch, his co-partner. Fielden v. Lahens, 9 Bosw., 445; S. C., 2 Abb. Ct. App. Dec., 111; 6 Abb. N. S., 341; St. Nicholas Nat. Bk. v. Savery, 45 N. Y. Superior Ct. R., 97.

Since every partner has prima facie equal power,, a note signed by the firm name, though made by a single partner, is presumably a firm note, Whitaker v. Brown, 16 Wend., 507, and so with a firm endorsement. Morehead v. Gilmore, 77 Pa. St., 118. But when it appeared, as it did here, that the note was not endorsed in the course of the partnership business, but for the benefit of Whitney, and that this fact was known to Hills, it was then incumbent on his transferee to show that Pitch as well as Whitney had assented to the undertaking. It was his duty on that state of facts to show affirmatively that Fitch was a party to the contract. Wilson v. Williams, 14 Wend., 147; Vallett v. Parker, 6 Ib., 615 ; Austin v. Vandermark, 4 Hill, 259. His assent must be proved and will not be implied or presumed. Mercein v. Andrus, 10 Wend., 461.

The exception to the rule exists only in favor of a bona fide holder for value without notice, First Natl. Bk. of Chittenango v. Morgan, 73 N. Y., 593; Johnson v. Lee, 30 State R., 389 ; for the giving of a note in the partnership name is a virtual representation that it is given in the partnership business, and if negotiable, this representation is deemed in law to have been made to every bona fide holder of the note, and the firm as to him is estopped from denying the authority of the partner to issue the instrument. Farmers’ & M. Bk. v. Butchers’ & D. Bk., 16 N. Y., 135; Griswold v. Haven, 25 Ib., 602. Another exception is to be found in Stenben Co. Bk. v. Alberger, 101 N. Y., 202, where a member of a firm, who had charge of its financial business, took up firm notes by giving in exchange thereof notes of a third person, endorsed by him in the firm name, which endorsement was without the knowledge of the partner, and the court held that the endorsement was within the authority of the partner making it; and that the firm was liable thereon. This upon the ground that the notes sued upon were actually used to retire obligations of the firm, and no limitation was placed upon the power of the financial partner to provide funds for such a purpose.

There was no merit in the plaintiff’s case, and his complaint was properly dismissed. The exceptions taken are without force. The questions put for the purpose of proving a partnership by the admissions of Whitney, one of the partners, were properly excluded, for the admissions made by one of a number of persons sought to be charged as partners cannot be used against the others. Drennan v. House, 41 Pa. St., 30; Currie v. Silloway, 1 Allen, 19. Nothing short of the separate admissions of each is competent to establish a partnership between them. Field v. Tenney, 47 N. H., 510; Bry v. Watson, 16 Me., 261; Pleasants v. Faut, 22 Wall., 116 ; McPherson v. Rathbone, 7 Wend., 216 ; Robins v. Warde, 111 Mass., 244; Dowley v. Hall, 5 Bush., 549. The effort to prove that Hills relied on the firm endorsement was abortive, for he knew it did not relate to a partnership transaction. The questions put to Whitney, as to whether the giving of the note was of any benefit to the firm were also properly excluded. They were not calculated to prove a fact, but to elicit the opinion of the witness founded on the theory that if he had paid his own debt from the assets of the firm, it would have depleted its capital to that extent, and hence the firm was benefited by adopting the course he pursued. The evidence rejected would not have affected the result, and the rule is that a new trial will not be granted where the plaintiff has been non-suited, although there was some evidence to establish the case, if the court is satisfied that the evidence, as well that adduced as that offered and rejected, was not sufficient to warrant a verdict in favor of the plaintiff. Wilson v. Williams, 14 Wend., 147. It follows that the exceptions must be overruled, the motion for. a new trial denied, and the defendant permitted to enter judgment on the non-suit, with costs.

Freedman, J., concurred.