Smyth v. Strader - 45 U.S. 404 (1847)
U.S. Supreme Court
Smyth v. Strader, 45 U.S. 4 How. 404 404 (1847)
Smyth v. Strader
45 U.S. (4 How.) 404
The statutes of Alabama require the negotiability and character of bills of exchange, foreign and inland, and promissory notes, payable in bank, to be governed by the general commercial law.
If a partner draws notes in the name of the firm, payable to himself and then endorses them to a third party for a personal and not a partnership consideration, the first endorsee cannot maintain an action upon them against the firm if he knew that the notes were antedated.
But if the first endorsee passes them away to a second endorsee before the maturity of the notes in the due course of business, and the second endorsee has no knowledge of the circumstances of their execution and first endorsement, he may be entitled to recover against the firm although the partner who drew the notes committed a fraud by antedating them.
But if the second endorsee received the notes after their maturity, or out of the
ordinary course of business, or under circumstances which authorize an inference that he had knowledge of the fraud in their execution or first endorsement, he cannot recover.
These things are matters of evidence for the jury.
Evidence is admissible to show that, in an account current between the first and second endorsee, no credit was given in it for the notes when they were passed from the first to the second endorsee.
So evidence of drawing and redrawing between the first and second endorsee, alluded to in the account current, is admissible.
The testimony of one of the partners, offered for the purpose of proving the fraud committed by the drawer of the notes, is not admissible. This Court again recognizes the rule upon this subject established in the case of Henderson v. Anderson, 3 How. 73.
The partner offered as a witness was a party upon the record, and thus also disqualified.
The facts in the case are stated in the commencement of the opinion of the Court, which the reader is requested to turn to and peruse before reading the argument of counsel.