Michigan Bank v. Eldred - 76 U.S. 544 (1869)
U.S. Supreme Court
Michigan Bank v. Eldred, 76 U.S. 9 Wall. 544 544 (1869)
Michigan Bank v. Eldred
76 U.S. (9 Wall.) 544
1. Evidence that by the articles of partnership, one partner had no right to endorse negotiable paper is inadmissible to defeat a bona fide holder of such paper endorsed with the firm name by a member of the firm, and taken by such bond fide holder for value, and without notice of the articles.
2. Where a partnership is in the habit of endorsing negotiable paper, having blanks left for the date, and gives the paper so endorsed to a person to use -- he to fill the blank when he wishes to use it -- the firm is liable on the paper with the date filled in when, thus complete, it has passed to the hands of innocent bona fide holders for value.
3. The power to fill the blanks for dates implies in favor of such holders a power in the person trusted, to change the date after the note has been written and before it is negotiated.
4. It is error to charge upon a state of facts of which no evidence has been offered.
The Michigan Insurance Bank brought suit against Anson Eldred, Wm. Balcom, and Elisha Eldred, composing the firm of Eldreds & Balcom, as endorsers of a promissory note dated June 12, 1861, given by one F. E. Eldred, and the body and signature of which were in his handwriting.
The summons was served upon Anson Eldred, the only defendant residing within the District of Wisconsin and the only one who appeared in the cause. The execution of the note, its endorsement by Elisha Eldred, one of the firm of Eldreds & Balcom, with the firm name, demand of payment from the maker, nonpayment by him, and notice to the endorsers of nonpayment were all proved. The date of the note as originally written by the maker, F. E. Eldred, had been August 12, 1861, and the word "June" had been written by him over the word "August."
The defendant, Anson Eldred, then offered to read in evidence a clause of the articles of co-partnership of the firm of Eldreds & Balcom to the effect that Elisha Eldred, one of the firm, and who, as above stated, had endorsed this note
in the firm name, had bound himself not to use the firm name except for the benefit of the said joint business. The evidence was objected to by the defendant, but the objection was overruled and testimony received.
There was no pretense that the bank had any knowledge of the articles of co-partnership or of the purpose for which the co-partnership's name in this instance had been used.
The defendant then introduced the deposition of F. E. Eldred, the maker of the note, and the brother of Anson Eldred, the defendant. He testified that the note was in his handwriting; that the endorsement of Eldreds & Balcom was made by Elisha Eldred, one of the firm; that he transferred the note as security for a loan about the time the note bore date. He said further:
"I had an arrangement with the firm of Eldreds & Balcom by which they endorsed my notes and I endorsed theirs, and the endorsements were made in blank, and were filled by the holders as they wanted to use them. This note was endorsed in that way, and this arrangement was known to Anson Eldred as well as to the other partners. The word 'June' was written by me, and was written by me before I used the note."
The defendant then read depositions, which showed that this note was transferred to the bank as collateral security for moneys lent to F. E. Eldred, the maker. Here the defendant rested, and upon this evidence the judge, in charging, made use of the following language:
"If the note in suit was never actually negotiated to the bank, but got up by Eldred and accepted by the bank in pursuance of a corrupt agreement between said Eldred and the bank to defraud the defendant, then the plaintiff cannot recover."
The testimony was without the least proof tending to show that this note had not been negotiated to the bank, or any tending to prove that it was "got up by Eldred and accepted by the bank in pursuance of a corrupt agreement between said Eldred and the bank to defraud the defendant."
Verdict and judgment having gone for the defendant, the bank brought the case here.