and others v.
FIRST NAT. BANK OF KASSON
(Circuit Oourt, D. Minhesota. January, 1883.)
NEGOTIABLE PAPER-DRAFT-WHEN OVERDUE.
In determining a question as to the sufficiency of a defense interposed by the drawer or indorser of a draft, payable on presentation or demand, when sued thereon, the draft must be considered as overdne if it was not presented for payment within a reasonable tIme, and a delay of over five months is unreaS011able.
SAME.....:REASONABLE DILIGENCE IN PUESENTMENT AND DEMAND.
The holder of a draft or check, payable on demand, is bound to usc reasonable diligence in forwarding the same according to the usual course of busintlss, and notice of non-payment be givtln to the indorser in order to hold him.
Under the statute of Minnesota defendant may set up any claim against the original party which arose out of the sUhject-mattcr of the action, or was acqUired by defendant while the chose in action was in possession of the original party, or before defendant had notice that he had assigned it for a. valuable consideration.
At Law. Jury waived, and tried by the court. Lamprey, James <£ Warren, for plaintiff. Charles C. Willson and Jones <£ Gove, for defendants. MCCRARY, C. J. This is a suit upon two drafts drawn by the defendant bank in favor of the defendant La Due, for $500, each dated October 13, 1881. They are in the usual form of bank drafts. No time of payment is named, but they were payable upon presentation and demand. On the day of their date they were indorsed by defendant La Due and delivered to one M. Edison, who, the next day, left the state of Minnesota, carrying the drafts with him, and leaving numerous debts unpaid and no property out of which they could be collected. The said Edison held the drafts over five months without presenting them for payment, and'then sold them to the plaintiffs at Quincy, Illinois. The bank pleads by way of defense a set·off or counter-claim against Edison. The defendant La Due claims that he is discharged as indorser by the long delay before the drafts were presented for payment. The sufficiency of these defenses depends upon the question whether the paper can be regarded as overdue or dishonored at the time the plaintiffs took it. The general rule undoubtedly is that a draft or check is not due, for the purpose of being made the foundation of a suit against the drawer or indorser, or for the purpose of
BULL V. FIRST NAT. JUNK OF KASSON.
determining questions arising under the statute of limitations, or for other similar purposes, until it is presented. But I am of the opinion that in determining a question as to the sufficiency of a defense interposed by the drawer or indorser of such an instrument, when sued thereon, the paper must be considered as overdue if it has not been presented for payment within a reasonable time. Cases may arise in which courts may find some difficulty in deciding whether presentation has bBcn made within a reasonable time, but the present case presents no such difficulty. A delay of over five months is plainly unreasonable. The bolder of the draft is not obliged to proceed by the first conveyance to the place of payment to present it for payment, nor is he bound to send it by the first mail. He may retain it in his possession for a time, and if he is traveling may for convenience carry it with him in lieu of money, especially if he intends shortly to be at the place of payment to cbllect it; but he cannot hold it five months withont either going or sending to tbe drawer for his money, especially wbere the place of payment can be reached by him in a few days. The law presumes, and the parties to such paper may act upon the presumption, that the draft is drawn in the usual cours.e of such transactions as a convenient method of transmitting funds from one place to another, and that it will be presented to the drawer in due time, and will not be held indefinitely by the payee without presentment. Such is the rule by which we are to be governed in determining whether the paper is, in tbe hands of an indorsee, subject to defenses wbich were good as against the payee and indorser. In other words, the holder of such paper is bound to use reasonable diligence in forwarding the same according to the nary course of business. Edw. Bills & Notes, 386 et seq.; Walsh v. Dart, 23 Wis. 334, and cases cited. A draft payable on demand (and such in legal contemplation are the instruments here sued on) must bo presented and payment demanded within a reasonable time, and notice of non·payment given to tbe indorser, in order to hold him. And "the circumstaniJes and considerations which determine the question whether or not a bill or note payable on demand bas become overdue, so as to let in equitable defenses by the original parties against the transferee, alike determine the question whether or not the presentment has been made in a reasonable time, so as to charge the drawer or indorser." 1 Daniel, Neg. lnst. 611. Being clearly of the opinion that the drafts sued on in tbis case were not presented for payment within a reasonable time, I must
hold defendant La Duc, the indorser, is discharged, and that the defendant bank is entitled to offset any valid claim held by'it against Edison while the drafts belonged to him.. This for the reason that the statute of Minnesota so provides. The following are the statutorypl'ovisions upon the subject: Cbapter 65, § 40. "If the action is upon a negotiablepl'omissory note or bill
of exchange, which has been to the plaintiff after it becomes due, a set-off to 'the amotlnt of the plaintiff's demand may be made.of a demanct eXisting against any person who has assigned or transferred such note or bill after it became due, if the demand is such as might have been set-off agaillst the assignor while the note or bilI belol1ged to bim!' Chapter 66, § 27. "In the case of an assignment of a thing in action, the action by tbe assignee is witij.out prejuf'lice to any set-off or other defense existing at the time of, or before notice of, tbe assignment; but this section does not apply to a negotiable promissory note or bilI of exchange transferred in good faith and upon good consideratJon before due,"
Under these provisions the supreme court of Minnesota has held that the rule of is so enlarged as to "enable the defendant to set up any claim against the original party whieh arose out of the subject-mattElr of the action, or was acquired by Lhe defendant while the chose in acHon was in the possession of the ori¢nal party, or fore the defendant had noticed that he had assigned it for a valuable consideration." 2lfart'in v. PilLsbury, 23 Minn. 175. It is out duty to enforce the statu.te as construed by the supreme court of the state. Partridge v. Ins. Go. 15 Wall. 573-580. The set-off of the b!tnk consists of five promissory notes exeouted by Edison. As to four of them the evidence is satisfactory that the bank owned them prior to the purchase of the drafts by plaintiffs, and these are clearly entitled to set-off against the plaintiffs. As to the last note, to-wit, note dated September 7, 1874, for $550, dne one month after date, I am unable to recall any evidence that it was purchased by the bank prior to the transfer of the drafts to thtl plaintiffs. As it was purchased after maturity there is no presumption as to the time of the purchase, and the burden is upon defendant to show the actual date, and that it was at a time when Edison still held the drafts. As the trial before me was a hurried one, and my of the testimony are not full, it may be that this proof was made and that I did not observe it, or have forgotten it. If defendant desires to do so, he may offer further proof upon the point, to which plaintiff may reply; but if no further evidenoe is offered, the offset as to the other notes will be allowed, and as to this ,me, rejected, and judgment rendered accordingly.
LIVERPOOL1 BRAZIL & RIVER 1'LATTE NAVIGaTION CO. V. AGAB.
RIVER PLATTE NA"IGATION
(Uirwit Oourt, E. D. Louisiana. December, 1882.'
PARTNERSHIP-LIABILITY IN SOLIDO',
Under the law of Louisiana a commercial partnership is an entity, capable Of being sued, is brought into court, as defendant by service of citation upon one of its members, and while the ultimate liability of the partners is in 8olido,-i. e" joint and several,-tbey, during the life of the partnersh1P, cannot be charged individually except through the partnership: '
2.JURISDlCTlON-,PAOTNERS-SU'lT BY ALIEN:
This court has jurisdiction of a suit by an alien against a partnership consisting of two partners, one of whom is also an alieIl, and one a resident citizen, the partnership being domiciled in Louisiana, and the obligation sought to l e enforced originating there.
W. B. Benedict, for plaintiff. Charles E. Schmidt, for defendants. BILLINGS, D. J. The facts relating to the exceptions in this ease are undisputed. This is a suit to, recover upon a demand in favor of the plaintiff against the defendants as constituting the commercial firm of Agar & Lelong, domiciled and doing business in the city of New Orleans, and there incurring the obligation sought to be enforced. The partnership and each of the members have been cited, and have severally pleaded the want of jurisdiction iIi this court, on the ground that the plaintiff is an alien, and that Lelong, one of the defendants, is also an alien. _ It is conceded that Agar is a citizen of -Louisiana; that the partnership of Agar&. Lelong was a commercial partnership, domiciled and doing business in the city of New Orleans, and composed of the defendants, Agar and Lelong, and that the obligation sued on originated there.. It is urged, as legal consequences of these admitted facts, (1) that. since the partnership of the defendants is in active existence under the laws of Louisiana, it alone can be sued upon a partnership obligation; (2) that since plaintiff and one of the defendants' firm arealien'?i the court is without juriSdiction as between the plaintiff and defendants' firm. 1 think the first proposition is 'correctly stated. Under the law of 'Louisiana a commercial partnership is an entity,capable of being sued, is brought into court as defendant by service of citation upon one of its memberH, and while the ultimate liability of the partners is in
'lfReported by Joseph P. Hornor,ESq., of the New Orleans bar.