CENTRAL TRUST CO. v. COOK COUNTY NAT. BANK.
CENrRAL TRUST Uo., Receiver, etc., v. COOK COUNTY NAT. BANK.
(Oircuit Oourt, N. D. Illinois. April 16,1883.)
BANKING-DISOOUNT OF NOTE OF PRESIDENT INDORSED BY BANK.
Where a party discounts a note given by president of a bank, with the Indorsement of the bank thereon, supposing that he is dealing with and !!-d. vancing the money to the bank, and not the president personally, the bank will beheld liable for the payment of such note. Claflin·v. FarmfJl's' Loan tJ Trust 00. 25 N. Y. 293, distinguished. Although an association may not have power to do a general banking busi· ness, if a .person borrows money such associllt.ion such money may: bere. covered in an 'action for money 'hali and rece,ved. l'Tus' Vo. v. lletmfJl', 77 Y. 64, distinguished. .
SAME-REOOVERY OF LOAN-No AUTHORITY TO Do BANKING BUSINESS.
At Law. Louis L. Pal·/lJ.er, for plaintiff. ¥onroc « BcrU, for defendant! BLODGETT, J. The declaration, in this case is against the defend. ant as maker of two notes for' $25,000 dated No:vember 19, 1874, payable 60 days after date, with interest; and the other dated DecembeJ.7 29, 1814, payable on demand, with interest,-both executed on behalf of the defendant by Chauncey T.Bowenj and made payable at the New York State Loan & Trust Company office in New York ; two notes for. $25,000. each, dated September made by B. F. Allen, payable to his-.own order, one in six .and the other in seven months from date, indorsed by Allen to the defendant and :by the defendant indorsed to the New York. State Loa.n·& Trust Company; one noteJor.$5,OOO, dated September 24, 1874, made by the First National Bank of Wyandotte, Kansas, payable to the defendant bank four months after date, and payment guarantied by the dElfendltnts to the NewYbrk State.Loan & Trust Company; and one note fqr $,10,000, and 10 pe.I;cent interest after due, dated E?eptem. Rer 28, 1874,mltde by B. F. Murphy & Co., ,payable to defendant fOUT months after date, and the payment whereof is also guarantied by the defendant tp the New York State Loan & Trust Company; ahd also for a balanCE) of open account due bom the defendant t(} the New York State Loan & Company. The declaration count·s for moneys loaned and money had and received for·the useol the plaintiff, and also for ,the U$e afthe New York State Loan & .Tru'8t CompaIlY' The defendanfa proof tends to show that the two, Allen .notes represent an advance m,ade by the loan and trast company to
Allen for his own private purposes, in which the defendant bank hauno interest whatever, and that the officers of the loan and trust company knew, at the time they made such advance, that the money was borrowed by Allen only and for his own use and business. But the proof on the part of the plaintiff shows, I think, by a decided preof the loan and trust company advanced ponderanc,e, that the the amount of. those two Allen notes as a loan to the defendant; that 'Mr. Allen, acting as president of the defendant bank; obtained the money represented by the face of the two Allen notes, less the discount, as a loan to his bank; that the money so obt.ained was placed on the b<!oks of the loan andtru'st company to the credit of the defendant bank and afterwards drawn out by checks or drafts of the d.efendant, which were duly paid by the loan and trust company. And while the defendant's proof tends to show that the defendant passed the full proceeds of this loan, on its books, to the oredit of Allen, yet the preponderance of proof is that the officers of the loan and trust company had no knowledge of the use the defendant made ,oftha money; and-even if they had known that the defendant passed the entire proceeds to the creditof'Allen, I do not see that such fact alone WOuld be notice to the loan and trust oompany tha.t the loan was Allen's, and not that of the ba.nk. The question is, to whom did ,the loan and trust company give credit when they advanced the money on this paper? and the preponderance of testimony, as I have already said" is that the credit was given to this defendant, and that the money was supposed to be advanoed to the defendant by the offi. cersof the loan and trust oompany. I think there can be no doubt froni the, proof that the loan and trust company, through its officers, supposed that they were dealing with and advancing money to the defendant bank. This case differs, as I think, very widely in its facts from the case of Olaflin v. Farmers' Loan ct Trust 00.25 N. Y. 293, cited and relied upon by defendant's counael, and I do not deem it controlling. For the president of a bank, as shown in that oase, to certify his own check aD his own bank is a very transaction from' that of Allen's giving, his own note, with the indorsement of the bank, for a loan 'to his bank. If the defendant bank, through its president as surety, desh'ed to borrow money, in what more natural and businesslike way could it have been done than for the president to give his own note, and place thereon the indorsement of his bank? As to the ,iwo notes for $25,000 eaoh; made to the plaintiff by Bowen, it is admitted that, they represent an actual loan by the loan and trust
OENTRAL TRUSTOO.V.OOOK OOUNTY NA1'. BA.NK.
company to the defendant, and it is conceded that the plaintiff should recover on them, unless the court shall deem itselfbollnd by the case of Trust Co. v. Helmer, 77 N. Y. 64,.where it is held by the New York.. court of appeals, in construing the oharter of the New York State Loan & Trust Company,that it had no right to exercise banking. powers. I am not disposed to question the soundness of that decision as applied to the facts there discussed. That was a complaint upon notes brought or discounted by the loan and trust company, and the court, on demurrer to the complaint, held that the loan and trust company had no power, under its charter, to deal in such notes, or to discount commercial paper. In the case at bar, however, there is no doubt the loan and trust company advanced $48,075 in money on account of the A.llen notes, and $50,000 on account of the Bowen notes; and also that the defendant received from the loan, and trust company the full amount represented by the Murphy &' Co; and Wyandotte Bank notes. I think, under all the testimoni in the case, that the proof makes out a right on the part of the plaintiff to recover the money, with interest on the two Allen notes, whichwou1d be $48,075; from should be deducted the $8,000 paid and indorsed on the notes; and We amount of the Bowen and Murphy riotes, and also the Bank of Wyandotte's note. I take this view of therigM of the complainant to recover from the fact I cannot conceive that. the case of Trust Co.v.. Helmer goe!,! far enough to hold that although this loan and trust company had not banking powers, yet, if· a person borrowed money from· them, .that the loan and trust company cannot recover the mOl}eyback in li\n. ftCtion for money had and received. Xt seems to me it does in the mouth of this bank to say to its creditor from whom it haa olltained over $100,000, "YQU had no power to .do l;lo banking business, and therefore you shall not recover back the money we borrowed of you and agreed to. pay you." True, they an tion on the discolUlt technically, but the same principle is applicable here which the· Upited States supreme and. c.ou:t:tshave so often applied '}'here municipal corporations Qave no authority to issue bonds, yet if they do issue, bonds and Bell them and recl}ivethe money thereon, an action for money had and received willlie to cover back the money. As to the open account sued. upon, no recovery can be allowed upon it, as. the proof satisfies me that this .account is mainly made up of)tems growing out of persona\ dealings between A.llen, theprei)i.
dent of the defendant bank, and Smythe, the president of the loan and trust company, and although charged to the defendant in an count rendered by the loan and trust company, yet it was so near the time of the failure of the bank that I do not think that the acquies. cence of the bank in the correctness of the account should be presumed. Judgment, $80,669.60.
CRONKHITE 'V. HERRIN.
(CircuitOourt j W. D. Wisconsin. 1888.)
STATUTE OF LIMITATIONS-PARTIAL PAYMENT BY PARTNER-DISSOLUTION OF FIRM-VERDICT FOR DEFENDANT.
As the only evidence offered to take the claim in this case out of the statute of limitations is a partial payment made .by a partner after the dissolution of the firm, such evidence will be struck out oil motion of defendant, and a verdict in his favor directed. .
PARTNEHSIIIP-POWER OF PARTNERS AFTER DISSOLUTION.
After dissolution of a partnership,one partner has no power to create or continue a debt as against his copartners, either by express agreement or Ily partial payments.
At Law. Decision on the motion to strike out evidence of payment of one joint debtor to take the case out of the statute of limitations. Finch If Barber, for plaintiff. William 1'. Vilas, of counsel. George W. Gate, for defendant. S. U. Pinney, of counsel. BUNN, J. Since the decision (jf Bell v. Morrison, by STORY, J., in 1 Pet. 351, there could be little doubt, in this court, that upon the dissolution of a copartnership the power of one partner to bind the other partners wholly ceases, and that, as a correct application of that doctrine, one partner has no power to create or continue a debt as against his copartner, either by an express agreement or by partial payment; for, although the case was not one where the power to uind by the continuation of a debt by partial payment actually arose, but only the renewal of the debt after it was barred by the statute, it would be hard to distinguish the two cases on principle. And so, accordingly, we find'that in New York, and other states where the authority and reason of Bell v. Morrison are admitted, the principle has been applied to cases precisely in the situation of the one at bar; that is to say, where it is sought to continue the obligation against