Grigsby's ex. v. Nance , 3 Ala. 347 ( 1842 )

COLLIER, C, J.

It has been so often decided, as to be now indisputably settled, that where a defendant demurrs and pleads to the entire declaration, his plea being posterior in the order of proceeding, is a tacit withdrawal of the demurrer, or an admission that it should not be sustained; and he cannot be allowed to allege on error, the omission of the Court to render judgment upon it. It is not pretended, that the declaration is defective, if objectionable, the demurrer to the pleas might be visited upon it. The questions then to be considered are,

1. Can a party maintain an. action on a promissory note payable to himself, the money due on which, when collected, belongs to a third person. ■

2. Can the agent of a partnership maintain an action against one of the partners, on a promissory note, payable to himself.

1. The payee of a promissory note has a legal interest therein, and if not paid at maturity, may maintain an action on it; for it may be laid down as a general rule, that wherever a legal right is created, or liability imposed in favor of, 'or upon a person through the medium of a bill of exchange, or promissory note, that right may be asserted and that liability enforced by and against the person entitled, or chargeable. Hence, it has been held, that a person may sue on a note payable to himself, though in trust for a third party. Smith v. Kendall, 6 T. Rep. 123; Randall v. Bell, 1 M. & S. Rep. 723, and a note can only be indorsed by the payee, so as to invest the indorsee with a right of action in his own name. Chitty on bills, 251, 265, 9th Am. ed.

In the case at bar, the note is payable to the plaintiff, generally, and this is an admission, that he is entitled to receive the amount thereof, and must estop the defendants from insisting that the beneficial interest is in others; especially when it is admitted upon the record that the plaintiff was authorised by those he represented, to take the note in the form he did. The defendants, it is clear, if liable, cannot be prejudiced by a recovery against them in the name of the plaintiff, as the judgment would bar all proceedings against them at the instance of the persons to whom the money is to be ultimately paid. The case of Bryant v. Owen, 1 Porter’s Rep. 201, is unlike the present. In that case a promissory note payable to a certain person, or bearer, was placed in the hands of an attorney for collection, who sued thereon, in his own name, as bearer, the Court held, as the attorney had no legal title to the note, by having become its proprietor, he was not entitled to maintain an action on it.

2. It is not alleged that Cowles, the principal, in the note, was a member of the company of which the plaintiff was agent, but merely that the testator of the plaintiffs, who was security, was a partner; so that it may well be questioned, whether the point sought to be raised by the pleas and bill of exceptions is presented. But we will consider the case, as if it appeared, that all the makers of the note were members of the partnership.

Courts of law, will not entertain suits for the recovery of money due from one partner to another, by simple contract, on the partnership account, because it would be useless for one partner to recover, what upon taking a general account amongst all the partners, he might be liable to refund; frustra peterit quod m'ox restiturus esset. Hence, it has been laid down as entirely clear, that one partner cannot maintain an action against his co-partner, for work and labor performed, or money expended on account of the concern. 1 B. & C. Rep. 74, 76, Holmes v. Higgins; Cansten v. Burke, 2 H. & Gill. Rep. 295. But it is unnecessary to cite authorities to this point, as the principal has been directly affirmed by several adjudications in this Court. Lyon v. Malone, 4 Porter’s Rep. 497; Phillips v. Lockhart, 1 Ala. Rep. N. S. 521.

The question in the case before us, is not whether an action will lie by one partner against another, to recover money due by a verbal contract on the partnership account; stating it most favoi’ably for the plaintiffs in error, it is this — can one partner be sued at law on a note, which he has given to his co-partners upon engaging in business, for the payment of his share of the capital stock?

If two persons commence business as partners, and one advance the whole capital, he may maintain an action against his co-partner for a moiety, because as to the share of the partner, who has not paid, the partnership may be considered as not commenced. The law7 was so ascertained in Helme v. Smith, 7 Bing. Rep. 709, where it was held, that if there be three intended partners, and one of them fail to bring in his share, the other two may recover it-from' him by action at law. So if one partner give the other his promissory note, or his ■separate acceptance for value received on the partnership account, an action will lie on such note, or bill. Van Ness v. Forest, 8 Cranch’s Rep. 30. And if one partner draw upon all the others by name, and they individually accept, he may recover against them, because by such acceptance, a separate right is acknowledged to exist. Neale v. Turton, et al. 4 Bing. Rep. 149; Gibson v. Moore, 6 New Hamp. Rep. 547; Burnell v. Minot, 4 Moore’s Rep. 340; Vening v. Lukie, 13 Easts Rep. 17; Smith v. Barron, 2 T. Rep. 476.

In Lyon v. Malone, 4 Porter’s Rep. 497, it appears that a partnership had existed between the parties, which was dissolved and all the remaining books and accounts of the partnership. to an amount exoeeding six thousand dollars, were placed in the hands of Malone, to be collected for their joint benefit; that afterwards, Malone paid a debt due from the firm, and took from Lyon, the note on which the, suit was brought. At the time of the trial, all the debts of the partnership had been paid, but the accounts of the partners, as between themselves, were unsettled. Malone had rendered no account, nor did it appear, what amount of money had been collected from the books, &c. or whether enough to pay the debts. After a review of many of the authorities, the Court were of opinion, that Malone might sue at law on the note: that it was an -admission of an indebtedness by Lyon, which was operative, notwithstanding the partners had never had a final settlement, and struck a balance. This case is recognised in Phillips v. Lockhart, 1 Ala. Rep. N. S. 521, as resting upon a very clear .principle.

Even conceding, that the form of the note on which the present action is brought, interposes no difficulty to the defence set up by the defendants, yet the authorities cited, and the reasoning by which they are sustained, show, that the defence itself is not available.

We have only to add, the judgment of the County Court, is affirmed.