Huston v. Newgass , 234 Ill. 285 ( 1908 )

Mr. Justice Farmer

delivered the opinion of the court:

The defense interposed by appellees was, that they would accept and pay drafts drawn on them by Grindell & Dainty for horses shipped, but that the draft sued oh was not drawn by Grindell & Dainty, as said firm had been dissolved before said draft was drawn. The buying and shipping was attended to chiefly by Grindell. Dainty resided in Chicago and officed with appellees. He testified that about the latter part of June he wrote Grincjell not to buy any more horses on his or on his and Grindell’s account, and that thereafter he had nothing further to do with Grindell in buying and shipping horses. He kept no copy of the letter and received no acknowledgment of its receipt from Grin-dell. He did not say whether he informed appellees of the dissolution of the partnership or not. One of the appellees, Max J. Newgass, testified that at the time the horses arrived in Chicago he knew the firm of Grindell & Dainty had been dissolved but does not state from whom or when he received the information. No notice was given appellants of the dissolution by either Dainty or appellees, and it is not claimed that they had any knowledge of such dissolution. According to the evidence it must have been after June 27 that Dainty wrote the letter dissolving the partnership, if it was dissolved. Grindell continued the same business in the same manner and under the same firm name as he had previously been doing and appellants were in utter ignorance of any change in the firm.

Appellees claimed they knew, at the time the last shipment of horses was made, the firm of Grindell & Dainty had been dissolved. How long they had known it before that time was not stated. They offered in evidence a letter from Grindell dated July 20 and addressed to “Mr. Newgass.” The letter stated the writer had shipped fourteen head of horses, and requested that when sold the profits be sent to him, “as Dainty told me he didn’t want any more to do with shipping horses.” This letter, according to the testimony, was received by appellees about two hours after the horses had arrived, so that if they knew of the dissolution at the time the horses arrived they did not get their information from this letter, and it is not probable they received such information from Grindell at any previous time, for he was doing business in the firm name the same as if there had never been a dissolution. The only persons testifying who did know of the dissolution were Dainty and appellees.

Appellants asked the court to hold as propositions of law that each partner in a commercial partnership has' power to bind the other partner in dealing with third persons within the scope of the partnership until notice given of the dissolution of the partnership, and that a notice of dissolution given by one partner to the other has no effect upon the rights of third persons dealing with the partnership without notice of the dissolution; also, that notice of dissolution given by Dainty to Grindell was inoperative as to all persons with whom the firm of Grindell & Dainty had been doing business prior to the dissolution, unless those persons had knowledge of the dissolution. These propositions were refused, and in this we think the court erred. Here the firm of Grindell & Dainty was a trading partnership, and either of the partners had the right to sign the firm name to obligations or negotiable paper within the legitimate scope of the partnership business. It would hardly be denied that if Grindell had signed the firm name to a promissory note payable to appellants at the time he signed it to the draft, the firm would have been liable in an action to recover on the note. Under the circumstances disclosed by the evidence in this case, appellants were warranted in dealing with Grindell as a member and representative of the firm. Appellees had some acquaintance with Grindell but were unwilling to extend their credit to him alone. They were well acquainted with Dainty and sustained close relations with him, and their agreement to accept and pay drafts drawn by Grindell & Dainty was on account of their knowledge of and faith in Dainty. This, together with the profits they expected to derive from commissions on the sales of horses shipped them by Grindell & Dainty, induced them to agree with the appellants to pay their drafts. But for this agreement of appellees, appellants would not have furnished the money to Grindell & Dainty to pay for the horses. Appellees’ agreement was to honor the drafts drawn on them by Grindell & Dainty for horses until further notice. It would seem consonant with both reason arid justice that so long as appellants were justified in advancing the money to pay for horses on drafts drawn in the name of the partnership, appellees would be liable for the payment of the drafts until they had given notice to the contrary or appellants had received notice of the dissolution of the firm. It was certainly their duty, when they received knowledge of the dissolution of the firm of Grindell & Dainty, to have protected themselves as well as appellants by notifying appellants of the fact and that they withdrew their agreement to honor further drafts if any such were drawn. Appellees’ failure to so notify appellants was inexcusable negligence under the facts in this case. The quiet withdrawal of Dainty from the firm without notice to appellants woulij, we think, no more relieve appellees from liability than it would have relieved Dainty if the action had been brought against the partnership, and as we have before stated, under the facts proven a recovery might have been had against the firm of Grindell & Dainty.

The acceptor of a bill of exchange becomes primarily liable for its payment and is to be considered the principal debtor; and this is true even if the acceptance was for the accommodation of the drawer, the acceptor having no funds of the drawer in his hands to pay it. (Cronise v. Kellogg, 20 Ill. 11 ; Diversy v. Moor, 22 id. 331.) In Hall v. First Nat. Bank of Emporia, 133 Ill. 234, Hall Bros, were commission men in the Union Stock Yards. In response to a request from Greer & Way they telegraphed the First National Bank of Emporia they would honor Greer & Way’s draft for cost of cattle and hogs consigned to them. It was held Hall Bros.’ agreement to accept the draft before it was drawn made their liability the same that it would have been had they accepted it upon presentation, and that they took the risk of the stock being diverted, either by accident or design, while in transit.

It is insisted that in any event appellees were justified in refusing to honor the draft because it was drawn for $1000 more than was required to pay for the horses shipped, and on that account there can be no.recovery. The suit is brought to recover only the $2300, and one of the counts of the declaration contains averments of the credit of $1000 upon the draft as originally drawn. It does not appear from the evidence that appellees based their refusal to honor the draft on the ground that it was drawn for $3300 instead of $2300, nor have they at any time signified a willingness to pay $2300. On the contrary, they have from the first denied any liability whatever and have based their denial on the ground that the partnership between Grindell and Dainty had been dissolved before the draft was drawn, and that it was the draft of Grindell, and not of Grindell & Dainty.

We think the propositions of law refused by the trial court stated correct principles of law applicable to the decision of this case and should have been held by the court, and that the Appellate Court erred in affirming the judgment of the trial court. Accordingly, the judgments of the Appellate and superior courts are reversed and the cause remanded to the superior court. '

Reversed and remanded.