Peoples State Bank v. Trombly

At the opening of the trial, the defendant Trombly obtained leave to amend his plea of the general issue theretofore filed, by attaching thereto a notice of special defense. In it he stated:

"1. The defendant Columbus Trombly will show that the defendant the Adams Lumber Company is a nonexistent, fictitious person.

"2. The defendant Columbus Trombly will show that on or about the first day of May, 1920, he became indebted to the defendant the Adams Lumber Company, or Gustave Munz, in the sum of three thousand six hundred ($3,600) dollars for lumber furnished by said defendant Gustave Munz, or by the Adams Lumber Company. The said Munz at that time representing to this defendant that he was an officer of and a duly authorized agent for said Adams Lumber Company. That on the said first day of May, 1920, this defendant at the request of said Gustave Munz executed a promissory note in the amount of three thousand six hundred ($3,600) dollars, payable to the said Adams Lumber Company, the said Adams Lumber Company being made payee at the request of said Munz. * * * That this defendant did at various times execute renewal notes to the said Adams Lumber Company at the request of defendant, said Munz, the said Munz at each time paying certain sums of money on the principal of said note to the Peoples State Bank, the plaintiff herein. That this defendant had no knowledge at any time that the Adams Lumber Company was a fictitious person."

As a witness he was permitted to testify, over plaintiff's objection, that he "never had any dealings with the Adams Lumber Company;" that he did not notice that the note was payable to the company; that he did not care to whom it was payable so long as the bill was settled. Later, when recalled, he testified:

"When I signed this note I did not know who it was payable to; I handed it to Munz with my name on it; I supposed I owed Munz for lumber; I was paying him something on account and gave this note expecting that it would apply on my account with Munz; I did not notice whether it was paid to John Smith or Henry Jones or the Adams Lumber Company; I saw the name Adams Lumber Company when I signed it; I gave this note and some money as settlement to Munz; * * * I did not know anything about Adams Lumber Company, or of such a company; I did not know whether there was such a company or not; I signed various renewals of this note and I read it; the one before this last one was payable to Adams Lumber Company; I knew the note was made with the Adams Lumber Company — I gave them a note and when I learned that Munz was fooling me out of what I had coming, I asked him, and I went over to the Peoples State Bank and I was chased out by the manager out of his office when I went in there to investigate after getting his notice of a note protest, then I went and scouted around at the bank and nobody knew about any note made to the Adams Lumber Company, and Mr. Munz called me and asked me to give him a renewal of this note and I told him I couldn't come down town, that he should mail me the note — here is the letter-head; here's the way the thing come right back by special delivery — and I would mail him a renewal back which I didn't do on account I found out he was trying to beat me."

In the notice he stated that Munz informed him at the time the note was given that "he was an officer of and a duly authorized agent for said Adams Lumber Company." This admission relieved plaintiff from establishing this fact. Circuit Court Rule No. 23, § 6; Rolland Township v. Pakes, 226 Mich. 284,287, and cases cited. His testimony relative thereto, even if admissible to contradict such admission, is very contradictory. We must consider it in its most favorable aspect to support the judgment. The record discloses that the note was renewed several times.

Section 6101, 2 Comp. Laws 1915 (negotiable instruments law) reads:

"The maker of a negotiable instrument by making it engages that he will pay it according to its tenor, and admits the existence of the payee and his then capacity to indorse."

From the record, when considered with this provision of the law, I think a fair inference may be drawn that Munz was doing business under the name of the Adams Lumber Company and that Trombly so understood. His failure to comply with the statute regulating the carrying on of business under an assumed or fictitious name (2 Comp. Laws 1915, § 6349, as amended by Act No. 263, Pub. Acts 1919 [Comp. Laws Supp. 1922, § 6353]) did not render the contract void. It was —

"unlawful and unenforceable at the instance of the offending party only, but not as designed to take away the rights of innocent parties who may have dealt with the offenders in ignorance of their having violated the statute."Cashin v. Pliter, 168 Mich. 386, 391 (Ann. Cas. 1913C, 697), quoted approvingly in Pontiac Savings Bank v. Pipe Co.,178 Mich. 261, 264.

Trombly knew that he was executing a note payable to the Adams Lumber Company. When he signed the renewals, he knew that Munz was negotiating them at the plaintiff bank. Each renewal was a representation to the bank that he was indebted to the lumber company. He should not now be permitted to avoid liability for the reason stated.

The judgment is affirmed.

FELLOWS, WIEST, CLARK, and BIRD, JJ., concurred with SHARPE, J.

The late Justice SNOW and Justice STEERE took no part in this decision.