McIntosh v. Detroit Savings Bank , 247 Mich. 10 ( 1929 )

The plaintiff claims by an assignment of the partnership debt, executed by Sweet. He has, of course, no right other than the partnership would have had in an action brought by it against the defendant bank. Evidence as to the understanding of the partners as to what was to be done with its funds was admitted as binding upon Cranston, who is also a defendant, but not as against the bank. The ruling of the court in this respect was clearly right, and the evidence so admitted must not be confused with that affecting the rights of the partnership as against the bank.

The plaintiff here seeks to charge the defendant with the proceeds of certain checks, drawn on other banks, but payable to the partnership, which were presented by Cranston to the defendant for deposit or payment. His counsel very appropriately group them in three classes for our consideration:

"In the first class, Cranston indorsed the firm name, presented the check to the bank, and received cash for the full amount of the check. In the second class, Cranston indorsed the firm name, listed the checks on deposit slips for the firm account and then wrote underneath 'less cash' a certain amount. In such instances, the latter sum was given in cash to Mr. Cranston, while the remainder was credited by the bank to the firm account. In the third class, Cranston indorsed the firm name and underneath it his own, and then deposited the checks to the credit of his own personal account at the bank."

1. First and Second Classes. In my opinion, the language on the signature card applied only to the withdrawal of moneys from the firm account in the bank, and in no way restricted Cranston, as a partner, from indorsing the checks drawn payable to the firm and depositing them in the firm account, or securing the cash thereon. The right of a partner to indorse checks drawn payable to the partnership is expressly provided for in section 7966(9 [1]), Comp. Laws Supp. 1922 (the uniform partnership act), quoted by Mr. Justice POTTER.

In Bank v. Freeman, 47 Mich. 408, 411, it was said:

"If the parties were engaged as copartners in the business of running the vessel, there could be no doubt, we suppose, but that paper received in the regular course of the business, payable to the order of the firm, might be indorsed by any member thereof in the firm name so as to bind the other members thereby."

Sweet testified:

"I knew Cranston was indorsing the checks for deposit. He had my authority to place the indorsement of the company on the back of the checks for the purpose of depositing them in the bank."

The bank had no knowledge, and it seems clear that none can be imputed to it, that the cash paid Cranston on these checks was not to be used in the partnership business. The record discloses that a part of it, at least, was used in payment of the wages of those employed by it, including both Sweet and Cranston, who were drawing weekly salaries for their services. Cranston testified:

"A lot of times I would get part cash to meet current bills, such as pay rolls and other things that we paid in cash around the salesroom."

The rule applicable to the acts of corporate officers, trustees, etc., does not apply to partnerships. In my opinion, no liability attached to the bank relative to these checks.

2. Third Class. Cranston admitted that he deposited some of the firm checks to the credit of his personal account. In the section of the partnership act following that above referred to, it is provided:

"An act of a partner which is not apparently for the carrying on of the business of the partnership in the usual way does not bind the partnership unless authorized by the other partners." Comp. Laws Supp. 1922, § 7966(9 [2]).

The bank was chargeable with a knowledge of this provision. The evidence does not warrant a finding that Sweet consented to such action. It cannot be said that this act of Cranston was "apparently for the carrying on of the business of the partnership in the usual way." The teller who received the deposits had no recollection of this being done. He testified that, if it was, he "thought it was the proper thing to do." The bank should be charged with the amount of such deposits. Cranston also testified that some of the partnership debts were paid by him by checks drawn on this (his personal account). If so, the partnership received the benefit of such payments, and credit should be allowed the bank therefor.

The record contains the following stipulation:

"It was agreed between counsel, with the approval of the court, that the case should be submitted to the court upon the main questions involved and that if the court should find that defendant, The Detroit Savings Bank, was indebted to plaintiff as alleged in the bill of complaint, that thereupon the matter should be referred to a circuit court commissioner to ascertain the amount of such indebtedness."

In my opinion, the decree entered should be reversed and set aside and the case remanded to the trial court for an accounting, applicable only to the third class of checks. Additional proof may be taken, if desired, relative to them and to the payments, if any, of the firm debts made by Cranston out of the moneys in his personal account. The amount due from the partnership to the bank, amounting to $1,171.79, must also be considered, as also the amount of the forged checks, of which there is no dispute.

A decree may be entered in conformity herewith and the case again submitted on the filing of the report on the accounting. Costs will then be determined.

NORTH, C.J., and FEAD and CLARK, JJ., concurred with SHARPE, J.