Rankin, J. R. Moore, and F. M. Moore are indebted to Jonathan Harris, and that Jonathan Harris is justly indebted to the plaintiff in the sum of $200 over and above all legal set-off. Judgment was rendered against Jonathan Harris for $200, with interest and costs. J. R. Moore and F. M. Moore, in their answer as garnishees, stated that they gave Adam Rankin a note for $200, which went into the Harris Bank. Adam Rankin testified that in March, 1881, J. R. Moore and F. M. Moore gave him their note for $200, payable January 1, 1882; that three or four months before it came due he borrowed $100 of Jonathan Harris & Co. and gave his note for it, and deposited the Moore note with them as collateral security; that afterwards, and before it came due, he got $94 more out of the bank on overdrafts against the Moore note; that he had never paid the note to the Harris Bank or the overdrafts. J. H. Hare testified that in 1884 he was the book-keeper in the bank of Jonathan Harris & Co.; that the Moore note to Rankin was turned over to J. Harris & Co. as collateral security. J. R. Moore testified that the $200 note which he and his brother gave to Adam Rankin was in J. Harris & Co.'s bank on December 31, 1881; and that on that day he went to Harris' bank, and asked William H. Smith if he held his note to Rankin for $200. He answered that he held it for collection. A. Smith Devenney testified that in December, 1881, William H. Smith was one of the partners in the Harris Bank. The case before us was tried to the court, without a jury, and a general finding was made for the defendants. Therefore the finding is in favor of the defendants for all the facts necessary to constitute their defense. Knaggs v, Mastin, 9 Kan. 532; Bix'y v. Bailey, 11 Kan. 359. There was no demand for special findings. In the bill of particulars filed by the plaintiff against the defendants it is alleged that the defendants are debtors of Jonathan Harris. The question therefore arises, can the defendants be held, as garnishees, as the debtors of Jonathan Harris alone, when the record shows that, if they are the debtors of any one, they are the debtors of Jonathan Harris & Co., a firm composed of Jonathan Harris and William H. Smith? The great weight of authority is that what is due a partnership cannot be subject to garnishment as a credit due one of the firm. Therefore in a suit against him a debtor to a partnership cannot be made a garnishee. Such debtor owes nothing to any one member of the firm. Drake says: "The attachment of a debt due to a copartnership, in an action against one of the partners, is justly distinguishable from the seizure, on attachment or execution, of tangible effects of the firm for the same purpose. Hence we find the supreme court of Alabama holding that partnership property may be sold to pay the debt of one partner, but that a debt due a firm cannot be taken by garnishment for that purpose. The reason assigned is that in the case of sale the property is not removed, and cannot be appropriated until all liens upon it growing out of or relating to the partnership are discharged; while in the other case, judgment against the garnishee, if acquiesced in, changes the right of property, and divests the copartner's title to the property attached, which cannot be done so long as the partnership accounts remain unsettled or its debts unpaid. Winston v. Ewing, 1 Ala. 129." Sections 567–571. In an action against G. & G., the garnishee answered that he was indebted to G. & L., one of the defendants being a member of both firms. Justice STORY, in deciding against the liability of the garnishee, observed: "In order to adjudge the trustee responsible in this action, it must be decided that the funds of one partnership may be applied to the payment of the debts of another partnership, upon the mere proof that the principal debtor is interested in each firm. If this be correct, it will follow that a separate creditor of one partner will have greater equitable as well as legal rights than the partner himself has. The general rule undoubtedly is that the interest of each partner in partnership funds is only what remains after the partnership accounts are taken, and unless, upon such an account, the partner be a creditor of the fund, he is entitled to nothing; and if the partnership be insolvent, the same effect follows." Lyndon v. Gorham, 1 Gall. 367; Upham v. Naylor, 9 Mass. 490. The position taken in the decisions cited is supported by the courts of New Hampshire, Vermont, Rhode Island, New York, Maryland, Louisiana, Mississippi, Tennessee, Ohio, and Missouri. In Maine, Pennsylvania, and South Carolina the contrary doctrine prevails. For a further discussion of this subject, see Waples, Attachm. & Garnishment, 204; Williams v. Gage, 49 Miss. 777; Sheedy v. Second Nat. Bank, 62 Mo. 17; Singer v. Townsend, 53 Wis. 126; S. C. 10 N. W. Rep. 365; Same v. Same, 53 Wis. 226; S. C. 10 N. W. Rep. 365; Markham v. Gehan, 42 Mich. 74; S. C. 3 N. W. Rep. 262; Sweet v. Read, 12 R. I. 121; Carr v. Catlin, 13 Kan. 393; Hershfield v. Claflin, 25 Kan. 166. was Counsel for plaintiff, in their oral argument, contended that the proposition that a debt due a partnership cannot be taken, by garnishment, to pay the individual debt of one member of the firm, not raised in the trial court; and they also assert that the firm of Jonathan Harris & Co. was composed solely of Jonathan Harris. The record does not sustain the assertion. It is clearly established that at least two partners composed the firm of Jonathan Harris & Co.,Jonathan Harris and William H. Smith. There was no evidence presented showing that William H. Sinith had ever withdrawn from the firm, or that at any time the firm of Jonathan Harris & Co. consisted solely of Jonathan Harris. The judgment of the district court must be affirmed. (All the justices concurring.) (34 Kan. 746) · Оно. MANN and another v. SECOND NAT. BANK OF SPRINGFIELD, OHIO. Filed March 5, 1886. 1. CORPORATION-ACTION AGAINST-EVIDENCE-PLEADING. Under the pleadings and evidence in this case, held, that it was sufficiently shown that the Second National Bank of Springfield, Ohio, was a corporation. 2. PROMISSORY NOTE-INDORSEMENT. Also, under the pleadings and evidence, held, that the indorsement of the note sued on in this action was sufficient to cut off all outstanding and existing equities against the note of which the purchaser at the time of the purchase and indorsement did not have notice; and further held, that a negotiable note, executed in terms to "A. W., president," A. W. being the president of the Champion Machine Company, but intended to be executed to and to belong to the Champion Machine Company, and it did in fact belong to such company; and such note is afterwards, but before maturity, sold to an innocent purchaser, and indorsed by A. W. to such purchaser in the following words: "The Champion Machine Company, by A. W., president, "-such indorsement will transfer the note freed from all equities or infirmities of which the purchaser had no notice. 3. CORPORATION-CONSTRUCTIVE NOTICE. A corporation should be held to have constructive notice of only such facts as have been brought to the actual notice or attention of some one of its officers or agents, or of such facts only as have been constructively brought to the notice or attention of some one of its officers or agents by the actual notice of such other facts as would naturally put the officer or agent upon inquiry; and therefore held, where none of the officers or agents of a bank had any actual notice of any infirmity of a note purchased by the bank, but one of the directors who was also a member of the discount committee of the bank was the president and general manager of another corporation, one of whose agents, not the president and general manager, had actual notice of an infirmity of the note such as would require this agent's own corporation to take constructive notice of such infirmity, the bank may nevertheless be considered as an innocent purchaser of the note without notice of any infirmity affecting it, notwithstanding the fact that the other corporation had constructive notice through its agent of such infirmity.1 4. PROMISSORY NOTE-POSSESSION AS EVIDENCE OF TITLE. The mere possession of a negotiable instrument payable to order, and properly indorsed, is prima facie evidence that the holder is the owner thereof: that he acquired the same in good faith, for full value, in the usual course of business, before maturity, without notice of any circumstance that would impeach its validity; and that he is entitled to recover upon it its full face value as against any of the antecedent parties; and where the maker of such an instrument, so indorsed and held, claims that the holder of the instrument is not a holder for value, it devolves upon the maker to prove the same. Mere evidence that at the time when such an instrument was discounted by a bank, the bank merely gave credit for the amount of the instrument to the person selling the same, who had an accouut with the bank, without showing the state of the account at that, or at any other time, will not, of itself and alone, prove that the bank was not a purchaser for value. 5. BANKS AND BANKING-ACCOUNT-EVIDENCE. It is not competent to prove the condition of a long account between a bank and one of its customers, and virtually the contents of the books of the bank, by the oral testimony of the cashier of the bank, where it is not shown that the cashier is the book-keeper, or that the books are kept under his supervision, or that he has any knowledge of such books. Error from Doniphan county. W. D. Webb and T. W. Heatley, for plaintiffs in error 1 See note at end of case. VALENTINE, J. This was an action brought originally before a justice of the peace of Doniphan county, Kansas, by the Second National Bank of Springfield, Ohio, against Lawson Mann and John D. Round, on a promissory note for $143, executed by Mann and Round to Amo's Whitely, president, and indorsed and transferred to the bank. After trial and judgment in the justice's court the case was appealed to the district court, where it was again tried, and judgment rendered in favor of the plaintiff and against the defendants for the amount of the note, with interest and costs, and to reverse this judgment the defendants, as plaintiffs in error, brought the case to this court. In this court the judgment of the court below was reversed, and the cause remanded for a new trial. Mann v. National Bank, 30 Kan. 412; S. C. 1 Pac. Rep. 579. After the return of the case to the district court it was again tried, and judgment was again rendered in favor of the plaintiff and against the defendants for the amount of the note, with interest and costs, and the defendants, as plaintiffs in error, again bring the case to this court for review. The first point now presented by the plaintiffs in error (defendants below) is that no proof was at any time introduced showing that the plaintiff below (defendant in error) was or is a corporation. Now, probably it makes no difference whether any such proof was introduced or not; but we think there was sufficient. The plaintiff alleged in its pleadings that it was a corporation, and the defendants have never denied the same. They raised no question in the district court with regard to the necessity for proof upon this subject, or the lack of proof, and have raised the question for the first time only in the submission of their case to this court. We think the proof upon this subject was sufficient. The evidence in the court below, as well as the pleadings, tended to show that the plaintiff was a corporation. The evidence tended to show that the plaintiff was a national bank, doing a banking business at Springfield, Ohio, with all the proper officers for that purpose, including a president, board of directors, cashier, discount committee, etc., and, presumably, it must be a national bank, for under the laws of congress no persons, or combination of persons, other than a national bank, have any right to use any such name. Rev. St. U. S. § 5243. The plaintiffs in error (defendants below) further claim that there was no such indorsement or transfer of the note as would convey any interest in the note to the defendant in error, (plaintiff below;) and that even if there was, still that such indorsement or transfer was so irregular and informal that it would not cut off any outstanding equities existing in favor of the defendants below and against the original holders of the note. We shall assume that there were outstanding equities existing against the note, for the evidence tended to prove the same; or, to be more explicit, we shall assume that there was a failure or partial failure of the consideration for the note; and yet we think that this claim of the defendants below is not good. The plaintiff below, in its original bill of particulars, alleged, among other things, that the note sued on was made payable to the order of "Amos Whitely, president," and gave a full copy of the note; and further alleged "that said Amos Whitely indorsed and transferred said note for a valuable consideration, before maturity, to said plaintiff." The defendants did not, by their answer or otherwise, deny any of these allegations, (and in this connection, see section 84, Justice's Code;) but, on the contrary, they admitted in their answer the execution of the note, and the alleged indorsement thereof, and alleged, among other things, as follows: "That the note sued on in this action was given to the said Amos Whitely as president of the Champion Machine Company of Springfield, Ohio, which said company was then and now is a corporation duly organized and doing business under and by virtue of the laws of the state of Ohio; and that it was at the time it was so given by these defendants the property of and belonged to the said Champion Machine Company, and was not the property of the said Amos Whitely, and never has been his note or property, although taken in his name and made payable to his order." The defendants also alleged in their answer that the note "was indorsed to the plaintiff as collateral security for the said Champion Machine Company to draw against at said bank." The case was tried in the court below upon the theory that the note originally belonged to the Champion Machine Company, as alleged in the defendants' answer; and it was shown by the evidence to have been indorsed and transferred to the bank by the use of the following words, to-wit: "The Champion Machine Company, by Amos Whitely, president." We think this indorsement transferred the note to the bank freed from all outstanding equities against it of which the bank did not have notice. The note, on its face, appeared to belong to "Amos Whitely, president." It belonged in fact to the Champion Machine Company. It was indorsed by the Champion Machine Company, and was also indorsed for such company by Amos Whitely, president. This, we think, was a sufficient indorsement, both as against the company and Whitely, to convey title, and we think it conveyed title freed from equities. Any other ruling would be the sacrifice of substance to form. Pease v. Dwight, 6 How. 190, 198. See further upon this subject the decision in this case when it was formerly in this court. Mann v. National Bank, 30 Kan. 412, 418; S. C. 1 Pac. Rep. 579. It is further claimed by the defendants below that the bank at the time when the note was discounted and afterwards had constructive notice of the failure of the consideration of the note, and therefore that the bank did not obtain title to the note freed from the equities existing in favor of the makers thereof; and this is claimed for the following reasons: It is claimed that Amos Whitely had notice of such failure of consideration; that he was a director and a member of the discount committee of the bank; and therefore that the bank must. |