Bills and Notes, Holder in due course, Indorsement. Partnership.
Where, in an action upon a promissory note by a holder in due course against a firm whose name was indorsed thereon, it appears that all indorsements were in blank and that the order of indorsements was, first, that of the payee, second, that of the defendant firm, third and fourth, those of two other persons, and, fifth, a second indorsement by the payee, and the judge, who heard the action without a jury, found that the indorsement of the defendant partnership's name was by one partner without authority of his copartner and for the accommodation of the maker and that the plaintiff had neither knowledge nor notice of the lack of authority of the indorsing partner, it was held, that
(1) On the record, the fact, that the indorsement of the firm name of the defendants by one partner was without authority, was not a defence;
(2) The finding, that the indorsement of the defendants was for the accommodation of the maker, was final, and the order of indorsements did not show as a matter of law that the indorsement of the defendants was for the accommodation of the payee;
(3) The fact, that the note before maturity came in the usual course of business into the hands of the payee after having been once negotiated by him, did not destroy its negotiability nor defeat the right of a subsequent bona fide holder to recover against all previous parties;
(4) The plaintiff could have struck out all previous indorsements not necessary to his own title, and have held the defendants under the blank indorsement by their firm.
BRALEY, J.
The indorsement of the note in the firm name by one member without the knowledge of his partner does not on the record relieve the defendant from liability. The plaintiff having given value and acquired title before maturity without knowledge of the circumstances under which the indorsement was made ordinarily would be a holder in due course. G.L.c. 107, § 75. Merchants National Bank v. Marden, Orth Hastings Co. 234 Mass. 161, 168. But the defendant contends that under the order of the indorsements appearing on the note it is manifest that the note did not pass from the possession of the payee until negotiated by the payee to the plaintiff, and therefore the indorsement was for the accommodation of the payee, of which the plaintiff had notice. The judge however has found that the indorsement was for the accommodation of the maker, and this finding is conclusive. Goodman v. Gaull, 244 Mass. 528. The cases of National Bank of the Commonwealth v. Law, 127 Mass. 72, Harrington v. Baker, 173 Mass. 488, 490, J. G. Brill Co. v. Norton Taunton Street Railway, 189 Mass. 431, relied on by the defendant, are clearly distinguishable. It also is plain that this contention is groundless when the indorsements are read in the order in which they appear on the note. As pointed out by the trial judge, "The mere fact that a note, before its maturity, comes in the usual course of business into the hands of the payee after having been once negotiated by him, does not destroy its negotiability, nor defeat the right of a bona fide holder to recover against all who are parties to the note at the time it is negotiated to him." West Boston Savings Bank v. Thompson, 124 Mass. 506, 515. The plaintiff moreover could strike out every indorsement not necessary to its title and allege that it was the holder under the blank indorsement of the firm. Parker v. Roberts, 243 Mass. 174. G.L.c. 107, § 71. The defendant's requests having been denied rightly the exceptions must be overruled.
So ordered.