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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 177 When the new firm indorsed the certified check for $200,000 and deposited it with the defendant, a contract was thereby made between the parties thereto whereby the bank agreed to pay that sum or any part thereof to said firm upon demand. That contract was not modified by the statement, whether casually made or not, that although the copartnership papers had been signed, the certificate of limited copartnership could not be filed until the next day, and the firm would not commence business for two or three days. In view of the fact that the firm had already commenced to do business with the bank, the statement apparently was intended to apply only to the formal opening of its doors by the firm for the transaction of business with the public generally. However that may be, it is clear that the relation of debtor and creditor between the new firm and the bank commenced *Page 180 with the deposit, and it would have continued, even if the certificate had never been filed and the firm had never begun to carry on business generally. The deposit was neither special nor unauthorized, for a common member of both firms in the presence of all the members of the new firm indorsed the check "for deposit" and signed the firm name thereto. A few minutes later the same person went to the bank with a member of the new firm who had not been a member of the old, deposited the check so indorsed and received a passbook in the usual form with the amount of the deposit duly credited thereon, both men having signed the signature book. No notice was given that the account could not be drawn upon at once or that the deposit was intended for a special purpose. The bank was not obliged to look beyond these facts, even if it was notified that the certificate of limited partnership had not been filed, and that there would be some delay in beginning business. It was its duty to pay the check for $60,000 when it was presented, and it would have broken its contract if it had refused. If the members of the new firm who made the deposit had before they left the bank drawn a check payable to bearer and had presented it for payment, we see no ground upon which the bank could lawfully have declined to pay it. Whether the parties had so complied with the provisions of the statute relating to limited partnership as to protect the special partner, was of no concern to the bank. That was not its business, for it did not affect the validity of its contract. A limited partnership has the same power to make a contract of deposit as a general partnership and the case is the same in that respect as if the partnership had been general but by the terms of the formal agreement was not to commence until the day after the transaction in question. If the firm could indorse a check for deposit on June 22nd, as it did all its members being present, it could sign a check on that day and bind itself in the one case the same as in the other. The question does not arise, as in the cases relied upon by the appellants, whether creditors of the new firm could hold the special partner liable as a general *Page 181 partner, but the simple inquiry is whether the new firm, whatever its character, after assuming to make a contract with the bank on June 22d 1892, could say years afterward when disaster had come, "We had no right to make that contract on that day, for the firm was not authorized to do business until the next day."
The articles had been signed before the deposit was made and the bank was so informed by two members of the new firm. It was not informed, however, of the provision therein that the firm should "begin on and include the 23rd of June," and the remark, after the deposit was made and the contract completed, "that the firm did not expect to start to do business for two or three days," fell so far short of notice of that provision as not even to put the bank upon inquiry. Power to do business at once was implied from the fact that the articles had been signed, and was not affected by the expectation of the firm with reference to opening its doors. The bank had the right to assume that if the papers were signed the firm could do business at once, even if it did not expect to formally begin its general business for a few days. The deposit is all there is of this case, for an authorized deposit is an authorized contract and the defendant simply performed the contract. A bank need not look into copartnership articles to learn the actual authority of the various members, for it has the right to rely on their apparent authority and to act on the presumption that each is the duly authorized agent of the firm.
When one copartnership by a written instrument transfers all its assets to another intended to take its place and covenants that they are worth a sum stated over all liabilities and that in one year they will yield that amount in cash, nothing further being said about the debts, such transfer is necessarily subject to the payment of the debts of the old firm, for otherwise it would be fraudulent, as there would be nothing left to pay creditors. Under such circumstances there is no beneficial transfer of anything except what remains after the debts are paid and the new firm is under obligation to pay the debts of *Page 182 the old, at least to the extent of what was fairly and in good faith realized from the assets. There was no misappropriation, therefore, of the assets of the new firm by paying the amount of the overdraft which was a debt of the old.
Upon the facts found by the learned referee, we think his conclusion of law that the defendant is liable for the sum of $60,000 and interest was erroneous and required a reversal by the Appellate Division. As to the balance of the deposit remaining in the bank after payment of the check for $50,593.79, we express no opinion, as the facts may not have been fully developed in that regard.
We announce these conclusions to guide the course of the new trial, which we deem it our duty to order, without attempting to add to the arguments of the learned Appellate Division. The facts depend mainly upon oral evidence and we are not satisfied that all the evidence in existence has been produced with reference more particularly to the balance of $9,406.21 remaining after payment of the check for the overdraft. The disposition of that sum does not appear so clearly as to make it certain that the facts cannot be changed by further investigation. (Ross v.Caywood, 162 N.Y. 259.)
The judgment of the Appellate Division should be so modified as to order a new trial, and, as modified, affirmed, with costs in all courts to abide event.
CULLEN, Ch. J., GRAY, BARTLETT, HAIGHT and WERNER, JJ., concur; O'BRIEN, J., absent.
Judgment accordingly.