ERROR to the Circuit Court of the United States for the District of Louisiana.
Case, as receiver of the First National Bank of New Orleans, brought an action against Beauregard, May, and Graham, to recover the sum of $237,008.39, alleging that said defendants were commercial partners engaged in carrying on the New Orleans and Carrolton Railroad; and that the partnership account, which was kept in said bank in the name of Beauregard as lessee, was largely overdrawn, and the money applied to the use of the partnership; that May, while acting as president of said bank, and to make a nominal settlement, executed a promissory note, in the name of Beauregard, as lessee, payable to the bank on demand, for $40,000; and that said May also drew a bill of exchange on A. C. Graham in New York, in favor of the bank, for $125,000, and caused it, as well as the note, to be placed to the credit of said lessee. The petition also avers that the note was not paid, and that the bill of exchange was not stamped, and never forwarded for presentation, acceptance, or collection; that both of said credits were false, fraudulent, and fictitious; and that May acted with fraudulent intent, well knowing that the note had not been discounted by the bank, and that the bill would not be paid; and further averring, that, as the money thus obtained was used for the benefit of the partnership, the partners are liable therefor in solido.
Graham was not served with process, and did not appear.
Defendants severed in their answer. May filed a general denial of the matters in the petition stated, and also averred that he was a discharged bankrupt.
Beauregard, in his answer, denied the existence of a partnership and his liability on account thereof, alleging that he was merely a salaried officer; that, under stipulations of agreement, May and Graham were exclusively responsible for the enterprise; and that the indebtedness to the bank was contracted upon that responsibility, said bank being aware of the state of facts. Beauregard denied the authority of May to execute the note for $40,000 in his name.
In a supplemental answer, he averred that on the 13th of May, 1867, the bank was indebted to May in the sum of $315,779.10; and that if there was any indebtedness by him (Beauregard), as claimed by the plaintiff, it was extinguished by the bank's indebtedness to May.
There was read in evidence an act passed before a notary public, bearing date April 12, 1866, between said Beauregard and the New Orleans and Carrolton Railroad Company, by which the latter leased its track and appurtenances to Beauregard for the term of twenty-five years from the sixteenth day of that month. It contains sundry stipulations on the part of said Beauregard. The concluding part recites,--
'And thereupon personally came and appeared Thomas P. May and Augustus C. Graham, who, having taken cognizance of this act, declared they do hereby bind themselves and their heirs, in solido, with the present lessee, to the said New Orleans and Carrolton Railroad Company, their successors and assigns, as well for the true and faithful compliance on the part of said Beauregard with all the clauses, conditions, and stipulations herein contained, as for the true and punctual payment of the whole rents therein specified.'
Said act was signed by the proper officer of said company, and by Beauregard, May, and Graham; and also a further agreement, bearing date the eighteenth day of said month, between Beauregard, May, and Graham, as follows:--
'ARTICLE 1. Gustave Toutant Beauregard shall obtain in his name, but for the joint account of the appearers, the lease of the New Orleans and Carrolton Railroad: he shall take charge, conduct, manage, and direct the undertaking, at a salary of five thousand dollars per annum, payable monthly at the rate of four hundred and sixteen dollars sixty-six cents and two-thirds per month, promising and binding himself to do his best endeavors to the utmost of his skill and ability for their mutual advantage; and also he shall have the right to select and appoint his assistants, with proper salaries.
'ART. 2. The said Thomas P. May and Augustus C. Graham shall furnish the amount of money necessary to carry out the enterprise, which amount shall not exceed one hundred and fifty thousand dollars for each of them, making an aggregate amount of three hundred thousand dollars. The said T. P. May and A. C. Graham shall be reimbursed, in capital and interest, at the rate of eight per cent per annum from the annual net profit of the enterprise.