Anderson Hay & Grain Co. v. Dunn

• Decision Date: 30 March 1970
• Docket Number: No. 8951,8951
• Parties: ANDERSON HAY AND GRAIN CO., Inc., A Washington Corporation, Plaintiff-Appellant, v. Sam DUNN and Virgil Welch, d/b/a Ruidoso Downs Concession, Defendant-Appellee.
• Court: New Mexico Supreme Court

Page 5

467 P.2d 5

81 N.M. 339

ANDERSON HAY AND GRAIN CO., Inc., A Washington Corporation Plaintiff-Appellant, v. Sam DUNN and Virgil Welch, d/b/a Ruidoso Downs Concession Defendant-Appellee.

No. 8951.

Supreme Court of New Mexico.

March 30, 1970.

[81 NM 339] Shipley, Durrett, Whorton & Conway, Alamogordo, for plaintiff-appellant.

M. J. Clayburgh, Albuquerque, for defendant-appellee.

OPINION

TACKETT, Justice.

This action was commenced in the District Court of Lincoln County, New Mexico, to recover $13,567.85 allegedly owed plaintiff by defendant Virgil Welch and Sam Dunn, doing business as Ruidoso Downs Concession, also known as Ruidoso Downs Feed Concession. The trial court awarded judgment against Welch and dismissed the complaint against Dunn. Plaintiff appeals.

The only issue before this court is whether Dunn was a partner in the operation of the Ruidoso Downs Feed Concession. The evidence reveals that Dunn was a partner by estoppel as a matter of law. The trial court found that Dunn was not a partner; however, such finding does not have sufficient support in the evidence.

The complaint alleged that Dunn and Welch were partners. Dunn answered, alleging that plaintiff knew Ruidoso Downs Feed Concession was a sole proprietorship operated by Welch, and that he and Welch were not partners. Welch filed an amended answer alleging that he and Dunn were full partners. Appellant sells feed to race track concessions. In late 1967, the president of appellant company visited the officers of Lincoln Management, who controlled all the concessions at the Ruidoso race track, apparently in an effort to sell feed. In January 1968, Lincoln Management and Welch entered into a contract whereby Welch managed the feed concession and appellant dealt with Welch as manager. On May 22, 1968, Lincoln Management subleased the feed concession to Welch, who was described in the agreement as an independent contractor. Kenneth Newton, president of Lincoln Management, refused to sign the agreement unless Dunn guaranteed the note securing the sublease. Dunn had an interest in Lincoln Management. After signing the sublease contract, Dunn and Welch entered into a written agreement whereby Dunn, as co-signer of the note for $65,000, would have the sole right to maintain accounting records, inventory controls and accounts receivable. After execution of the sublease, Newton supposedly sent a letter to appellant (the receipt of which was denied) advising that Welch would be responsible for all debts incurred by the Ruidoso Downs Feed Concession. A bank account was opened in the name of Ruidoso Downs Feed Concession, and both Dunn and Welch were authorized to sign checks and make withdrawals from the capital account. For the year 1968, Welch filed a partnership income tax return.

Credit was extended by appellant on the strength of Dunn's financial responsibility, and appellant contacted Dunn for payments on the account. In April 1968, Dunn and Welch executed a hauling contract wherein both were designated as 'parties of the second part,' and the suppliers looked to Dunn as the responsible partner. The public conduct of both Dunn and Welch lead to the conclusion that they were partners, and Dunn and Welch allowed themselves to be so held out. Welch considered Dunn to be a partner, and Dunn, by his own admission, considered Welch to be a partner, as he stated to Kenneth Newton at the first meeting as a representative of the feed concession, 'at least I (Newton) didn't have a partner like Virgil Welch.'

Section 66--1--16, N.M.S.A., 1953 Comp., is as follows:

'(1) When a person, by words spoken or written or by conduct, represents himself, or consents to another representing him or any one, as a partner in an existing partnership or with one (1) or more persons not actual partners, he is liable to any such person to whom such representation has been made, who has, on the faith of such representation, given credit to the actual or apparent partnership, and if he has made such representation or consented to its being made in a public manner he is liable to such person, whether the representation has or has not been made or communicated to such person so giving credit by or with the knowledge of the apparent partner making representation or consenting to its being made.

'(a) When a partnership liability results, he is liable as though he were an actual member of the partnership.

'(b) When no partnership liability results, he is liable jointly with the other persons, if any, so consenting to the contract or representation as to incur liability, otherwise separately.

'(2) When a person has been thus represented to be a partner in an existing partnership, or with one (1) or more persons not actual partners, he is an agent of the persons consenting to such representation to bind them to the same extent and in the same manner as though he were a partner in fact, with respect to persons who rely upon the representation. Where all the members of the existing partnership consent to the representation, a partnership act or obligation results; but in all other cases it is the joint act or obligation of the person acting and the persons consenting to the representation.'

Dunn, by his conduct, actions and words, furnishes substantial evidence that he and Welch were partners. Farmers and Merchants Bank of Long Beach v. Kirk, 165 Cal.App.2d 470, 332 P.2d 131 (1958); Singleton v. Fuller, 118 Cal.App.2d 733, 259 P.2d 687 (1953). It is...