Boyer v. First Nat. Bank of Kokomo, 4-484A105

CourtCourt of Appeals of Indiana
Citation476 N.E.2d 895
Docket NumberNo. 4-484A105,4-484A105
Parties40 UCC Rep.Serv. 1745 William R. BOYER, Appellant (Plaintiff Below), v. FIRST NATIONAL BANK OF KOKOMO, Indiana and Merchants National Bank & Trust Company, Appellees (Defendants Below).
Decision Date17 April 1985

William M. Pope, Indianapolis, for appellant.

Peter G. Tamulonis, Kightlinger, Young, Gray & DeTrude, Indianapolis, for appellees.


Plaintiff-appellant William R. Boyer (Boyer) appeals the judgment of the Marion Circuit Court in favor of appellees First National Bank of Kokomo (First National) and Merchants National Bank & Trust Company (Merchants), (collectively "the Banks").

We affirm.


1. Were Boyer and Twin Lakes engaged in a joint venture?

2. Did the Banks act in a commercially reasonable manner when they cashed two checks made payable to "Twin Lakes Steel Co., Inc. & Boyer" even though both checks were endorsed only by Twin Lakes?


Boyer and Twin Lakes Construction Co. (Twin Lakes) executed a contract entitled "Joint Venture Agreement" regarding construction Apparently, Twin Lakes spent the entire proceeds of the two checks. Boyer, not receiving any of the proceeds from either check, sued both First National and Merchants for conversion. They filed a joint motion for summary judgment. The case was heard on stipulated facts, and the trial court found Boyer and Twin Lakes were co-joint venturers. 1 It concluded the Banks acted in good faith and in accordance with reasonable commercial standards in cashing the checks even though only endorsed by Twin Lakes. Other pertinent facts are stated below.

                and demolition work to be performed for Wilhelm Construction Co.  (Wilhelm) on the "Lilly project".  Wilhelm issued 12 checks in payment of Boyer's and Twin Lakes's services.  Two of the checks, totalling $37,000, were made out to "Twin Lakes Steel Co., Inc. & Boyer."   Twin Lakes cashed these two checks at First National even though only Twin Lakes had endorsed both of them with a rubber stamp.  First National processed these checks by forwarding them to Merchants.  Merchants then debited Wilhelm's account.  Wilhelm is not a party to this suit
I. Standard of Review

We first note the trial court here made special findings of fact under Indiana Rules of Court, Trial Rule 52. The trial judge found against Boyer, who carried the initial burden of proof at trial. Boyer therefore is appealing a negative judgment.

We employ a limited standard of review in such cases:

As an appellate tribunal, we may neither reweigh the evidence nor judge the credibility of witnesses.... Moreover, because [this case] ... was tried before the court and not a jury, its decision will be reversed only if clearly erroneous.... Such a finding will be made by this court when the evidence is uncontradicted and supports no reasonable inferences in favor of the decision, or, even when there is evidence supportive of the judgment if our review of the record leaves us with a "definite and firm conviction that a mistake has been made." (Citations omitted).

Burnett v. Heckelman (1983), Ind.App., 456 N.E.2d 1094, 1097; see also First Federal Savings & Loan Association of Gary v. Stone (1984), Ind.App., 467 N.E.2d 1226, 1234.

However, where a party challenges only the judgment as contrary to law and does not challenge the special findings as unsupported by the evidence, we do not look to the evidence but only to the findings to determine whether they support the judgment. Paul Revere Life Insurance Co. v. Gardner (1982), Ind.App., 438 N.E.2d 317, 320; Indiana Industries, Inc. v. Wedge Products, Inc. (1982), Ind.App., 430 N.E.2d 419, 422; Merryman v. Price (1970), 147 Ind.App. 295, 259 N.E.2d 883, 888 cert. den. (1971), 404 U.S. 852, 92 S.Ct. 89, 30 L.Ed.2d 92.

II. Commercial Reasonableness

The trial court found the Banks acted in good faith and in accordance with reasonable standards in paying the checks over Boyer's missing endorsement. Because Boyer sufficiently challenges that finding, we must determine whether the evidence most favorable to the judgment is sufficient to support that special finding.

a. Joint Venture

Boyer first contends he and Twin Lakes were not engaged in a joint venture, thus the Banks could not raise IC 26-1-3-110(g) as a defense. We disagree.

A joint venture is an association of two or more persons formed to carry out a single business enterprise for profit, through the combination of their property and services. O'Hara v. Architects Hartung and Association (1975), 163 Ind.App 661, 665, 326 N.E.2d 283, 286; Baker v. Billingsley (1956), 126 Ind.App. 703, 708, 132 N.E.2d 273, 275-76, trans. denied. A joint venture exists when an express or implied contract providing for (1) a community of interests, and (2) joint or mutual control, that is, an equal right to direct and govern the undertaking, binds the parties to such agreement. Neither criterion is dispositive of the point, however. See, Stallings v. Dick (1965), 139 Ind.App. 118, 134, 210 N.E.2d 82, 91. See also, 48A C.J.S. Joint Ventures Sec. 10 (1981). The joint venture agreement must provide for sharing of profits but it need not distribute them equally. See, Lafayette Bank & Trust Co. v. Price (1982), Ind.App., 440 N.E.2d 759, 762; 48A C.J.S. Joint Ventures Sec. 13 (1981). Sharing of losses, if the losses involve only time and labor, need not specifically be in the joint agreement. Lafayette Bank, 440 N.E.2d at 762; Davis v. Webster (1964), 136 Ind.App. 286, 295, 198 N.E.2d 883, 887. Distribution of other losses and expenses may be implied from the manner in which profits are to be shared. 48A C.J.S. Joint Ventures Secs. 13, 39 (1981). Where it is the intent of the parties for all co-venturers to be subject to the risks of the business, a joint venture exists even though one co-venturer contributes capital and secures his contribution with a note. See, 48A C.J.S. Joint Ventures Sec. 6 (1981). Finally, a joint venture is similar to a partnership except a joint venture contemplates only a single business transaction. A partnership, on the other hand, is formed for general business of a particular kind. Lafayette Bank, supra, 440 N.E.2d at 762; Beck v. Indiana Surveying Co. (1981), Ind.App., 429 N.E.2d 264, 268.

The agreement executed between Boyer and Twin Lakes provided in pertinent part:


Let it be known that the above two parties, namely Twin Lake Steel Co., Inc. and William R. Boyer have agreed to furnish and erect to the above named contractor for the above named project Structural Steel, Metal Roof Deck, Miscellaneous Metals, Demolition, Demolition and reinstallation of existing steel as required by drawings all according to F.A. Wilhelm Construction Co., Inc., in the amount of $135,029.00, dated August 8, 1980.

It is further agreed that the two parties named ... shall share in the gross profits from this joint venture according to the following:

Twin Lakes Steel Co., Inc. 75%

William R. Boyer 25%

Gross profits to be determined upon completion of the project and distributed according to the above percentages.

Boyer put up $50,000 for the "Lilly project." This debt was evidenced by a $25,000 note executed by Twin Lakes, signed by Twin Lakes's president in both his corporate and individual capacities. The remaining $25,000 debt to Boyer was to be repaid "as the profits came in." Thus, at least half of Boyer's "investment" was subject to the risks of the business as there was no guarantee evidenced by a note for this amount Boyer would be repaid. Boyer's brief states he "performed some services with regard to disbursement of the draws received from the contractor." More specifically, the record indicates Boyer informed Wilhelm he and Twin Lakes "were going into this together." He also instructed Wilhelm to make checks for the project payable to Twin Lakes and Boyer after Wilhelm initially made the first checks on the project payable only to Twin Lakes. Boyer would then endorse these checks, already containing Twin Lakes's endorsement, and would deposit the funds in his account. He in turn would make a check payable to Twin Lakes drawn on his account for an amount calculated "according to need." This evidence indicates Boyer had considerable financial control over the project or at least was more than a passive investor.

Finally, the agreement itself labeled "Joint--Venture Agreement", was drawn up on Boyer's stationery and was witnessed by Boyer's wife. It indicated both parties had a right to control the enterprise. It stated "the above two parties ... namely Twin Lakes and Boyer ... have agreed to furnish [to Wilhelm] and erect certain materials." The agreement also specified how profits were to be distributed. Thus, the agreement coupled with the conduct of the parties, demonstrate a joint-venture existed. The joint venture created by Boyer and Twin Lakes was a "partnership or unincorporated association" as defined in article 3. Therefore, the checks could be endorsed by any authorized party, in this case Twin Lakes.

b. Paying Check over Missing Endorsement

Boyer alternatively argues even the existence of a joint venture does not absolve the Banks from liability. Under these facts, we hold it does.

Boyer initially sued the Banks for conversion under IC 26-1-3-419(1)(c). It provides "an instrument is converted when ... (c) it is paid on a forged endorsement." A check paid over a missing endorsement is treated the same as a check paid on a forged endorsement for purposes of conversion under this section. See, Yeager and Sullivan, Inc. v. Farmers Bank (1974), 162 Ind.App. 15, 17, 317 N.E.2d 792, 794; see also, Humberto Decorators, Inc. v. Plaza National Bank (1981), 180 N.J.Super 170, 174, 434 A.2d 618, 619.

The trial court found the Banks successfully defended on the basis they dealt with their instrument "in good faith and in accordance with the reasonable commercial standards...

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