College v. Dockery

Decision Date28 March 1912
Citation145 S.W. 785,241 Mo. 522
PartiesMONMOUTH COLLEGE, Appellant, v. THOMAS J. DOCKERY
CourtMissouri Supreme Court

Appeal from Adair Circuit Court. -- Hon. Nat M. Shelton, Judge.

Reversed and remanded (with directions).

Campbell & Ellison, Safford & Graham, and Gage, Ladd & Small for appellant.

(1) A partner is liable for the fraud of his copartner if committed in the name of the partnership and within the apparent scope of the partnership business, although he be entirely ignorant of it, receive no benefit from it and the fruits of the fraud are appropriated by his copartner to his own use. Story on Partnership (7 Ed.), secs. 108, 166; Bates on Partnership sec. 476; Lindley on Partnership (Ewell's Ed.), p. 314; Hayner v. Crow, 79 Mo. 293; Winship v Bank, 5 Pet. 566; Church v. Sparrow, 5 Wend 223; Gilchrist v. Blande, 58 Wis. 184; Wolf v. Mills, 56 Ill. 360; Tenney v. Foote, 95 Ill. 908; Bank v. Kinnare, 174 Ill. 358; Darlington v. Garrett, 14 Ill.App. 243; Alexander v. State, 56 Ga. 478; Wine Co. v. Weippert, 14 Mo.App. 483; Grocery Co. v. Cole, 26 Mo.App. 5; Dudley v. Love, 60 Mo.App. 420; Sadler v. Lee, 6 Beavan, 324; Eager v. Burnes, 31 Beavan, 579; St. Aubyn v. Smart, L. R. 5 Eq. Cas. 183; Rhodes v. Moules, L. R. (1895) 1 Ch. 236; Lindu v. Crowley, 29 Kan. 756; Pahlman v. Taylor, 75 Ill. 629; Boardman v. Gore, 15 Mass. 331; Burgess v. Bank, 4 W. P. D. Bush (Ky.) 600; Coleman v. Pearce, 26 Minn. 123; Iron Co. v. Harper, 41 Ohio St. 101; Jackson v. Todd, 56 Ind. 406; Todd v. Jackson, 75 Ind. 272. (2) This court will set aside a verdict of a jury or a finding of a trial court unless the same is supported by substantial evidence. Whitsett v. Ransom, 79 Mo. 258; Garrett v. Greenwell, 92 Mo. 120; Long v. Moon, 107 Mo. 334; Nugent v. Milling Co., 131 Mo. 252; Payne v. Railroad, 136 Mo. 580; Sanguinette v. Railroad, 196 Mo. 494; Weltmer v. Bishop, 171 Mo. 116; Avery v. Fitzgerald, 94 Mo. 207; Flynn v. Wacker, 151 Mo. 552; Champagne v. Hamey, 189 Mo. 726; State v. King, 203 Mo. 571; Deane v. Transit Co., 192 Mo. 585; Story v. Story, 188 Mo. 129; Hethcock v. County, 200 Mo. 170; Brewing Co. v. St. Louis, 209 Mo. 600; Bond Co. v. Houck, 213 Mo. 440; Efron v. Car Co., 59 Mo.App. 645; Meier v. Proctor & Gamble Co., 81 Mo.App. 419; Stafford v. Adams, 113 Mo.App. 721; Joy v. Cale, 124 Mo.App. 576; Pickens v. Railroad, 125 Mo.App. 674; Schaub v. Railroad, 133 Mo. 448; Com. Co. v. Aaron, 130 S.W. 118. (3) There is no substantial evidence to support the finding of the court as to an arrangement or an agreement between plaintiff's treasurer and Dockery & Hilbert, as to the method or plan by which loans were to be made by Dockery & Hilbert for the plaintiff; and that finding ought to be set aside. (4) Even if an arrangement or agreement regarding the method of conducting the loan business had been made between the plaintiff and Dockery, as found by the court, it could have afterwards been modified, or compliance with its terms waived by the parties; and it was so modified and waived. Bank v. Lonergan, 21 Mo. 46; Hays v. Bank, 101 Ky. 201. (5) There is no substantial evidence to support the finding of the court as to the method pursued in all other loan transactions with the plaintiff; and that finding ought to be set aside. (6) The court erred in finding that the transaction was without the scope of the authority of Hilbert. There is no evidence in support of that finding. (7) The court erred in finding the plaintiff guilty of negligence and of failure to exercise ordinary diligence. There is no evidence to support the finding. (8) The conclusion of law by the circuit court that the action was barred by the Statute of Limitations, was error.

Higbee & Mills and Morton Jourdan for respondent.

(1) In view of the allegations as to the course of business adopted between plaintiff and defendants, the presumption must be that the plaintiff relied upon the certificate and guarantee of title, and not the representations made in the application, nor the letter accompanying the application. The money was paid after the receipt of the certificate of title. The petition charges that at the time the notes were presented defendants falsely represented that the notes were secured by a deed of trust which is a first lien on said lands. This evidently refers to the certificate of title. (2) All prior and contemporaneous representations as to title were merged in this certificate and guarantee of title, which was received and accepted by plaintiff before the money was paid, and the suit should have been based on the false certificate and guarantee of title. It was the final representation. No money was parted with upon the representations of title contained in the application, or the letter accompanying it. Of course, the application was approved, upon condition that an approved abstract of title should be furnished. The money was paid upon the certificate of title, which was the sole and final expression of the will and agreement of the parties, and becomes the only admissible evidence of the contract. 21 Am & Eng. Ency. Law (2 Ed.), 1079; Ringer v. Holtzclaw, 112 Mo. 523; Kellerman v. Railroad, 136 Mo. 189; Standard Co. v. St. Louis Co., 177 Mo. 571; State v. Chinn, 19 Mo. 233; State v. Evers, 49 Mo. 545; State v. Bohle, 182 Mo. 58; 2 Parson's Contracts (8 Ed.), p. 545; Graham v. Sadlier, 165 Ill. 95. Hence the suit should have been bottomed upon the false certificate and guarantee of title, and not against defendant individually. (3) There was substantial evidence to support the finding of the court that the transaction was without the scope of the authority of Hilbert, and so known to plaintiff and its treasurer at the time. Plaintiff had no right to make a loan on a certificate of title. Plaintiff alleges in its petition that there was a course of business adopted; that the blank application for loans should be filed "with a description of the security offered for proposed loans," and "plaintiff accepting the representations of said defendant firm, concerning the character and value of the security offered, and the character of the proposed borrower, as being true." The evidence is unquestioned that in every other loan transaction defendants submitted abstracts of title approved by Ellison & Campbell. Whether the act of Hilbert was within the scope of his authority or was consented to by Dockery, was a question of fact. 22 Am. & Eng. Ency. Law (2 Ed.), 139 (c); Dowling v. Bank, 145 U.S. 512; Deardorf v. Thatcher, 78 Mo. 128. (4) Plaintiff's reckless disregard of the course of procedure adopted, and to be followed in the making of loans, and its laches in not requiring an abstract of title, and in not calling for the deed of trust, estops it from prosecuting this action. Defendant was grossly prejudiced by plaintiff's negligence. It is such laches as will defeat plaintiff's action. Laches is such neglect or omission to assert a right as taken in conjunction with lapse of time more or less great, and other circumstances causing prejudice to an adverse party, operates as a bar in a court of equity. 18 Am. & Eng Ency. Law & Proc. (2 Ed.), 97, 100; Kline v. Vogel, 90 Mo. 239; Newman v. Newman, 152 Mo. 398; Hudson v. Cahoon, 193 Mo. 457; Loomis v. Railroad, 165 Mo. 469. (5) If an abstract of title had been prepared in this case, Dockery would have known it, and defeated the fraud. (6) This action is barred by the fifth clause of the Statute of Limitations. There is no averment of any effort to discover the fraud, or any trick or artifice to conceal it. The petition therefore shows on its face that the cause of action was barred by the five-year Statute of Limitation. County v. Bragg, 135 Mo. 291; Callan v. Callan, 175 Mo. 346; Stark v. Zehnder, 204 Mo. 442; Loomis v. Railroad, 165 Mo. 494; 19 Am. & Eng. Ency. Law (2 Ed.), 250, 252; Hudson v. Cahoon, 193 Mo. 547; Teall v. Schroder, 158 U.S. 172; Clark v. Leon, 108 Iowa 250; Felix v. Patrick, 145 U.S. 317; Hart v. Heidweyer, 152 U.S. 547. (7) Payment of interest not pleaded nor relied upon to take the case out of the Statute of Limitations.

VALLIANT, C. J. Lamm, Ferriss and Kennish, JJ., concur; Woodson, Graves and Brown, JJ., dissent, and each files a dissenting opinion.

OPINION

In Banc

VALLIANT, C. J.

Plaintiff, an Illinois corporation, sues to recover $ 12,000, with interest, which it alleges was obtained from it by defendant through fraud and deceit. It is not disputed that the money was obtained from the plaintiff by fraud and deceit and it is not charged that defendant Dockery was, in person, guilty of any of the fraud or deceit that was practiced in the transaction, or that he did in person obtain any of the money in question. But defendant was a member of a business firm or copartnership doing business under the name and style of Dockery & Hilbert, and the fraud was practiced in the name of the firm by Hilbert, defendant's partner, and the money was obtained by Hilbert in the name of the firm, without the knowledge of defendant Dockery. It is, therefore, a case in which one of two innocent parties must suffer, and the question is, must the defendant suffer for the wrongdoing of his partner or must the plaintiff suffer from the wrongdoing of defendant's partner?

There is no dispute about the main facts in the case. At the time of this transaction and for several years prior, defendant and Edwin L. Hilbert were partners in trade under the style and firm name of Dockery & Hilbert. Their business was dealing in real estate, making and negotiating loans on real estate, etc. They did the largest business of that kind that was done in Kirksville, Missouri, where they lived. Their personal and commercial reputation was of the very best; even Hilbert, for integrity and financial strength, was, at that...

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