Ditzell v. Shoecraft

• Decision Date: 25 May 1925
• Docket Number: No. 14990.,14990.
• Parties: DITZELL et al. v. SHOECRAFT.
• Court: Missouri Court of Appeals

274 S.W. 880

DITZELL et al. v. SHOECRAFT.

No. 14990.

Kansas City Court of Appeals. Missouri.

May 25, 1925.

Certiorari Denied July 3, 1925.

Appeal from Circuit Court, Atchison County; John M. Dawson, Judge.

Action by Sebastian Ditzell and another, partners doing business as the Kansas City Oil Company, against Charles V. Shoecraft. From a judgment for defendant, plaintiffs appeal. Reversed and remanded, with instructions.

James Gore and L. D. Ramsey, both of Rockport, for appellants.

Walsh & Aylward and Morrison, Nugent, Wylder & Berger, all of Kansas City, amici curie.

John Gerlash, of Tarkio, and W. C. Ellison, of Maryville, for respondent.

ARNOLD, J.

This is an action to recover the sum of $250, based upon a trade acceptance of a draft.

The draft, of date April 27, 1921, was drawn by and made payable to a company designated as the Producers' Consolidated Oil Company. Plaintiffs were partners doing a wholesale business in oil products under the firm name of Kansas City Fuel Oil Company, with headquarters at the city of Kansas City, Mo. In the regular course of business they sold large quantities of gasoline and kerosene, one a their purchasers being a certain retail corporation known as the Producers' Consolidated Oil Company, a Nebraska corporation. This last-named company deposited with plaintiffs, as security for their past account and future sales, before due,. certain trade acceptances, among them one signed by defendant, which is the one involved in this suit.

The Producers' Oil Company became insolvent, at which time their indebtedness to plaintiffs amounted to $3,796.20. Plaintiffs thereupon filed suit against defendant as the drawee and acceptor of one of these trade acceptances in the sum of $250. The cause was tried to the court, a jury having been waived and judgment was for defendant. Plaintiffs appeal.

The cause was presented to the court upon an agreed statement of facts, though there are some facts not included in the statement which we deem necessary to a clear understanding of the case.

In 1921, the Producers' Oil Company organized a large and partially successful chain of filling stations throughout Missouri and Kansas. In order to secure local interest in the project and to raise capital for financing said filling stations, advance agents of said company would offer to local investors and consumers a certain contract or so-called "purchase order," by which the investor was to get double the value of gasoline when the station should be built, in return for signing a 6 months' acceptance for a given amount. A number of persons in and around Tarkio, Mo., signed such contracts and trade acceptances. Defendant, on April 27, 1921, signed and delivered to the Producers' Oil Company the 6 months' acceptance sued on herein. The Tarkio filling station was never completed, and the Producers' Oil Company never delivered to defendant or others in the Tarkio district the oil for which the acceptances were taken.

On June 17, 1921, the Producers' Oil Company's account with plaintiffs, being of considerable size, and more purchases being contemplated, plaintiffs asked for security, and the president of the Producers' Company indorsed and delivered to plaintiffs, as collateral security, a number of the said acceptances including that of defendant. This suit was instituted to collect on said acceptance.

The agreed statement of facts is brief, and, as it greatly simplifies and brings out the issues involved, it is set out in full herein, as it appears in the bill of exceptions.

"First. It is agreed by the parties that on the 17th day of June, 1921, plaintiffs as partners, were, and for 3 months next prior and subsequent thereto had been, transacting business in the purchase and sale of petroleum products, in Kansas City, Mo., under and in the name of the `Kansas City Fuel Oil Company,' without complying with any of the provisions of section 13277, R. S. 1919, pertaining to the registration of fictitious names in the office of the secretary of state, but did so register prior to bringing this suit, to wit, on December 27, 1922.

"Second. It is agreed that on the said 17th day of June, and under the said name of the `Kansas City Fuel Oil Company,' the plaintiffs, in the course of their said business, and in Kansas City, Mo., obtained, as hereinafter set out, from the `Producers' Consolidated Oil Company' the draft and acceptance, and indorsement thereon, involved in this suit, which said draft, signed by defendant herein and now unpaid, is in words and figures following:

                                "`Tarkio, Mo., April 27, 1921
                "`$250
                

"`Six months from date hereof, pay to the order of the Producers' Consolidated Oil Company, two hundred fifty and no-100 dollars ($250.00), at the office of Tarkio Valley Bank, Tarkio, Mo., for petroleum products sold to drawee. With interest hereon at the rate of 8 per cent. from date.

                  "`To Charles V. Shoecraft, Tarkio, Mo
                "`The Producers' Consolidated Oil Company
                                   "`By R. R. Sibley, Pres.'
                

"It is further agreed that on the face of said draft are the following words of acceptance:

                "`Accepted April 27, 1921. This obligation
                arises out of the actual purchase of goods from
                drawer.       [Signed]   Charles V. Shoecraft'
                

"And on the back of said draft are the following words: `The Producers' Consolidated Oil Co., R. R. Sibley, Pres.'

"Third. It is agreed that this draft, acceptance, and indorsement thereon with others were received and accepted as aforesaid by plaintiffs from said Consolidated Oil Company (through its president, R. R. Sibley, who represented that they were sound and good), under a contract of the date and place aforesaid, between plaintiffs in their business name aforesaid and said consolidated oil company, by which contract plaintiffs were to hold said drafts and acceptances as collateral security for the payment to them of a certain unpaid indebtedness of some $3,796.20, then and thereafter incurred by the said Producers' Consolidated Oil Company, and still unpaid, for petroleum products sold by plaintiffs in their business name aforesaid in Kansas City, Mo., at various dates between December 1, 1920, and June 29, 1921.

"Fourth. It is agreed that, as to the Producers' Consolidated Oil Company, the defendant would have a complete defense to said draft and acceptance thereof, on the ground of the entire lack of consideration; but it is further agreed that the plaintiffs, when they received the acceptance sued on, had no knowledge or notice whatever of said lack of consideration, or of any other facts which would create an infirmity in said acceptance or draft."

At the request of defendant the court found the facts to be as follows:

"First. The court finds the facts to be that on the 17th day of June, 1921, plaintiffs as partners were, and for more than three months next prior and subsequent thereto had been, transacting business in the purchase and sale of petroleum products, in Kansas City, Mo., under and in the name of the `Kansas City Fuel Oil Company,' without complying with any of the provisions of section 13277, R. S. 1919, pertaining to the registration of fictitious names in the office of the secretary of state.

"Second. The court finds the fact to be that on said 17th of June, and under the name of the Kansas City Fuel Oil Company, the plaintiffs, in the course of their said business, and in Kansas City, Mo., obtained from the Producers' Consolidated Oil Company the draft and acceptance thereof involved in this suit.

"Third. The court finds the fact to be that said draft and acceptance were received and accepted by plaintiffs from said Consolidated Oil Company under a contract between them by which plaintiffs were to hold the same as collateral security for the payment of a certain debt arising out of this business aforesaid.

"Fourth. The court finds the fact to be that the sole consideration for the execution of said acceptance by defendant was as set forth in the papers in evidence, called the `Purchase Order' and `Receipt,' which were executed concurrently with the execution of the acceptance, and all were parts of one transaction.

"Fifth. The court finds the fact to be that the filling station mentioned in the `Purchase Order' was never established by said Producers' Consolidated Oil Company, or by any one for them; that no petroleum products of any kind I were ever supplied or tendered by said company to defendant, and defendant has not directly or indirectly received any consideration for said acceptance, and said company has never offered to return said acceptance to defendant, nor any money in lieu thereof, and it is no longer a going concern.

"Sixth. The court finds the facts to be that said acceptance was not delivered to plaintiffs as collateral security for the payment of any debt in the form of a book account, but was delivered as collateral security to secure the payment of a promissory note or other obligation which was then and there executed by said Producers' Consolidated Oil Company to plaintiffs in lieu of such book account.

"Seventh. The court finds the fact to be that the evidence fails to show that plaintiffs, when they received the acceptance sued on, had any knowledge of said `Purchase Order,' or of any other fact creating an infirmity in said acceptance, or constituting a failure of consideration."

The court declared the law to be as follows:

"(a) The court declares the law to be that article III of chapter 122, R. S. 1919, commonly known as the fictitious name statute, is a constitutional enactment, and is expressly declared by the Legislature to be a regulation of business done under fictitious names, rendered necessary for the protection of the public against fraud and deceit.

"(b) The court declares the law to be that the name `Kansas City Fuel Oil Company' was a fictitious name as used by plaintiffs in the transaction of their business herein involved, and as defined by ...