Appeal from, Circuit Court, Jackson County; Willard P. Hall, Judge.
GRAVES, P. J.
This is a suit upon four notes, each dated December 20, 1917, and made payable to the order of the Hale Petroleum Company at its office in Kansas City, Mo. Each note was in the sum of $6,340.23 except the fourth one, which was for $6,340.20. Each constituted the basis for a separate count in the petition. These notes were signed "The Hale Petroleum Company, S. H. Hale, President," and bore interest at the rate of 6 per cent. payable semiannually.
The petition charges that for a valuable consideration, and prior to Maturity, the defendant
indorsed and delivered the same; that thereafter, for value received and before maturity, said notes so indorsed were transferred and delivered to the plaintiff. The notes matured in from 12 months to 30 months.
The defendant answered (1) by a general denial, (2) a specific denial of the fact that said notes were executed or delivered by authority of defendant, or that the same were ever delivered to plaintiff before maturity, and (3) the following defense was pleaded:
"Further answering, the defendant alleges that there was a pretended trade between William McGinley, Wayne Pouting, James A. Corbett, Rice McDonald, and C. F. Enright, as partners, and the Hale Petroleum Company, wherein the above-named partners first acquired an option on a greater part of the stock of the Wichita Independent Consolidated Companies, a corporation, which was pretended to be traded to the Hale Petroleum Company for stock of the Hale Petroleum Company and notes of the Hale Petroleum Company amounting to $670,541.77, consisting of 35 notes of various amounts, dated December 20, 1917, of which each of the notes sued on in plaintiff's petition is one, and, in order to procure the control of the stock which was to be delivered to the Hale Petroleum Company, William McGinley, Wayne Ponting, and James A. Corbett advanced to the owners of the same cash in the amount of about $72,000, and Rice McDonald and C. F. Enright were to have one-fourth of the profits accruing from such sale or trade of such Wichita Independent Consolidated Companies' stock to the Hale Petroleum Company for the Hale Petroleum Company stock and notes, in consideration that the said Rice McDonald and C. F. Enright pay to said Corbett, McGinley, and Ponting one-fourth of the moneys, amounting to about $72,000, which they had expended and advanced for the same, which one-fourth amounted to the sum of $18,000, and the said C. F. Enright and Rice McDonald paid the said $18,000 to the said Corbett, McGinley, and Panting, and received from them one-fourth of the Hale Petroleum Company notes and one-fourth of the Hale Petroleum Company stock received on such exchange; that said pretended trade was made and the said pretended notes and stock of the Hale Petroleum Company were all delivered to said Corbett, McGinley, and Panting without any authority on the part of the Hale Petroleum Company to execute, deliver, or exchange the same; that the said Corbett, McGinley, and Ponting, on ascertaining that the same had been delivered to them without any authority, on behalf of themselves and other partners, returned all of the notes delivered to them in such transaction with the exception of the notes now held by either C. F. Enright, the plaintiff, or Rice McDonald, and rescinded the said pretended trade; that during all of the time herein the said C. F. Enright was a stockholder and director of the said Hale Petroleum Company.
"That the said Corbett, McGinley, and Ponting now stand ready and are willing and able to return to the said McDonald and Enright their proportionate part of the stock rightly due them, by virtue of the rescission of the said contract, and they have at divers times offered to deliver to the said C. F. Enright and Rice McDonald the said stock upon the return to the said McGinley, Pouting, and Corbett of the Hale Petroleum Company notes herein sued on, which, in turn, were to be canceled and delivered to the Hale Petroleum Company, all pursuant to the terms of the rescission.
"That the said C. F. Enright, Rice McDonald, William McGinley, Wayne Pouting, and James A. Corbett were partners in the above transaction, and that the said rescission was for and on behalf of all of said partners, including the said C. F. Enright and Rice McDonald.
"Wherefore, the premises considered, the defendant asks that the said plaintiff take nothing by his first amended petition herein; that the defendant have judgment for costs; that the said plaintiff be enjoined and restrained from transferring the said pretended notes sued on, or any one of the above-mentioned pretended notes now in his possession or under his control; that he be required to deliver the same up to the court; and that the same be canceled, set aside, and held for naught."
The reply was as follows:
"Plaintiff, for reply to the amended answer to plaintiff's amended petition, denies each and every allegation in said amended answer contained, and for further reply plaintiff says that the defendant is estopped from denying that the president of the defendant company had authority to execute and deliver the notes sued on, for the reason that the defendant accepted the proceeds of the contract by virtue of which said notes were issued, and defendant by its practice and method and custom of carrying on its business held its president out as having authority to make contracts and issue and deliver notes similar to those sued on, and defendant ratified all action of its president in executing and delivering said notes."
Upon a trial before a jury the plaintiff had Judgment upon each count of the petition in the sum of $7,578.17, and from such judgment this appeal follows. Details are left to the opinion.
I. Both parties waived a jury, and tried the case before the court. Defendants requested a finding of facts and conclusions of law. The following is the finding of facts:
"On the 15th day of December, 1917, the Hale Petroleum Company entered into a contract in writing with William McGinley, J. A. Corbett, Wayne Pouting, and Rice McDonald, by the terms of which said individuals, acting as partners, agreed to procure and turn over to the Hale Petroleum Company at least 8,500,000 shares of the stock of the Wichita Independent Consolidated Companies, in consideration for which the Hale Petroleum Company agreed to pay to Corbett and associates approximately $670,000 and to give to Corbett and associates about 250,000 shares of its own stock. This contract was executed by Corbett and associates in person and by the Hale Petroleum Company by its then president, S. H. Hale.
"Such action was taken under the contract by Corbett and associates as that on the 20th day of December, 1917, Corbett and associates had purchased about 9,000,000 shares of the stock of the Wichita Company at an expense to themselves of about $72,000, the total amount of which Messrs. Corbett, McGinley, and Ponting paid. Rice McDonald paid none of the various sums paid out for the stock.
"On December 20, 1917, as stated, the Hale Petroleum Company received from Corbett and associates this large amount of the stock of the Wichita Company and gave to Corbett and his assistants notes aggregating $101,000 and about 128,000 shares of stock of the Hale Petroleum Company. These notes and this stock in the Hale Petroleum Company were to be divided into four parts among the members of said partnership, to wit, Corbett, McGinley, Pouting, and Rice McDonald, but, inasmuch as Rice McDonald had paid no part of the sums paid out for the stock, Rice McDonald received none of the notes or stock in the Hale Petroleum Company until McDonald made arrangements with C. P. Enright by which C. F. Enright was to pay McDonald's share of the $72,000 and take over McDonald's part of the notes and the stock in the Hale Petroleum Company.
"On March 27, 1918, the arrangement between McDonald and C. F. Enright was carried out. C. F. Enright paid McDonald's share of the $72,000 to Mr. Corbett for Corbett and his other two associates, McGinley and Pouting, and received the notes in suit aggregating $25,000 and some odd dollars, and 32,000 shares of the stock of the Hale Petroleum Company.
"C. F. Enright paid this sum of $18,000 and some odd dollars out of the funds of his son, this plaintiff, and from that time held the notes in suit as trustee for said son, charging his son in his accounts as his son's agent and trustee the sum of $25,000, and he held from that time on, so far as the evidence discloses, the 32,000 shares of stock in the Hale Petroleum Company for himself and Rice McDonald.
"In May, 1919, C. F. Enright settled his accounts with his son as his son's agent and trustee and received credit for $25,000 on account of the notes in suit.
"The Hale Petroleum Company prior to the completion of the transaction heretofore stated between its president, acting for it, and Corbett and associates, never formally authorized the transaction and never formally ratified it, except in so far as ratification may be implied from receiving and holding the stock in the Wichita Consolidated Companies.
"Corbett and his two associates, McGinley and Pouting, after the delivery by Corbett to C. F. Enright of the notes in suit and the 32,000 shares of stock in the Hale Petroleum Company, conceived the idea that it would be to their interest to undo the deal with the Hale Petroleum Company and give back to the Hale Company the notes aggregating...
