Farmers' Exch. Bank v. McDonald (In re McDonald's Estate)
| Decision Date | 14 December 1914 |
| Docket Number | No. 29682.,29682. |
| Citation | 149 N.W. 897,167 Iowa 582 |
| Parties | IN RE MCDONALD'S ESTATE. FARMERS' EXCHANGE BANK v. MCDONALD. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Polk County; Lawrence De Graff, Judge.
Opinion states the case. Affirmed.
Dale & Harvison, of De Moines, for appellant.
Wilkinson & Wilkinson, of Winterset, and Hunn & Jones, of Des Moines, for appellee.
On the 28th day of February, 1908, the plaintiff herein, the Farmers' Exchange Bank of Ankeny, filed its claims against the estate of Finley McDonald, Sr., in which it states: That Finley McDonald died on November 29, 1907. That he left a will. That the will was duly probated, and that Finley McDonald, Jr., his son, was duly appointed executor. That on the 19th day of December, 1905, Finley McDonald, Sr., was a member of the partnership or firm of F. McDonald & Sons, and on said date the firm executed and delivered to the First National Bank of Winterset its promissory note, signed F. McDonald & Sons, for $260 and on the 8th day of May, 1906, Finley McDonald, Sr., being still a partner, the firm executed and delivered to the First National Bank of Winterset a note for $616.21, and on the 8th day of August, 1906, it executed and delivered to said First National Bank of Winterset its two promissory notes, one for $1,300 and one for $1,500, signed Finley McDonald & Sons. That on the 27th day of May, 1907, the said bank, for a valuable consideration, transferred said notes to this plaintiff, and this plaintiff is now the owner thereof, and asks that its claims be established based upon said notes, against the estate of Finley McDonald, Sr. On July 13, 1909, the executor, Finley McDonald, Jr., filed an answer, denying practically each and every allegation of plaintiff's claim, except that Finley McDonald, Sr., died at the time alleged, and that this defendant is the executor of his last will and testament. On January 17, 1913, four years after the filing of the answer, the plaintiff filed the following amendment to its petition:
That during the transactions mentioned in plaintiff's petition, and for a long time prior thereto, up to the 27th day of May, 1907, the said Finley McDonald, Sr., held himself out to the general public and to the First National Bank of Winterset as a member of the firm of F. McDonald & Sons, and responsible for and liable upon notes signed by his son John F. McDonald under and with the firm name of F. McDonald & Sons, and that John F. McDonald. with full knowledge, consent, and approval of Finley McDonald, Sr., held out to the public generally, and to said bank and to this plaintiff, that his father, Finley McDonald, Sr., was a member of the firm of F. McDonald & Sons; that, relying upon said representation, the plaintiff purchased the notes in question, and would not have purchased them except for such representations, and alleges that Finley McDonald, if living, would be, and his executor is now, estopped and barred from denying that Finley McDonald, Sr., was a member of said firm.
This amendment was filed the next day after the trial had been begun.
Upon the issues thus tendered, the cause was tried to the court as an equitable action, by consent of both parties, and upon the conclusion of the trial and its final submission, the court made the following findings of fact, to wit: That said Finley McDonald, Sr., was not a partner of his son, John F. McDonald; that the said Finley McDonald, Sr., did not hold himself out to the plaintiff as a partner of his said son; that, therefore, the plaintiff's petition should be dismissed at its costs, and judgment was entered, dismissing the petition at plaintiff's costs. From this action, the plaintiff appeals, and assigns the following errors as grounds for reversal.
(1) The court erred in failing to find that Finley McDonald, Sr., was a member of the firm of F. McDonald & Sons.
(2) And in failing to find that said Finley McDonald, Sr., had held himself out to the public generally, to the knowledge of the plaintiff, as a member of said firm, and was liable accordingly.
(3) And in failing to find that said Finley McDonald, Sr., permitted his son, John F. McDonald, to hold him out to the public generally, to the knowledge of the plaintiff, as a member of said firm, and was liable accordingly.
(4) And in failing to find that said Finley McDonald, Sr., had held himself out to the plaintiff in particular as a member of said firm, and was liable accordingly.
(5) And in failing to find that said Finley McDonald,Sr., permitted his son, John F. McDonald, to hold him out to the plaintiff in particular as a member of said firm, and was liable accordingly.
(6) And in failing to find that said Finley McDonald, Sr., if living, would be, and that defendant, as executor of his estate, was, estopped from denying liability upon the notes in suit.
[1] The following appears to be without controversy in this record: That Finley McDonald, Sr., during all his life, was a farmer; that he went to Madison county in 1901, and lived on a farm about five or six miles from Winterset until October 5, 1905; that on March 1, 1906, he removed to the town of Ankeny, and later moved from there to the city of Des Moines, at which place he died; that he never was engaged in any other business than that of farming; that the notes in suit were given by his son, John F. McDonald, for overdrafts on the First National Bank of Winterset. It does not appear for what purpose this money was used that John F. McDonald obtained by means of these overdrafts. It does appear that John F. McDonald kept an account at the First National Bank of Winterset in the name of Finley McDonald & Sons; that the overdrafts arose by reason of checks drawn by John F. McDonald, and charged by his direction, to the account of Finley McDonald & Sons. It appears that, at the time these notes were given, John F. McDonald had overdrawn at this bank the amount of these notes; that the notes were made and executed, at the time stated in plaintiff's petition, to satisfy these overdrafts. It does not appear that Finley McDonald, Sr., was in any way interested in the money procured by means of these overdrafts. It does not appear that he received any of the money, or that the same was used in any business enterprise, or for the purchase of any property, in which Finley McDonald, Sr., was interested. It does not appear that Finley McDonald, Sr., knew, at the time, that his son John F. was carrying an account in the Winterset Bank, under the name of Finley McDonald & Sons. It does not appear that he knew that John was checking against any such account. It does not appear that he knew of these overdrafts, or the giving of these notes in question, until some time after they were given. The notes in question were assigned to the plaintiff on the 27th day of May, 1907, without recourse. Finley McDonald, Sr., died November 29, 1907. His son John F. McDonald died October 17, 1908. These notes were filed as a claim against the estate of Finley McDonald, Sr., on the 28th day of February, 1908.
There is no evidence of any agreement of partnership between Finley McDonald, Sr., and any of his sons, or that he had any personal interest in any of the business carried on by John F. McDonald, under the name of Finley McDonald & Sons, or otherwise, or that he was personally engaged, or in any way concerned, in any of the business carried on by John F. McDonald, under that name, or any other name. So far as this record discloses, Finley McDonald and Sons was but a name under which John F. McDonald transacted his own business. We do not find anything in the evidence that shows that a partnership actually existed between Finley McDonald, Sr., and John F. McDonald, or that they had any business transactions of a partnership nature, or that any business was carried on by Finley McDonald, Sr., in connection with any of his sons, under the name of Finley McDonald & Sons, or that he had any interest in any business carried on under that name. It does not appear what the business of the alleged firm was, or that it had any business.
Upon this record, we dismiss the claim made by the plaintiff, that Finley McDonald, Sr., was, in fact, a partner of his sons, conducting business under the name of Finley McDonald & Sons.
The plaintiff, however, claims in the amendment filed to its petition four years after the answer was filed, and after the trial of the case had been begun, that Finley McDonald, Sr., held himself out to the public, and to the First National Bank of Winterset, as a member of the firm of McDonald & Sons, and responsible for and liable upon notes signed by his son, John F. McDonald, under that name; that John F. McDonald held out to the public generally, and particularly to the First National Bank of Winterset, and to the plaintiff bank, that his father was a member of the firm of Finley McDonald & Sons, and liable with him for all notes signed by him, John F. McDonald, under the name of Finley McDonald & Sons, and that he did this with the full knowledge, consent, and approval of Finley McDonald, Sr.; that in purchasing these notes from the Winterset Bank, the plaintiff relied upon this fact and paid full value for the notes, and would not have done so if it had not been for these representations.
[2][3] This presents a different question, for the law is well settled that a person may be estopped by his conduct to deny liability as a partner, though not in fact a member of the firm, and it is well settled by authority that one holding himself out to another as a partner, or knowingly permitting himself to be so held out, although no partnership exists, may be liable to one who, relying upon such conduct and believing that a partnership exists and that he is a partner, deals with the alleged partnership on that assumption.
[4] That is based on the doctrine of estoppel, and denies to him the right to gainsay that which, by his conduct, he led the...
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