Gordon v. Pettingill

• Decision Date: 30 October 1939
• Docket Number: 14507.
• Citation: 96 P.2d 416,105 Colo. 214
• Parties: GORDON v. PETTINGILL et al.
• Court: Colorado Supreme Court

96 P.2d 416

105 Colo. 214

GORDON v. PETTINGILL et al.

No. 14507.

Supreme Court of Colorado

October 30, 1939

Rehearing Denied Nov. 27, 1939.

In Department.

Error to County Court, City and County of Denver; C. Edgar Kettering, Judge.

Action by D. G. Gordon, doing business as the Gordon Construction Company, against J. N. Pettingill, Sr., and J. N. Pettingill Jr., sued separately and not jointly, to recover the amount of checks drawn on the plaintiff by an employee of the plaintiff and given to the defendants by the employee in payment for rent. The plaintiff obtained judgment in justice court, and the defendants appealed to the county court. Judgment of the county court in favor of the defendants, and the plaintiff brings error.

Judgment affirmed.

Van Cise, Robinson & Charlton, Philip S. Van Cise, and Robert A Theobald, all of Denver, for plaintiff in error.

J. F Schneider, Horace N. Hawkins, Sr., Charles H. Haines, and Lucian M. Long, all of Denver, for defendants in error.

BURKE, Justice.

These parties appeared in reverse order in the trial court. They are hereinafter referred to as Gordon and Pettingill respectively. For convenience we elect to treat defendants in error as a single person. This in no way affects our opinion and the record discloses that it can confuse neither the parties nor the trial court. One H. E. Baumgarten is hereinafter referred to as Baumgarten.

Gordon sued Pettingill in justice court to recover $180 and had judgment. On appeal to the county court a jury was waived the cause was tried on an agreed statement of facts and Pettingill had judgment against Gordon for costs. To review that judgment the latter brings error. Since the facts are not in dispute the sole contention, under the six assignments, is that the court put the wrong construction on the facts and was in error as to the law applicable.

Gordon was in the highway construction business. Baumgarten was his bookkeeper with authority to sign checks for payrolls (including $40 per week to himself), machinery and office supplies only. The printed form of those checks bore Gordon's business title and address, and printed signature, with a blank for the name of the person actually signing, thus----

The Gordon Construction Co.,

By ________

By ________

Baumgarten was a tenant of Pettingill and paid the latter $180 rent by three such checks, for $60 each, dated August 3, 1935, January 16, 1936, and October 3, 1936, respectively, each bearing the signature 'The Gordon Construction Co., By H. E. Baumgarten.' Gordon was out of the state 'the greater portion of 1935 and 1936.' Baumgarten was his only office employee, so, without the actual knowledge of either of these parties Baumgarten embezzled Gordon's money and used it to pay his own house rent. In July, 1937, Baumgarten quit his employment, his books and bank statements were examined, and so Gordon first learned of the embezzlement, whereupon he made demand and brought suit.

Gordon says Pettingill was put upon notice that Baumgarten was paying his personal rent with his employer's money and bound to inquire into his authority to do so, and that having failed in that duty he must repay, citing, inter alia, 2 Am.Juris. Sec. 390, p. 306; Restatement, Law of Agency, § 314, p. 699; DeBaca v. Higgins, 58 Colo. 75, 143 P 832, L.R.A.1915B, 1091; Gerard v. McCormick, 130 N.Y. 261, 29 N.E. 115, 14 L.R.A. 234. There is no question as to the general rule and under it Pettingill would lose because the form of the check and its signature gave him the notice alleged. The only question is, Was Pettingill within any well recognized exception? Answering this we note first these peculiar facts: The bank, apparently, had no special knowledge. It cashed all Gordon's checks so signed. Their face did not disclose their purpose. Baumgarten had authority to pay his own salary with such checks. The three in question were spread over a period of 14 months during which his salary was $2240. If that account was duly charged with these rent payments only a slight irregularity, at most, occurred, and Gordon lost nothing. Assuming Baumgarten's integrity this would be the natural conclusion of one dealing with him, knowing his authority to so pay his salary, and taking such checks for his personal debts. Each check was but for one and one-half weeks salary. Five months elapsed between the first and second, and eight months between the second and third, or over a year between the first and the last. Another eight months elapsed Before the matter was brought to the attention of Pettingill, and for that length of time Baumgarten had been elsewhere. In other words after Pettingill...