Hobbs v. Va. Nat. Bank Of

• Decision Date: 27 May 1926
• Citation: 133 S.E. 595
• Parties: HOBBS . v. VIRGINIA NAT. BANK OF PETERSBURG.
• Court: Virginia Supreme Court

133 S.E. 595

HOBBS .

v. VIRGINIA NAT. BANK OFPETERSBURG.

Special Court of Appeals of Virginia.

May 27, 1926.

Further Rehearing Denied June 10, 1926.

Christian, J., dissenting.

Error to Hustings Court of Petersburg.

On rehearing. Reversed and remanded.

For former opinion, see 128 S. E. 46.

Mann & Townsend and Richard D. Gilliam, all of Petersburg, for plaintiff in error.

Richard H. Mann, of Petersburg, for defendant in error.

CRUMP, P. [1] In the argument upon the rehearing it was urged by the learned counsel for plaintiff in error that the court bad, in its opinion, attached too great weight to the statement of the condition of the firm of J. W. Thomas & Co. rendered to the National Bank of Petersburg in 1922, and signed by Thomas and also by Hobbs as the two persons composing the partnership under that name; it was also again insisted that the statement was not relevant in this case, as its existence was unknown to and did not influence the plaintiff bank, and was therefore inadmissible. That the statement was admissible as competent testimony in the case is too clear to be questioned. Mr. Hobbs' oral testimony in the case is brief, but in the course of it he denied that any arrangement in the nature of a partnership at any time existed between Thomas and himself. This written statement signed by him is in complete refutation of that testimony. Mr. Hobbs denied that the agreement of 1900 authorized Thomas to represent to any one that he was a partner in the concern. This written statement was a declaration in writing to the contrary. By this writing Mr. Hobbs declared, in effect, that the agreement of partnership made in 1900 had continued in force during the years intervening up to 1922, and had not been terminated. Mr. Hobbs had contended in his oral testimony that he understood the arrangement he had made with Thomas to have the effect only of allowing the firm to buy goods upon his credit. By this statement Mr. Hobbs declared, over his signature in 1922, in effect, that the agreement between the parties which had existed since 1900 authorized Thomas to borrow money from the bank upon the credit of the firm in which he was to be regarded as a partner, and to bind the firm by the obligagations which he might give to the bank.

Whether this character of testimony was admissible at the time it was first offered, the plaintiff bank not having relied upon it, became immaterial, as it was made admissible by the evidence of Mr. Hobbs and the introduction of the written agreement between him and Thomas.

In order that the importance of this statement of 1922 to the ascertainment of the extent to which Mr. Hobbs had authorized Thomas to represent to third parties that Hobbs was a partner with him in the firm of J. W. Thomas & Co-., it is here transcribed in full as it appears in the record:

"The National Bank of Petersburg.

"Name (firm style):.1. W. Thomas & Co. "Business: General house furnishing goods. "Location: 125 N. Syc.

"For the purpose of procuring credit from time to time, borrowing money and obtaining discounts from you, the undersigned declare the following to be an accurate, true and full statement of the financial condition of the undersigned on Jan. 1, 1922, understanding that the officers of the bank in granting said credits rely upon the accuracy of this statement.

"If at any time the condition of the undersigned should be materially changed, notice will be given you immediately in writing, stating the nature of such changed condition, and in the event of not doing so it shall be evidence that the condition is unchanged.

Assets.

                ------------------------------------------------------------------
                |Cash In the National Bank of Petersburg..            |$300 00   |
                |-----------------------------------------------------|----------|
                |Accounts receivable from customers (good)            |1, 500 00 |
                |-----------------------------------------------------|----------|
                |Merchandise finished (how valued), inventory         |2, 500 00 |
                |-----------------------------------------------------|----------|
                |Real estate in fee belonging to partners individually|75, 000 00|
                |-----------------------------------------------------|----------|
                |Machinery an fixures                                 |500 00    |
                |-----------------------------------------------------|----------|
                |Other assets and of what composed: Bonds, stocks, etc|50, 000 00|
                ------------------------------------------------------------------
                

Liabilities.

                -------------------------------------------------------------------------------
                |Bill payable for merchandise                                          |None  |
                |----------------------------------------------------------------------|------|
                |Bills payable to others                                               |None  |
                |----------------------------------------------------------------------|------|
                |Bills receivable, discounted                                          |None  |
                |----------------------------------------------------------------------|------|
                |Open accounts, not due                                                |600 00|
                |----------------------------------------------------------------------|------|
                |Open accounts, part due                                               |None  |
                |----------------------------------------------------------------------|------|
                |Mortgage or lien on real estate                                       |None  |
                |----------------------------------------------------------------------|------|
                |Chattel mortgage or other lien                                        |None  |
                |----------------------------------------------------------------------|------|
                |Confidential loans from friends or relatives (and from whom)          |None  |
                |----------------------------------------------------------------------|------|
                |Please list real estate in detail on other aid side Contingent        |      |
                |liability:                                                            |      |
                |----------------------------------------------------------------------|------|
                |Accommodations on indorsement                                         |None  |
                |----------------------------------------------------------------------|------|
                |Guaranties on bonds                                                   |None  |
                -------------------------------------------------------------------------------
                

"Do you pledge, sell or otherwise dispose of any of your accounts receivable? No.

"If so, to what extent are any of the accounts in above statement so disposed of? None.

"General partners: J. W. Thomas & E. S. Hobbs.

"Date and expiration of partnership: Indefinite.

"When was business established: 1900.

"Sales for year ending: $15,000.

"Average terms of sale: 30 days.

"Amount of rent paid per annum: $112.50.

"Amounts charged off for depreciation and bad debts: I have none I consider bad; been very cautious who I sold this year.

"Amount of insurance: On stock $4,000.

"Are accounts insured, and, if so, in what company? None.

"Date signed: January 1, 1922.

"Please sign firm name: J. W. Thomas & Co.

"J. W. Thomas & E. S. Hobbs."

Reading this entire statement in connection with the articles of partnership executed in 1900, we gain a fairly clear idea of the conception of both parties as to the arrangement between them and as to the effect of the so-called articles of partnership, not from dim memory under the stimulus of testifying post litem motam, however. upright in intention the witness may be, but from documentary proof, the highest vehicle of proof. Unquestionably the parties who signed these two papers understood and intended that they should be taken by the business world as partners, that the property of Mr. Hobbs accounted as $75,000 in real estate and $50,000 of securities should be considered as a financial backing of the firm of J. W. Thomas & Co., in which he stated he was a partner, and that the partnership, acting through either one of the partners, had authority to borrow money from banks and to execute the usual evidences of debt therefor in the partnership name. How can the court come to any other conclusion than that this was the construction placed by both parties themselves upon the agreement of 1900?

It is further contended by the learned counsel for plaintiff in error that Thomas perpetrated a fraud upon Mr. Hobbs when he obtained his signature to the financial statement, and points to the fact that Thomas, who doubtless prepared the statement, placed the liabilities of the firm at only $500, whereas they must have been greatly in excess of the amount. The only testimony given by Mr. Hobbs as to the statement consists in his evidence that he did not remember when or where he signed the statement, and he would not have signed it if the liabilities had been correctly stated instead of having been put down at only $500. But this is beside the mark. The question here is not whether he would have terminated the agreement. He had a right to do so at any time. The condition of the business, the possibility of his incurring loss by reason of his partnership agreement with Thomas, were matters at all times open to investigation by him, and he could have terminated his further liability any time at his pleasure. But the fact is that he acknowledged the authority of Mr. Thomas to continue the business under the agreement which made him liable as a partner, and his further authority to borrow an unascertained amount of money from a bank upon his credit as a partner.

By the first instruction given to the jury, which is copied in the opinion of this court, the court instructed the jury that, by the agreement between Hobbs and Thomas, Hobbs had authorized the latter to hold him out to the world as a partner for "the purpose of giving Thomas credit in and about the trade therein mentioned. The court then in the same instruction told the jury, in substance, that if Thomas represented to the plaintiff that Hobbs was his...