Kirkpatrick v. Seneca Nat. Bank, 46859

• Decision Date: 03 November 1973
• Docket Number: No. 46859,46859
• Citation: 213 Kan. 61,515 P.2d 781
• Parties: Mary Ellen KIRKPATRICK and Jayde Sprecker, d/b/a Kirkpatrick & Sprecker, a partnership, Appellees, v. SENECA NATIONAL BANK, a National Banking Association, Appellant.
• Court: Kansas Supreme Court

Page 781

515 P.2d 781

213 Kan. 61

Mary Ellen KIRKPATRICK and Jayde Sprecker, d/b/a Kirkpatrick & Sprecker, a partnership, Appellees, v. SENECA NATIONAL BANK, a National Banking Association, Appellant.

No. 46859.

Supreme Court of Kansas.

Nov. 3, 1973.

Syllabus by the Court

1. Under the doctrine of promissory estoppel a promise is binding and will be enforced when it is a promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance and if injustice can be avoided only by enforcement of the promise.

2. The doctrine of promissory estoppel will be invoked where the evidence shows that a promise was made under circumstances where the promisor should reasonably expect that the promise would be relied upon by the promisee and that the promisee acted reasonably in relying upon the promise and further if refusal to apply the doctrine would result in injustice otherwise unavoidable. (Following Marker v. Preferred Fire Ins. Co., 211 Kan. 427, 506 P.2d 1163.)

3. The judgment of a trial court is to be upheld, if it is correct, even though the court may have relied upon a wrong ground or assigned an erroneous reason for its decision.

4. The record is examined, in an action to recover payment of fees for accounting services rendered in reliance upon a promise made by appellant, and for reasons appearing in the opinion the judgment of the trial court awarding payment of such fees is affirmed.

Terry G. Paup, of Regan, Sargent, Klenda, McGannon, Paup & Glickman, Wichita, argued the cause, and Daniel R. Glickman, Wichita, was with him on the brief for the appellant.

Jack Scott McInteer, of Weigand, Curfman, Brainerd, Harris & Kaufman, Wichita, argued the cause, and Windell G. Snow, Wichita, was with him on the brief for the appellees.

KAUL, Justice:

Plaintiffs-appellees, a partnership doing business as certified public accountants, instituted this action against defendant-appellant, Seneca National Bank, to recover for services rendered in auditing the books of and preparing financial statements reflecting the financial condition of the Barkley Sheet Metal Co. Inc., a customer and debtor of defendant. For convenience the parties mentioned will hereafter be referred to as Kirkpatrick or plaintiffs, Bank or defendant, and Barkley.

Mr. Lanny D. Jackson, vice-president and cashier of the bank, was in charge of the Barkley account. During the summer of 1970, the Bank became concerned about Barkley's loan account because a financial statement of Barkley made as of July 31, 1970, reflected that Barkley had operated at a substantial loss during the period April 1 through July 31, 1970. The statement was prepared by another certified public accountant firm identified as Peterson, Peterson and Goss. A previous statement prepared by Peterson reflected a net profit of $20,205.00 for Barkley for the corporate fiscal year ending March 31, 1970. The next statement prepared by Peterson running through July 31, 1970, reflected a loss of $65,505.55, during the interim period. The evidence discloses that at this point Bank was considering the termination of Barkley's line of credit, calling its notes and foreclosing on secured collateral which, in effect, would close down Barkley's operations.

Mr. Barkely, president of the Barkley company, expressed the opinion to Jackson that the accounting procedures of Peterson in preparing the previous financial statements were adversely erroneous. Miss Mary Ellen Kirkpatrick, a partner in plaintiffs' firm, was contacted by C. I. Blair, who was employed by Barkley as an estimator. Blair had known Miss Kirkpatrick for several years. Arrangements were made for a meeting in the Kirkpatrick office on November 11, 1970. Barkley, Blair, Jackson and Miss Kirkpatrick were present at this conference. The current financial condition of Barkley was discussed and the financial statements prepared by Peterson were reviewed. Miss Kirkpatrick testified that both Jackson and Barkley indicated to her that they had been unable to obtain from the Peterson firm a satisfactory explanation for the appearance of such a substantial loss during the four-month period ending July 31, 1970. Miss Kirkpatrick further stated that she questioned the accuracy of the previous Barkley financial statements and suggested that when corrected a much different picture of losses supposedly incurred by Barkley might be reflected.

In the course of the conference Jackson, Barkley and Miss Kirkpatrick discussed whether or not the additional expense in preparing a new financial statement for Barkley was justifiable as Barkley had not paid all of the accounting fees then owed to Peterson, the former accountants. Jackson informed Miss Kirkpatrick the Bank had all of Barkley's accounts receivable under assignment and all of the proceeds for Barkley's 'work-in-progress' were coming to the Bank; that he was authorizing the payment of bills by Barkley; and that as long as he was handling the Barkley account for the Bank, he would see that Kirkpatrick's accounting fees would be paid by Barkley. Miss Kirkpatrick testified that she would not have performed the work without the assurance of Jackson that her fees would be paid; and that she relied on that assurance and proceeded to prepare accouniting statements for Barkley running through September 30, 1970.

On or about October 10, 1970, Jackson asked Miss Kirkpatrick to extend the financial statement current to October 31, 1970. Jackson testified that the Bank needed to know the current financial position of Barkley because the Bank at that time had advanced $138,700.00 to Barkley; that the Bank's position was over-extended and beyond their loan limitations, and an examination by bank examiners was expected. In compliance with the Bank's request Miss Kirkpatrick prepared supplemental statements running through October 31, 1970, these statements showed that the indebtendnses of Barkley to the Bank had dropped by $11,000.00 during the month of October. In the meantime, in re-auditing the earlier financial reports by Peterson, Miss Kirkpatrick discovered accounting errors which she believed entitled Barkley to income tax refunds. Thereafter, Kirkpatrick prepared and filed amended returns for Barkley claiming a refund in the amount of $4,787.00 on Federal income tax and $721 on Kansas State income tax. Bank obtained an assignment from Barkley of the tax refunds.

For services performed Kirkpatrick invoiced Barkley on October 30, 1970, in the amount of $3,157.50. After the final work was completed Kirkpatrick again invoiced Barkley on November 30, 1970, in the amount of $3,323.75. Miss Kirkpatrick testified that when she discussed the tax refunds with Jackson she told him the amount of the bill for plaintiffs' services and that he was aware of the original billings sent to Barkley.

On or about December 8, 1970, after Barkley mentioned the Kirkpatrick bill to him, Jackson directed Barkley to send Kirkpatrick a check in the amount of five hundred dollars. On February 27, 1971, Kirkpatrick sent a statement for services in the amount of $2,996.25 addressed to Barkley and the Bank 'codebtors.' On March 12, 1971, Kirkpatrick received a letter from P. R. Mullen, president of defendant Bank, stating that the Bank disclaimed any liability for payment of the invoice. This litigation was then instituted.

In their petition plaintiffs allege that the Bank was indebted to them for accounting services performed for Bank, the reasonable value of which was $2,996.25 and prayed for judgment accordingly. Bank answered in the form of a general denial.

After a pretrial conference an order was entered which reflected stipulations of the parties and delineated their respective positions. Plaintiffs contended they were entitled to recover for breach of contract on several alternative theories; namely, breach of express contract, breach of contract implied in fact and breach of contract implied in law or quasi-contract. Plaintiffs elaborated on their alternative theory of recovery for breach of quasi-contract by asserting that it was based upon legal liability imposed upon the Bank to anser for the reasonable value of the accounting services for the purpose of imposing a legal obligation and affording a remedy, without which injustice would result.

The pretrial order reflects that Bank asserted as a defense that plaintiffs failed to state a claim upon which relief could be granted. In addition Bank attacked plaintiffs' theory of recovery for breach of contract by asserting that there was no contract (1) for lack of mutual assent; (2) for lack of sufficient definiteness as to terms; and (3) for lack of legally sufficient consideration. Bank further asserted that plaintiffs' theory relative to surety or guaranty was barred by the statute of frauds. As an affirmative defense Bank further asserted that plaintiffs, by their own actions, were estopped legally and equitably from asserting against it any claim for accounting.

In this posture the case came on for trial to the court. The evidence consisted primarily of the testimony of Mary Ellen Kirkpatrick, Blair and Jackson. There is no material conflict in their testimony concerning the chronology of events or what was said or done by the parties on the several occasions testified about.

In its decision, which was announced from the bench, the trial court ruled in substance; first, that there was no meeting of minds between Kirkpatrick and the Bank on a contract whereby the Bank obligated itself through its own funds to pay Kirkpatrick for the accounting services. The court commented:

'. . . (T)he parties did not agree on a promise that the bank would indemnify or stand in the shoes of the sheet metal company and pay in the event they didn't pay. We have already decided that didn't happen. Such understanding was not made.'

The...