Plains State Bank v. Ellis

• Court: Kansas Supreme Court
• Writing for the Court: PARKER
• Citation: Plains State Bank v. Ellis, 174 Kan. 653, 258 P.2d 313 (Kan. 1953)
• Decision Date: 06 June 1953
• Docket Number: No. 38971,38971
• Parties: PLAINS STATE BANK v. ELLIS.

Page 313

258 P.2d 313

174 Kan. 653

PLAINS STATE BANK v. ELLIS.

No. 38971.

Supreme Court of Kansas.

June 6, 1953.

Rehearing Denied July 7, 1953.

Syllabus by the Court.

1. By reason of the provisions of the negotiable instruments law of this state, G.S.1949, 52-218, no person is liable on a promissory note whose signature does not appear thereon unless liability is expressly imposed by other provisions of such law.

2. When it is claimed he has received the benefits of the transaction the remedy against an undisclosed principal, who is not liable on a promissory note not containing his name, is to disregard liability on the note and maintain a separate action to recover on the original consideration for the contract.

3. Under the facts, conditions and circumstances of record, as fully set forth in the opinion, it is held the trial court's action in rendering judgment against the plaintiff for the costs of the action should be affirmed.

James A. Williams, of Dodge City, argued the cause, and C. W. Hughes, and Byron G. Larson, both of Dodge City, were with him on the briefs for appellant.

Chas. Vance, of Liberal, argued the cause, and H. Hobble, Jr., and Chester A. Nordling, both of Liberal, were with him on the briefs for appellee.

PARKER, Justice.

In the opening paragraph of its brief the plaintiff denominates this case as an action brought by the Plains State Bank of Plains, Kansas, against V. M. Ellis upon two promissory notes, neither of which was signed by the latter, the first of the two notes being signed by Lee Roy Kerr and Estelle Kerr and the second by Lee Roy Kerr alone. After a trial by the court judgment was rendered against the plaintiff. The cause is here on an appeal by the Bank from the order, judgment and decision of the trial court overruling its motion for a new trial.

Plaintiff's petition contains two causes of action. In substance the allegations of the first cause of action are to the effect that on June 14, 1947, Lee Roy Kerr and V. M. Ellis entered into a written agreement for farming and stock raising, a copy of which is attached to such pleading, whereby such parties intended to and did form a partnership or joint adventure for the farming of 1440 acres of farm land owned by Ellis and the pasturing of cattle thereon; that in pursuance of the agreement Ellis furnished the farm land and machinery and Kerr the labor, gas, oil and grease in carrying on the operations contemplated by the terms of the contract; that on July 15, 1948, Kerr and his wife, Estelle Kerr, executed and delivered to plaintiff their certain promissory note in a named amount with interest until paid, a copy of which is also attached to the petition; that the consideration furnished by plaintiff to Lee Roy Kerr upon such note was used and spent by him in paying expense of labor, repairs, gas, oil, grease, wheat insurance, and other expenses and debts of the alleged partnership in the farming and operations of such lands under the written agreement; that the Kerrs have never paid the note, or any part thereof, although both principal and interest have long been due and payable; and that Lee Roy Kerr, Estelle Kerr, and defendant V. M. Ellis, are indebted to plaintiff upon said promissory note and the debt evidenced thereby for the total amount of the principal and interest due thereon for which plaintiff is entitled to judgment against the defendant Ellis.

Allegations of the second cause of action are substantially the same except they allege the note therein involved, which is likewise attached to and made a part of the petition, is for a different amount and signed only by Lee Roy Kerr.

For purposes essential to a disposition of the case it may be said the answer of defendant Ellis contains a general denial; admits the corporate existence of the plaintiff, the execution of the agreement and allegations respecting what was to be furnished by Ellis and Kerr under the terms of the contract; and includes further allegations charging that the agreement referred to in the petition constituted only a lease of real estate whereby the landlord agreed to provide machinery as well as land and the tenant agreed to pay a stated proportion of the crops raised on the premises covered by the terms of the lease as rent.

Plaintiff's reply to the answer denies all allegations of new matter therein contained.

With issues joined as heretofore related the cause came on for trial by the court. Nothing would be gained, as will be pressently disclosed, by a detailed reference to the evidence there presented. It suffices to say that after the parties had stipulated as to certain facts at a pretrial conference plaintiff adduced its evidence and rested its cause; that defendant then demurred to such evidence on the ground it failed to prove or tend to prove any cause of action against him, which demurrer was overruled; that thereupon defendant announced it would adduce no evidence and rested its case; and that subsequently, after making certain written findings of fact and conclusions of law, the court rendered judgment decreeing that plaintiff take nothing by reason of its petition and that the costs of the action be taxed against it. Upon rendition of the foregoing decision plaintiff filed a motion for a new trial which was overruled. It then perfected its appeal from such ruling and now contends the judgment of the trial court should either be reversed and judgment rendered in its favor for the sum total of the notes sued on or that it should be granted a new trial.

The opening paragraph of this opinion indicates the theory on which appellant brought the action. Further examination of its brief reveals similar statements and the express admission of the case was tried by the trial court 'solely upon the Bank's causes of action upon the notes.' Indeed, examination of the petition requires a like conclusion even if those admissions had not been made. In view of such concessions, as well as our conclusion respecting the force and effect to be given the allegations of the petition in which it is to be remembered the promissory notes were incorporated by teference, we are convinced the short and simple answer to appellant's overall contention the trial court erred in rendering judgment against it is to be found in the negotiable instruments law of this state which, it is to be noted, was adopted by our legislature, with some slight changes not here material, to conform with provisions of the Uniform negotiable instruments act as recommended by the National Conference of Commissioners on Uniform State Laws.

G.S.1949, 52-218, provides:

'No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided; but one who signs in a trade or assumed name will be liable to the same extent as if he had signed in his own name.'

This court, although the case came here on a demurrer to the pleadings and did not go to judgment as in the case at bar, has had occasion to construe the foregoing section of our statute. In Federal Deposit Ins. Corp. v. Cloonan, 165 Kan. 440, 196 P.2d 195, we held:

'Under the negotiable instruments law of this state (G.S.1935, 52-218) no person is liable on a promissory note whose signature does not appear thereon unless liability is expressly imposed by other provisions of such law.

'The amended petitions in three actions involving liability on as many promissory notes examined, and it is held, the trial court did not err in holding that such pleadings failed to state a cause of action against a defendant whose signature did not appear upon the instrument sued on.' (Syl. 1, 2.)

The fact the foregoing case was decided on questions pertaining to sufficiency of the pleadings does not detract from its value as a precedent in disposing of the instant case. The proposition that a party must prove, as well as allege, facts sufficient to establish a cause of action in order to be entitled to a judgment is so well established that it requires no citation of the authorities supporting it.

Under the confronting facts and circumstances we think the judgment against appellant in the instant case might well be affirmed on authority of Federal Deposit Ins. Corp. v. Cloonan, supra. But our decision need not be predicated on that premise entirely. The rule that a suit may not be maintained nor a judgment obtained on a promissory note against an undisclosed principal whose signature does not appear thereon unless the note is signed by use of his trade, partnership or other assumed name in jurisdictions having a statute such as ours in force and effect is recognized by all well established textbooks and legal treatises where the subject is discussed and considered. See 3 C.J.S., Agency, § 247, p. 175; 10 C.J.S., Bills & Notes, § 34, p. 454; 68 C.J.S., Partnership, § 161, p. 608; 2 Am.Jur., ...