Schlichenmayer v. Luithle

• Decision Date: 27 June 1974
• Docket Number: No. 8960,8960
• Citation: 221 N.W.2d 77
• Parties: Charles SCHLICHENMAYER, d/b/a Schlichenmayer Livestock Sales, Plaintiff and Appellant, v. Melinda LUITHLE, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 77

221 N.W.2d 77

Charles SCHLICHENMAYER, d/b/a Schlichenmayer Livestock Sales, Plaintiff and Appellant, v. Melinda LUITHLE, Defendant and Appellee.

Civ. No. 8960.

Supreme Court of North Dakota.

June 27, 1974.

Rehearing Denied Aug. 26, 1974.

Syllabus by the Court

1. Neither joint tenancy in real estate nor the relationship of husband and wife nor the cosigning of a note creates a partnership.

2. Partnership arises from contract, express or implied.

3. As to third persons, persons not in fact partners may be held liable as 'ostensible partners' by reason of conduct justifying the third person to believe a partnership exists, if he relies on that belief in acting to his detriment.

4. Proof of ostensible partnership, if circumstantial, must be inconsistent with any other reasonably hypothesis than the existence of a partnership.

5. Assistance by a farm wife in farming operations does not create a partnership, express or implied.

6. A surviving joint tenant takes title under the instrument creating the joint tenancy, did not by inheritance.

7. A surviving joint tenant is not unjustly enriched by taking title to property jointly owned with an insolvent joint tenant.

8. Growing crops are part of the real estate until severed.

9. The 'dead man' statute,' Section 31--01--03, N.D.C.C., prohibits direct testimony by an executor, administrator, heir at law, or next of kin of a decedent in an action in which such a person is a party, as to transactions with a decedent, but does not prevent the adverse party from calling such a party or cross-examination as to such transactions.

10. A conversation in the presence of a party is hearsay unless there is evidence, circumstantial or direct, to show that the party heard or participated in the conversation.

11. Where a party is examined in his own behalf as to transactions with a deceased person, his testimony as to the transactions is barred by the 'dead man's statute,' Section 31--01--03, N.D.C.C., only where the party is suing or is sued as executor, administrator, heir at law, or next of kin of the decedent.

Wheeler, Wolf, Wefald & Durick, Bismarck, and William F. Lindell, Washburn, for plaintiff and appellant.

Duffy & Haugland, Devils Lake, for defendant and appellee.

VOGEL, Judge.

This is an appeal from a judgment in favor of the defendant in an action tried by the court without a jury, which was brought by Schlichenmayer, an individual operator of a livestock sales ring, against Melinda Luithle, the widow of a part-time cattle buyer and farmer.

The complaint is in two counts. The first count alleges that the deceased husband of the defendant bought cattle at the plaintiff's sales ring between January 6 and March 24, 1969, for $36,235.01, that the husband paid for them with insufficient-funds checks and resold the cattle to others, and that he made good only $6,161.35 of the indebtedness, leaving unpaid $30,073.36. It further alleges that the husband and the defendant 'took the money realized from the resale of said cattle and appropriated it to the benefit of the defendant. That the money was appropriated to pay debts of a direct benefit to the defendant. That the defendant knew of the above transactions and was present during certain of them.' The second cause of action alleged that certain damages were caused 'by reason of the fraudulent action of the said decedent of which the defendant had knowledge.'

It will be seen that the complaint charges fraud, either by the defendant or her husband or both. During the trial, various other theories were advanced, including the claims that there was a partnership between the defendant and her husband, that she was unjustly enriched, and that she was liable in tort for the acts of her husband.

The proof indicates that the deceased husband was short of capital and brought cattle from the plaintiff with bad checks. When he sold the cattle he failed to use the proceeds to pay off the debt to the plaintiff and instead used some of the funds to make payments for ordinary family expenses and some other of the funds to make payments on the purchase of land held in joint tenancy with his wife, the defendant. However, the amounts used for family purposes are only a small part of the missing money; the land payment amounted to only approximately $1,100; and most of the funds were not traced.

The connection of the wife to all of this is tenuous, at best.

She testified that her husband managed the farm and she did not participate, except by milking cows occasionally and otherwise assisting around the farm as most farm wives do. She knew nothing about the financing of his cattle-buying operations, which started only in January, some four months prior to his death. She knew that he customarily made $1,100 payments in April of each year on a land contract for himself and another $1,100 for a brother, who subsequently reimbursed him. She knew that he had a separate bank account in the Dakota National Bank of Bismarck, but knew nothing about his banking operations there. The husband and wife had a joint account in the Farmers Security Bank of Washburn, on which she wrote checks for groceries and electricity. She knew that he often went to sales rings where cattle were sold, but not what he did there. She had a job of her own in a local retail establishment, and occasionally went to the sales ring after work to meet her husband and wait for him to come home with her. She cosigned a note when her husband borrowed money from the Farmers Security Bank of Washburn. She was present once when the plaintiff Schlichenmayer and her husband were 'doing settlements', as her husband described it to her, but that's all she knew about the meeting. She was waiting for him to go home at the time and heard no conversation.

Her testimony on the foregoing matters was largely undisputed. A banker testified that she was present when her husband gave the bank information as to his assets on a financial statement which showed the joint-tenancy property as belonging to him. The banker did not say that she participated in the conversation or heard it. Similarly, the plaintiff Schlichenmayer testified that she was present at a time when Schlichenmayer and her husband were talking about some records and about selling some livestock. Testimony as to the contents of these conversations was not permitted when an objection to the effect that the conversations violated the 'dead man's statute,' Section 31--01--03, N.D.C.C., was sustained.

She testified that her first knowledge of the indebtedness of her husband, or his insolvency, came after his death.

Probate records of the estate of the husband were received in evidence. They show that the estate is insolvent and that it consisted largely of machinery and other personal property of the value of more than $60,000. In addition, for tax purposes, it showed real estate in joint tenancy with the defendant wife, as well as a joint-tenancy bank account with her. The claims against the estate far exceeded the assets, and a claim filed by the plaintiff Schlichenmayer for the full amount of his loss was allowed but was not paid because of the lack of funds.

The plaintiff asserts that Mrs. Luithle benefited from the expenditures of the funds which her husband unlawfully obtained by selling the livestock he had brought from the plaintiff with checks which were later returned unpaid because of insufficient funds. As we have indicated, he variously claims to be entitled to recover because of an alleged partnership between husband and wife; or under a theory that the defendant was unjustly enriched; or that she is somehow liable in tort for her husband's acts.

He also claims that the wife should somehow be held liable to turn over the proceeds of the crop on the joint-tenancy land after the husband's death. The husband died on April 29, 1969, at which time part of the cropland was seeded. The remainder was seeded after his death.

The plaintiff claims that the trial court erred procedurally in enforcing the 'dead man's statute,' Section 31--01--03, N.D.C.C. The trial court filed a memorandum opinion and held against the plaintiff on all his contentions. We affirm.

As to the claim of partnership, we find no credible evidence to sustain the claim that the husband and wife were partners. Joint tenants are not, merely because of the joint ownership, partners (Sec. 45--05--06(2), N.D.C.C.), nor are husband and wife, merely because of the marriage, partners (Sec. 47--02--05, N.D.C.C.) Partnership arises from contract, and a partnership between the parties arises only out of the contract between them as expressed in their agreement or as implied from their dealings with each other. Degen v. Brooks, 77 N.D. 514, 43 N.W.2d 755 (1950).

As to third persons, there may be an 'ostensible partnership' whereby persons who are not in fact partners may be held liable as such by reason of their conduct if the conduct justifies a third party in believing that the partnership exists and justifies him in relying on that belief in acting to his detriment. But to establish an ostensible partnership, the person claiming the existence of it must prove that the persons to be charged as partners either held themselves out to be partners or knowingly or negligently permitted others to do so. Circumstantial evidence to establish such an ostensible partnership must be inconsistent with any other reasonable hypothesis than the existence of a partnership. Oelkers v. Pendergrast, 73 N.D. 63, 11 N.W.2d 116 (1943). The mere cosigning of a note does not make a cosigner a partner with the other signers. Oelkers v. Pendergrast, Supra.

We find nothing in the facts summarized above to indicate the existence of a partnership, either actual or ostensible. The indications are that the plaintiff dealt with the husband in his individual capacity. There is no reliance shown on the existence of a partnership with the wife, nor is there any proof...