Shaw v. Gunby

• Decision Date: 03 May 1915
• Citation: 176 S.W. 548,188 Mo.App. 659
• Parties: K. A. SHAW, Respondent, v. W. J. GUNBY, Appellant
• Court: Kansas Court of Appeals

176 S.W. 548

188 Mo.App. 659

K. A. SHAW, Respondent, v. W. J. GUNBY, Appellant

Court of Appeals of Missouri, Kansas City

May 3, 1915

Appeal from Linn Circuit Court.--Hon. Fred Lamb, Judge.

REVERSED.

Judgment reversed.

Scott J. Miller and Paul D. Kitt for appellant.

(1) The court erred in refusing to give demurrer asked by defendant. 30 Cyc. 511; Hukman v. Kunkle, 27 Mo. 326; Blake v. Bank, 219 Mo. 650. (2) A partner cannot execute a note in the name of the firm after its dissolution, even in renewal of a note of the firm, so as to bind any other partner or the firm. Synod v. Schoeneich, 143 Mo 652; Moore v. Lackman, 52 Mo. 323; Springer v Cabell, 10 Mo. 640; Friendman v. Punch, 93 Mo.App. 464; Broughton v. Sumner, 80 Mo.App. 386; Seufert v. Gille, 230 Mo. 480; Bank v Drew, 126 La. 1028; Long v. Story, 10 Mo. 636. (3) The exception to the rule last above is, a firm is liable as well as the partners where one deals with a person professing to act for the firm and believes he so deals and is justified in that belief, either by what the other members of the firm have done or have failed to do; that is, have failed to give notice of dissolution. Parsons on Partnership (4 Ed.), sec. 299; Seufert v. Gille, 230 Mo. 480. (4) But the above exception that after a partnership is dissolved, one partner dealing with a person having no notice of the dissolution may bind his late partner applies only to transaction in the usual course of the firm business. Parsons on Partnership (4 Ed.), sec. 323; Seufert v. Gille, 230 Mo. 481; Winship v. Bank, 5 Pet. 561; 30 Cyc. 675, note 49; Whitman v. Leonard, 3 Pick. 177.

Edwin C. Orr for respondent.

(1) The defendant having directed the drawing of the note in suit, and having sent it to plaintiff, after execution by McWilliams, his partner, showed a knowledge and consent and a ratification of the partner's action as to bind him as though he had, himself signed the note. 30 Cyc. 506, notes 78 and 79; 30 Cyc., page 507 and cases cited; Bank v. Faults, 115 Mo.App. 42; Deardorff v. Thatcher, 78 Mo. 128; Broughton v. Sumner, 80 Mo.App. 386. (2) It was within the powers, both expressed and implied, for either partner to issue negotiable paper for a preexisting debt for money which had been applied to the firm's benefit, with the knowledge and consent of the other partner. 30 Cyc. 503 and 504; Tyler v. Tyler, 78 Mo.App. 240; Hardware Co. v. Moyer, 110 Mo.App. 14. (3) Plaintiff was entitled to an actual notice of the retirement of defendant before defendant was relieved of any obligations of the firm towards those accustomed to dealing with the firm. 30 Cyc. 609 and 671; Curtis v. Sexton, 201 Mo. 217; Page v. Risley, 23 Mo. 185; Black v. Price, 24 Mo.App. 14; Costello v. Nixdorf, 9 Mo.App. 501. (4) The burden of showing notice of dissolution was upon the partner relying upon its advantage. 30 Cyc. 674; Bank v. Spielman, 35 Ill.App. 184; Stricker v. Conn., 90 Ind. 464; Reading Braid Co. v. Stewart, 45 N.Y.S. 69. (5) The distinction between trading and nontrading concerns is a close one. It having been held that a real estate, loan and abstract business was a commercial partnership. Adams v. Long, 114 Ill.App. 277.

OPINION

JOHNSON, J.

Plaintiff brought this suit in the circuit court of Livingston county June 18, 1914, upon the following negotiable promissory note:

"$ 500.00 Chillicothe, Mo., Jan. 26, 1911.

Three years after date I promise to pay to the order of K. A. Shaw five hundred and no/100 dollars. For value received, with seven per cent interest thereon from date which interest shall be due and payable annually; and if the interest thereon be not paid when due, the same shall bear interest at the rate of eight per cent per annum; negotiable and payable at the office of The Gunby Realty Co., Chillicothe, Mo., and if not paid when due, a ten per cent attorney's fee to be added for collecting.

THE GUNBY REALTY CO.,

CHARLES E. McWILLIAMS."

The petition alleges that at the time of the execution and delivery of the note defendant and Charles E. McWilliams "were copartners doing business under the firm name of 'The Gunby Realty Company' at the city of Chillicothe, Missouri." The answer, under oath, denies the partnership and the execution of the note by defendant. The cause was sent to Linn county on change of venue and a trial in the circuit court of that county resulted in a verdict and judgment for plaintiff. Defendant appealed.

Plaintiff formerly practiced law in Chillicothe, but since 1905, has lived in Washington. He owned real estate in Chillicothe and employed defendant who was doing business in that city as an abstracter and loan and real estate broker, under the name of The Gunby Realty Company, to sell the property and lend the proceeds for him. Following this employment and after plaintiff had returned to Washington, defendant, in September, 1908, entered into partnership with McWilliams and the firm continued to do an abstract, loan and real estate brokerage business under the name of The Gunby Realty Company. They found a purchaser for plaintiff's real estate and after the sale was consummated invested the proceeds in loans which were accepted by plaintiff. McWilliams owned a newspaper known as the Meadville Messenger which he sold in February, 1909, on deferred payments to one Varney for $ 2000. He testified that defendant had a half interest in the newspaper but this is denied by defendant who insists that McWilliams was the sole owner. Varney executed and delivered to The Gunby Realty Company his promissory notes for the purchase price and a chattel mortgage on the newspaper to secure their payment. One of these notes was for $ 500, bore interest at eight per cent per annum from date and matured in five years. Under date of February 11, 1909, The Gunby Realty Company wrote plaintiff advising him to buy this note saying, in part, "there has come to our office a loan of $ 500 which we thought perhaps you might be able to handle . . . this is the first note out of a $ 2000 loan that we made on the Meadville Messenger Printing Plant. We sold the plant to a gentleman for $ 2000, and he is paying it off on the basis of $ 30 per month and this is the first note, draws eight per cent interest and is absolutely good. . . . Of course we are back of this for $ 1500 and you know that it makes it absolutely gilt edge because if he failed to pay yours would be the first note to fall due."

A week later defendant personally wrote plaintiff about the note as follows: "Under this mortgage the way it is drawn and under our State laws, the first note takes precedence and if foreclosure should be necessary then the first note would have to be paid first . . . so then in a loan of this kind you are absolutely protected, because your $ 500 would have to be paid first before we could get a cent of our $ 1500. There is no real estate in connection with this loan but the plant is absolutely good for the money and as we wrote you originally we would have to protect your loan before we could get a cent ourselves."

The note was enclosed and plaintiff accepted and paid for it. On February 3, 1910, defendant wrote plaintiff: "Please send me the F. O. Varney note as he has sold the plant and some other parties now own it and we will send you the new note in place of this one with interest payable at the same time as the old one." On December 7, 1911, The Gunby Realty Company asked plaintiff to "kindly send us by return mail note you have for $ 500 secured by the Meadville Printing Plant" and on December 21, 1911, wrote plaintiff enclosing a check for $ 35, "covering interest on $ 500 loan sent us a short time ago; also a new note of like amount from the new owner of the Meadville Messenger Plant." On May 24, 1912, The Gunby Realty Company, in a letter dictated by McWilliams, enclosed the note in suit "in lieu of the one that you hold. We have somehow neglected sending this to you and just run across it among the loans today."

The partnership was dissolved March 1, 1912, defendant retiring from the business which, thereafter, was conducted by McWilliams under the...