South Second Livestock Auction, Inc. v. Roberts

• Decision Date: 12 September 1961
• Docket Number: No. 6901,6901
• Citation: 1961 NMSC 130,69 N.M. 155,364 P.2d 859
• Parties: SOUTH SECOND LIVESTOCK AUCTION, INC., a Corporation, Plaintiff-Appellee, v. Audie ROBERTS, Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 859

364 P.2d 859

69 N.M. 155

SOUTH SECOND LIVESTOCK AUCTION, INC., a Corporation Plaintiff-Appellee, v. Audie ROBERTS, Defendant-Appellant.

No. 6901.

Supreme Court of New Mexico.

Sept. 12, 1961.

Seth, Montgomery, Federici & Andrews, Santa Fe, for appellant.

Dale B. Dilts, Albuquerque, for appellee.

COMPTON, Chief Justice.

This action was commenced in the District Court of Bernalillo County, New Mexico, by plaintiff to recover from Audie Roberts and Claude Lowery, defendants, the value of three checks drawn by the defendant Lowery and issued to plaintiff but remaining unpaid. The case came to trial on plaintiff's complaint containing two counts. Count I related to a partnership relationship between the two defendants, Lowery and Roberts, and Count II alleged that Lowery was managing operator of a sole proprietorship owned by defendant Roberts, and known as Valley Packing Company of Espanola, New Mexico. It was alleged that Lowery was the agent, servant and employee of Roberts and, as such, issued three checks totalling $6,002.23 purporting to be in payment for the purchase of livestock and that, therefore, defendant Roberts was indebted to plaintiff in that amount. The Answer contained a general denial as to both counts, admitting only that Valley Packing Company was a sole proprietorship owned by Roberts and denying a claim upon which relief could be granted.

After both sides had rested, the Court permitted plaintiff to amend Count II to show a suit upon a debt to conform to the evidence. Thereafter, the Court dismissed Count I of plaintiff's complaint relating to partnership; dismissed the action as to defendant Lowery as he was never served with process, and rendered judgment in favor of plaintiff against defendant Roberts for $6,002.23.

An appeal to this Court on Count II only was taken by appellant Roberts. He relies on the following points: (1) the trial court erred in refusing to dismiss Count II of the Complaint; (2) Appellee relied on the credit of Lowery and not on the credit of appellant Roberts and therefore appellant is not liable to appellee, and judgment should be entered for appellant; (3) the court erred in entering judgment for appellee based on estoppel; and (4) the court erred in entering judgment for appellee based upon a debt.

After hearing the evidence, the lower court found substantially as follows: that defendant Roberts was the owner of the business known as Valley Packing Company; that defendant Lowery was his manager to operate the business; that Roberts furnished Lowery with $1,500 to open a bank account in the name of Valley Packing Company with authority to draw checks thereon as long as there were sufficient funds to do so; that Lowery managed the business from December, 1957 until June 1, 1958, when Roberts took over the business; that Lowery purchased from plaintiff livestock, issuing as payment therefor checks drawn on said Valley Packing Company account; that plaintiff had previously done business with Valley Packing Company through Lowery and checks signed by Lowery on the packing company account had been paid; that the three checks in question were so issued and remain unpaid; that prior to the issuance of the three checks in question plaintiff knew that Roberts had some interest in the packing company but did not rely on Roberts' credit; that Roberts had authorized Lowery, as manager, to purchase livestock for and on behalf of Valley Packing Company.

The lower court then concluded that defendant Roberts was indebted to plaintiff in the amount of $6,002.23 by reason of the livestock sold and delivered by plaintiff to the defendant Roberts doing business as Valley Packing Company; that Roberts, as the owner of the business, received the benefits of the cattle thus sold by plaintiff to the business; that he was estopped to deny the indebtedness since he had placed Lowery in the position to obtain the livestock from plaintiff and in a position to negotiate the checks to plaintiff; and, that the restriction upon Lowery, prohibiting him from issuing checks when the bank balance would be insufficient to cover same, was not binding upon the plaintiff as he had no knowledge thereof.

In his first point appellant contends that the lower court erred in refusing to dismiss Count II of the complaint for the reason that the plaintiff sought therein to recover from Roberts on checks signed only by Lowery, which is prohibited by Section 50-1-18 of New Mexico Statutes Annotated, 1953 (Uniform Negotiable Instruments Act), as follows:

'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 [name] or assumed name will be liable to the same extent as if he had signed in his own name.'

Appellant then set forth numerous authorities in support of this contention, taking the view that this case deals with an undisclosed principal.

The record shows that this point was first raised by appellant in his motion for judgment at the close of plaintiff's case and the Court reserved its decision until the close of all of the evidence. At that time the motion was renewed, the Court heard oral argument of both counsel and granted appellee's motion to amend Count II to include an allegation of debt to conform to the evidence.

Since the judgment of the lower court was not based on the checks themselves, but on Count II, as amended to allege the indebtedness, there is no need for this Court to enter into a lengthy discussion of the application of the Uniform Negotiable Instruments Act.

With respect to the second point, that appellee relied on the credit of Lowery and not on the credit of appellant, we find no fault with the finding of the court below, from all of the evidence, that appellee, prior to the sales of cattle here involved, knew that defendant Roberts had some interest in Valley Packing Company, but did not rely upon his credit in making the sales. But we do not think it necessarily follows that appellee relied solely and exclusively on the credit of Lowery. Appellee was relying on the credit of Valley Packing Company with whom it was dealing through Lowery and as it had done on previous occasions in making sales and receiving payment by the same method. Nowhere does the evidence indicate that appellee thought or believed that the packing company and Lowery were one and the same.

In two cases cited by appellant, Gilbert v. Howard, 64 N.M. 200, 326 P.2d 1085, and Hempstead v. Allen, 126 Mont. 578, 255 P.2d 342, one party was dealing with another without any indication of a company being involved, or the existence of a principal-agent relationship, and there was no question but that the exclusive credit of the individual signing the particular instrument was relied upon. In the third case cited by appellant, Marchbanks v. Horn, Tex.Civ.App., 203 S.W.2d 649, the sole and exclusive credit of a wife was relied upon in receiving her notes. The husband's name did not appear thereon; neither was he a party to the transaction or to the notes, nor did he have any knowledge thereof.

We some now to the third and fourth points assigned by appellant, that (3) the court erred in entering judgment for appellee based upon estoppel, and (4) the court erred in entering judgment for appellee based upon debt. Since both appellant and appellee appear to have experienced some difficulty in determining upon which of these grounds the trial court held for appellee, let us first consider the two pertinent conclusions of law, Nos. 3 and 4, upon which the judgment appears to be based:

'3. That the defendant Audie Roberts is indebted to the plaintiff in the sum of $6,002.23 by reason of livestock sold and delivered by plaintiff to defendant Audie Roberts, doing business as Valley Packing Company.

'4. That defendant Roberts was the outright owner of said business, got the benefit of the cattle sold by plaintiff to said business, and is estopped to deny said indebtedness, inasmuch as he had placed the defendant Lowery in the position to obtain said livestock from the plaintiff, and in a position to negotiate said three checks to the plaintiff.'

Appellant made timely objections to both of these conclusions on the ground that they were contrary to the evidence and the law since appellant did not receive the cattle. Although no bills of sale or other vouchers were introduced into evidence, appellee testified that he received the checks, which were drawn on the packing company account, in payment for cattle and sheep, to which no objection was made, and appellant Roberts himself testified that Lowery purchased cattle, slaughtered them and sold the meat from Valley Packing Company from and after the time he was hired in December, 1957. The evidence further shows that on several occasions, when appellant came from Colorado, Lowery showed him sales sheets and how much meat he was selling and also that appellant, upon being advised of the unpaid checks, went to appellee's auction barn in Albuquerque at which time appellee gave him copies of the sheets showing the purchases and sales made between appellee and Lowery.

While the record is lacking in specific proof as to whether Roberts d/b/a Valley Packing Company actually received or got the benefit of the cattle sold by appellee, it is clear that there was a sufficient showing of delivery to Lowery as agent to bind Roberts as principal.

It is the opinion of this court that the judgment of the lower court was based on the doctrine of equitable estoppel, having specifically found that defendant Roberts is estopped to deny the indebtedness inasmuch as he had placed the defendant Lowery in the position to obtain the livestock from the plaintiff. See 2 Am.Jur. 86, Agen...