Van Hoose v. Smith

• Citation: 198 S.W.2d 23,355 Mo. 799
• Decision Date: 09 December 1946
• Docket Number: 39918
• Parties: Earl Van Hoose v. Forrest Smith, State Auditor of the State of Missouri, Appellant
• Court: United States State Supreme Court of Missouri

198 S.W.2d 23

355 Mo. 799

Earl Van Hoose v. Forrest Smith, State Auditor of the State of Missouri, Appellant

No. 39918

Supreme Court of Missouri

December 9, 1946

Appeal from Jasper Circuit Court; Hon. Woodson Oldham Judge.

Reversed and remanded (with directions).

J E. Taylor, Attorney General, Tyre W. Burton and Will F. Berry, Jr., Assistant Attorneys General, for appellant.

(1) The jurisdiction of this appeal in this court is amply supported. Mo. Constitution, Art. V, Sec. 3; State ex rel. Martin v Childress, 345 Mo. 495, 134 S.W.2d 136; Wymore v. Markway, 338 Mo. 46, 89 S.W.2d 9; State ex rel. Becker v. Farmers Exchange Bank of Gallatin, 331 Mo. 689, 56 S.W.2d 129; Foster v. Commission for Blind, 327 Mo. 416, 37 S.W.2d 450. (2) There was sufficient evidence in the record to support the assessment against Earl Van Hoose as a partner of Woodrow Glosser, doing business as Glosser Motor Company. (3) The evidence to support the assessment against the respondent as a partner was sufficient to make a prima facie case, and since the respondent failed to offer any evidence in rebuttal thereof, he failed to overcome the prima facie case of partnership. Glore v. Dawson, 106 Mo.App. 107, 80 S.W. 55; Torbert v. Jeffrey, 161 Mo. 645, 61 S.W. 823; State ex rel. Jones v. Daues, 321 Mo. 910, 13 S.W.2d 537; Falloon v. Fenton, 182 Mo.App. 93, 167 S.W. 591; 47 C.J., p. 721, sec. 127; Grey v. Callan, 110 N.W. 909; Mechem, Elements of Partnership, sec. 65.

Roy Coyne for respondent.

(1) Until a prima facie case is made out that a partnership exists, its existence cannot be proved by the acts and declarations of an alleged partner. Willoughby v. Hildreth, 167 S.W. 639; Scott v. Scott, 265 S.W. 864. (2) A person is not bound by the declarations of another as to the existence of a partnership between them where they were not made in his presence. Pryor v. Kopp, 119 S.W.2d 228; Prasse v. Prasse, 77 S.W.2d 1001. (3) Testimony as to declarations of one of the partners as to such defendant being a partner not made in the presence of such defendant nor subsequently ratified by him, held inadmissible to establish partnership. Hely v. Hinerman, 236 S.W. 698. (4) Declarations as to one's membership in a partnership by another are not admissible to prove partnership even if already prima facie established by competent evidence. Hely v. Hinerman, 260 S.W. 471. (5) Mere participation in profits and losses does not of itself necessarily constitute the relation of partnership. Graff Distilling Co. v. Wilson, 156 S.W. 23; Miller v. Pepperling, 170 S.W. 328; Schneider v. Schneider, 146 S.W.2d 584. (6) The mere statement that a certain business was a partnership business, or that the parties were partners, is a mere legal conclusion, and is of no probative force in establishing the fact of partnership. Even evidence that one person was to pay one-half the expenses and receive one-half the profits was not evidence of facts necessary to be shown to establish the existence of a partnership. Wittling v. Schreiber, 202 S.W. 418; Ellis v. Brand, 158, S.W. 705.

Bradley, C. Dalton and Van Osdol, CC., concur.

OPINION

BRADLEY

This cause involves the validity as to respondent of an additional sales tax assessment made by the appellant against respondent and Woodrow Glosser on the theory that they operated a used car business as partners under the name of Glosser Motor Company at Joplin, Missouri. The assessment, penalty and interest amount to $ 4,971.62, but the appeal is to the supreme court because a state officer as such is a party. See Sec. 3, Art. V, Constitution.

Respondent was given notice of the additional assessment and filed with appellant a verified denial of the partnership. Appellant seems to have considered the denial of partnership as a petition for reassessment under Sec. 11428, Laws 1943, p. 1022, and under Sec. 11422, Laws 1943, p. 1021, appointed an employee in his office as a Commissioner to conduct a hearing in order "to decide the issues raised by the petitioner (respondent) for reassessment; to ascertain the correctness of the additional assessment heretofore made; to determine the amount of the additional tax due . . . and to duly make his finding of facts, together with his conclusions, and make a report of the same in writing." Notice of the hearing before the commissioner was given respondent and in response thereto he, with counsel, appeared at the hearing; participated therein, but did not testify.

At the hearing in Joplin before the commissioner the only question considered was the question of partnership, and the commissioner found that the partnership existed; so reported to appellant who approved the report and the additional assessment became final. Respondent thereupon brought certiorari proceedings in the circuit court to quash the additional assessment against him. See Sec. 11445, Laws 1943, p. 1026. Upon issue of the writ appellant filed return; the additional assessment as to respondent was quashed and this appeal followed.

Appellant contends that the evidence as to partnership, taken at the hearing before the commissioner, was sufficient to make a prima facie case and that since respondent failed to offer any evidence to the contrary, he failed to overcome the prima facie case, and that such being so, the trial court should have quashed the writ of certiorari and entered judgment as provided in Sec. 11445, Laws 1943, p. 1027. Respondent contends that the proceedings before the commissioner were unauthorized and therefore a nullity and that the evidence was not sufficient to establish a partnership.

If the proceedings before the commissioner were unauthorized and a nullity as respondent contends, then that ends the argument, and we will first rule that question. The document filed with appellant by respondent and termed "denial of partnership" follows: "Comes now Earl Van Hoose, one of the parties being charged as a partner by Forrest Smith, State Auditor, pertaining to the assessment for sales tax, and denies each and every allegation contained in the assessment for sales tax, dated May 17, 1945, and upon being duly sworn upon his oath the said Earl Van Hoose denies that he ever was a partner with Woodrow Glosser under the firm name of Glosser Motor Company or any other name whatever, and expressly denies that he ever was or now is a partner with Woodrow Glosser under any name whatever, and denies that he owes any sales tax to the State of Missouri."

While respondent did not specifically ask for a reassessment, appellant, as stated, proceeded as though such had been asked for and served notice of a hearing for that purpose, and respondent, as stated, appeared at the hearing and participated therein. It is true that at the hearing the correctness of the tax as to amount was not considered, but the correctness of the assessment against respondent was considered and determined. It is stated in respondent's brief that the proceedings before the commissioner constituted "a clear violation of a citizen's rights under the Constitution of this state", but our attention is not directed to any provision of the Constitution that is violated. A hearing before the State Auditor on a question of partnership is not specifically provided for in Sec. 11428, or any other section, but it will be noted that by Sec. 11422, Laws 1943, p. 1021, referred to supra, appellant's designate, the commissioner, was authorized to "determine the amount of tax due" from respondent. The denial of partnership, in effect, was a denial that any tax was due from respondent, besides, respondent specifiically denied that he owed any tax, hence the question of partnership was a proper one for consideration by the commissioner. We rule that the proceedings before the commisioner were authorized and proper.

Does the evidence make a prima facie case of partnership? The Glosser Motor Company operated a garage and also engaged in the sale of used cars. The additional tax assessed accrued in the conduct of the business from January 1, 1943, to February 28, 1945. Glosser was called and testified as a witness for appellant as follows:

"I live in Joplin and from January 1, 1943 to February 28, 1945 I conducted a garage and used car business. During that period I had business relations with Mr. Van Hoose. He furnished the money to buy the used cars which were sold. This relationship started about the middle of 1941. I fixed the price and did the selling of the used cars, but sometimes he had a prospect and would send him over. I considered the cars bought his cars because he paid for them and if I sold them he got half the profit. When I bought a car I would give his check in payment or write a check on my own account. If I repaired a car he stood 50 percent of all expense. Q. As I understand it, all of your expenses were added into your sales price, and then you split your profits. A. Yes; everything that we were partners, we were in together. The expenses were added in on the cost of the cars. I borrowed money personally from him and paid interest on that, but on the cars we bought together I paid no interest. We just split the profits. The dealer's license to operate was added in on expense, and Mr. Van Hoose paid half of that. The profits and losses were handled on the 50 percent basis. I did not sign any notes or mortgages to him in connection with the operation of this business. Mr. Van Hoose and I discontinued this mode of operation April 10, 1945. There were 20 cars at that time and I turned these over to him. At the time he took these cars we had no settlement. Our business relation was terminated rather suddenly. He started taking cars off about 11 o'clock at night; I had no notice. He made no demand on me for any money he claimed to have loaned me...