Opinion
No. 70-217 (Supreme Court No. 23511)
Decided July 7, 1970. Rehearing denied July 28, 1970.
Action on promissory note. From entry of judgment against partner of person who executed the note, defendant appealed.
Affirmed
1. PARTNERSHIP — Note — Executed — Partner — Purportedly — Partnership Capacity — Partnership's Name Thereon — Basis — Finding — Ostensible Authority — Sign Note — Behalf of Partnership. Where promissory note was executed by one partner, purportedly in a partnership capacity, and the partnership's name appeared thereon, which, so far as concerns plaintiff, inferred that the note was partnership business, these facts afford a basis for the trial court's conclusion that maker of note had ostensible authority to sign the note on behalf of the partnership.
2. Statute — Partner Not Liable — Partner's Acts — Not Done — "Usual Way" — Partnership Business — Attention — Trial Court — Conclude — Taken Into Account. Statute (C.R.S. 1963, 104-1-9(2)) which provides that partner is not liable for partner's acts which were not apparently done for the carrying on of the partnership business in the "usual way," was brought to the attention of the trial court and reviewing court must conclude that it was taken into account by trial court in its ruling against defendant whose partner had executed note payable to plaintiff.
3. APPEAL AND ERROR — Sufficient Evidence — Conclusions — Defendant Liable — Note Executed — Partner — Reviewing Court — Controlled — Trial Court — Determine — Questions of Fact. Where there was sufficient evidence for trial court to reach the conclusions that defendant was liable on note executed by his partner, reviewing court is controlled by the principle that it is the province of the trial court to determine questions of fact.
Error to the District Court of El Paso County, Honorable John F. Gallagher, Judge.
Raymond Duitch, for plaintiff in error.
Blakemore McCarty, for defendant in error.
This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.
Plaintiff in error, a partner in K B Auto Sales (referred to hereinafter as "the partnership" or as "K B") was defendant below and will be referred to hereinafter by name.
The matter before this Court is an appeal from judgment in favor of the plaintiff bank entered by the court below on a promissory note in the amount of $2,600, plus interest, attorney's fees and costs. The note was executed by one Travis D. Bishop, Sr., Kruse's partner in K B, on August 20, 1965, and clearly stated that he was signing on behalf of the partnership.
In its complaint, among other claims for relief, plaintiff alleged that Bishop, acting in the course of partnership business, executed the subject note and a chattel mortgage on a used, 1963 Lincoln Continental to secure it; that the note was in default, and that Kruse, as a partner in K B, was liable on the note.
Kruse denied liability, alleging (1) that the subject transaction was not a partnership transaction, and (2) that Bishop had no authority to incur partnership indebtedness by executing promissory notes.
Trial was held to the court. The evidence showed that Kruse and Bishop entered into partnership in May of 1965. At approximately that time, Kruse and Bishop approached plaintiff with the proposition, which was accepted, that the partnership sell vehicles repossessed by plaintiff in the course of its business, and refer any necessary customer financing on those sales to plaintiff, which could then, at its option, carry the paper or not as it saw fit. However, only two such transactions occurred. Customer financing on other vehicles sold by the partnership would be referred to any available source, including, presumably, plaintiff; however, no such financing was apparently ever referred to plaintiff.
Sometime toward the end of August, 1965, Kruse and Bishop decided to dissolve their partnership. A formal dissolution agreement, effective on September 8, 1965, was signed on September 27, 1965. It is uncontroverted, however, that at the time of Bishop's execution of the subject note, the partnership was still in existence and no notification of actual or anticipated dissolution had been given to plaintiff.
When plaintiff eventually received notification of dissolution, it returned to Kruse a "goodwill" check for $500, issued to it by Kruse, and drawn on a partnership account maintained at a different bank. The purpose of this check was to cover any damages plaintiff might incur from the partnership's handling of plaintiff's repossessed cars.
The proceeds of the subject note were apparently transferred into Bishop's personal account in plaintiff bank. Defendant knew nothing of this transaction, and was unaware of the existence of the 1963 Lincoln Continental securing it, which was never part of partnership inventory.
Other evidence showed that Bishop, as between the partners, had no authority to financially obligate K B in any way.
Based upon this evidence, the trial court found that plaintiff had proved that Bishop, purportedly on behalf of the partnership, had executed the subject note, which note was in default, and that Kruse had failed to prove dissolution of the partnership at the time of execution of the note and was, therefore, liable on it. The court accordingly entered judgment for plaintiff on the promissory note, but dismissed plaintiff's other claims for relief which are not pertinent to this appeal.
The sole issue on appeal is the trial court's judgment against Kruse on the note executed by Bishop, which Kruse claims is error.
We determine no error in the trial court's findings regarding the note.
Defendant complains that the court did not take C.R.S. 1963, 104-1-9(2), into account in arriving at its decision. That statute states, "an act of a partner which is not apparently for the carrying on of the business of the partnership in the usual way does not bind the partnership unless authorized by the other partners." He contends that his testimony was uncontroverted that Bishop had neither actual authority, nor approval, from him to financially obligate the partnership and that he had met his burden under the statute and could not be held liable on the note. He further argues that it is obvious that the bank did not consider this note to be a partnership indebtedness in that it deposited the funds from the note in Bishop's personal account in the bank and, after the partnership was dissolved, returned the partnership's goodwill check to Kruse. There would have been no logic in either of these acts, defendant argues, had the bank in fact considered the note to be a partnership matter, and a continuing indebtedness of Kruse and the partnership.
On the other hand, the record shows little or no evidence of what was the partnership's "usual way" of doing business; nor does it indicate whether Kruse met any burden of proof in this regard. But it does indicate that plaintiff was unaware of the partnership's "usual way" of doing business, since plaintiff's only business contacts with the partnership during the latter's three-month existence were limited to two occasions on which the partnership sold cars repossessed by plaintiff.
[1,2] The subject note was made by Bishop, purportedly in a partnership capacity, and partnership's name appeared thereon, which, so far as concerns plaintiff, inferred that the note was partnership business. These facts indicate a basis for the court's conclusion that Bishop had ostensible authority to sign the note on behalf of the partnership. We further note that C.R.S. 1963, 104-1-9(2), was brought to the court's attention at the time of the motion for new trial and we must conclude that this statute was taken into account by the trial court.
There was sufficient evidence before the court to enable it to draw the conclusions which it did in this action. We are controlled by Rocky Mountain National Bank v. McCaskill, 16 Colo. 408, 26 P. 821, which involved a very similar situation of both fact and law. In affirming that decision, our Supreme Court emphasized that it is the province of the trial courts to determine questions of fact.
Judgment is affirmed.
JUDGE COYTE and JUDGE DUFFORD concur.