Watkins v. Moore , 178 Ark. 350 ( 1928 )

STATEMENT OF FACTS.

T. A. Watkins and Charlie Watkins, doing business under the firm name of White County Supply Company, instituted this action in the circuit court against M. E. Moore and Guy Moore, doing business under the firm name of Moore Son, and several other defendants, to recover judgment in the sum of $1,946.95. The defendants, M. E. Moore and Guy Moore, denied that they were partners, and denied that M. E. Moore had any interest whatever in the business. They admitted that Guy Moore had indorsed the notes described in the complaint of the plaintiffs, but averred that it was not the intention of the parties that he should guarantee the payment of the notes. On motion of the defendants the case was transferred to the chancery court, and tried, there.

According to the testimony of T. A. Watkins and Charlie Watkins, who were brothers, and who conducted a fertilizer business, M. E. Moore came to their place of business at Searcy, Arkansas, to see them about making arrangements for the purchase and sale of fertilizer. T. A. Watkins and M. E. Moore conducted the negotiations. T. A. Watkins made the trade with M. E. Moore and not with his son, Guy Moore. The fertilizer was to be sold for cash, if possible; and if not, sales were to be made on a credit at the option of M. E. Moore, and he and his son were to take notes which were to be indorsed by them to T. A. Watkins and his brother. T. A. Watkins and his brother had eight men in White County selling fertilizer for them during the same year, and all sold under substantially the same terms. Under the cash sale each party received a profit of $165. Notes by purchasers of fertilizer were given, payable to M. E. Moore Son or to Moore Son. These notes amounted to about $4,000, and were indorsed by Guy Moore for the firm of M. E. Moore Son. Suit was brought on one of these notes by M. E. Moore and Guy Moore, and judgment was rendered in the circuit court. This suit was brought in the fall after the note had been indorsed by Guy Moore for the firm of M. E. Moore Son to the plaintiffs in this action.

Both M. E. Moore and Guy Moore denied that there was any partnership between them to sell fertilizer for the plaintiffs. They both testified positively that M. E. Moore had no interest in the business. They say that he went with his son to see T. A. Watkins merely in order to introduce his son to Watkins. M. E. Moore testified that he did not know that his son had taken notes for fertilizer payable to M. E. Moore Son. He further testified that he allowed his name to be used in bringing suit on one of these notes merely to accommodate the parties. M. E. Moore also testified in general terms that he did not know that the notes for fertilizer were made to Moore Son until Charlie Watkins brought them down to Beebe in the fall for collection.

According to the testimony of Guy Moore, his father had purchased some fertilizer from him, and gave his note for it in the sum of $40. He turned this note with the rest of the notes over to T. A. Watkins. His father subsequently paid the note. The note was payable to Moore Son, and he did not know whether his father read it over when he signed it or not. He does not know why he indorsed the notes given by purchasers of fertilizer in the name of Moore Son. He supposed that it was because he did not know any better. His father, M. E. Moore, did not have any interest in the notes or in the fertilizer business. He did not understand that he was to be personally bound when he transferred the notes given by the purchasers of the fertilizer to the plaintiffs. He only understood that he was to sell the fertilizer and receive one-half of the profits derived from the sale of it.

The chancellor found that M. E. Moore was not a partner with Guy Moore, and was not liable on the latter's indorsement of the fertilizer notes as a partner. It was therefore decreed that the complaint of the plaintiffs as to the defendant, M. E. Moore, be dismissed for want of equity; and it was adjudged that the plaintiffs recover from Guy Moore $1,677.84. The plaintiffs have appealed. (after stating the facts). It is well settled in this State that, when a person holds himself out, by word or deed, to another as a partner, and thereby induces him to extend credit to the partnership on the faith of such representation, he cannot shield himself from liability under the partnership. When a person holds himself out as a member of a partnership, any one dealing with the firm on the faith of such representation is entitled to act on the presumption that the relation continues until notice of some kind is given of its discontinuance. Brugman v. McGuire, 32 Ark. 733; Herman Kahn Co. v. Bowden, 80 Ark. 23,96 S.W. 126, 10 Ann. Cas. 132; and Gerhner v. Scott-Mayer Commission Co., 93 Ark. 301, 124 S.W. 772.

We think that a preponderance of the evidence shows that M. E. Moore held himself out to T. A. Watkins as a partner with his son in the purchase and sale of fertilizer from Watkins and his brother. The Moores were in business at Beebe, and the Watkins were in business at Searcy. It is true that the testimony of the parties to the contract is in direct and irreconcilable conflict, but we believe that the attendant circumstances turn the scale in favor of the plaintiffs. The record shows that very little of the fertilizer was sold for cash. Notes to the total amount of $4,000 were given by purchasers of the fertilizer, and these notes were indorsed by Guy Moore, in the name of M. E. Moore Son, to the plaintiffs. The notes were either made payable to M. E. Moore Son or to Moore Son. It is true that M. E. Moore denies that he knew that this was done until in the fall, when an attempt was made to collect the notes. Notwithstanding his testimony on this point, the record shows that he signed one of these notes himself, payable to M. E. Moore Son, or Moore Son. M. E. Moore only states in a general way that he did not know these notes were made payable to Moore Son. He does not state specifically that he did not read over the note that he gave for fertilizer. It is true that Guy Moore says that he presumed his father signed the note without reading it, but his father makes no such statement. If M. E. Moore read the note, he was bound to know that it was payable to M. E. Moore Son, or to Moore Son.

Again, the record shows that in the fall M. D. Moore and Guy Moore brought suit on one of these notes and recovered judgment in the circuit court. It is true that M. E. Moore said that this was done to accommodate the parties, but this could have been done as effectually by disclaiming any right to the proceeds of the note. During the whole of the season he was considered a partner in the business, and was so treated by the plaintiffs. The partnership was organized and conducted as a trading business, and Guy Moore had the right to indorse the notes to the plaintiffs in payment of the fertilizer which the firm had purchased from the plaintiffs. The law of partnership is a branch of the law of agency. One partner acts for himself and as the implied agent of the other within the scope of the partnership business. Stephens v. Neely, 161 Ark. 114, 255 S.W. 562, 45 A.L.R. 1236; hence a member of the partnership is authorized to settle and adjust claims against the partnership. Mortimore v. Atkins, 98 Ark. 183, 135 S.W. 865.

Guy Moore was acting within the scope of the partnership business when he indorsed the notes given by the purchasers of fertilizer to the plaintiffs in payment of the debts of the firm. By indorsing the notes in the firm name in payment of a firm debt he bound all the members of the partnership by his indorsement; and, as we have already seen, M. E. Moore became liable for the partnership debts by holding himself out as a member of the firm to T. A. Watkins when the arrangement was made for the purchase of the fertilizer from the White County Supply Company by Moore Son.

The decree is reversed, and the cause is remanded with directions to the chancery court to render judgment in favor of the plaintiffs against M. E. Moore jointly with Guy Moore as members of the partnership of Moore Son.