Tootle, Hosea & Co. v. Rice

The opinion of the court was delivered by HortoN, C. J.: Tootle, Hosea & Co., the plaintiffs, sold their goods on the credit of the firm of C. R. Rice & Co., and their ownership of a $4,000 stock. George Schowe really owned the goods, but employed C. R. Rice on a salary to take eharge of the'stock, to operate the store at Preston, to sell at retail in the name of C. R. Rice & Co., to buy goods for the store in that name, and to do all other necessary business pertaining thereto. Rice had no capital in the business. The Bank of Kansas was a partnership, composed of E. A. Dupree, George Schowe, and others. Schowe was a director, the cashier and general manager of the bank up to July 14, [581] 1890. On July 14, 1890, D. M. Bell was the president. Under the findings of the trial court, as C. R. Rice and Geo. Schowe held themselves out to the plaintiffs as copartners as “C. R. Rice & Co.,” both were legally bound for the payment of the goods purchased by them from the plaintiffs. On the 14th day of July, 1890, Rice and Schowe were insolvent. On that date, a bill of sale was executed by George Schowe, in the name of C. R. Rice & Co., transferring the stock of goods at Preston to E. A. Dupree, to satisfy his individual debts, and Dupree executed a bill of sale of the same goods to the Bank of Kansas. 1- property-lP-inatviauai0 As to the power of Schowe to make such a disposition of the firm property with the consent of C. R. Rice, if of no actual fraud intervened, see Woodmansie v. Holcomb, 34 Kas. 38; Berkley v. Tootle, 46 id. 336; Goudy v. Werbe, 117 Ind. 154; Purple v. Farrington, 119 id. 164; Fitzpatrick v. Flannagan, 106 U. S. 648; Huiskamp v. Wagon Co., 121 id. 310, and cases cited. C. R. Rice, being legally bound with George Schowe for the goods purchased of the plaintiffs in the name of the firm of C. R. Rice and Co., had the right to have the firm assets of C. R. Rice & Co. appropriated to the payment of the partnership creditors, including the plaintiffs, over the individual creditors of George Schowe. Therefore the firm of C. R. Rice & Co., having possession and control of the firm assets, had the right, in order to make an honest disposition of their goods, to secure or pay the plaintiffs out of the partnership property. George Schowe, while the partnership remained in existence, could not, without the consent of C. R. Rice, sell and transfer the firm property in payment of his individual debts. There is no finding of the trial court that Rice consented to the bill of sale of the stock of goods by Schowe to Dupree or to the bank in satisfaction of his individual debts. The bill of sale of the 14th of July, 1890, by Schowe to Dupree, was made at the time without the knowledge or consent of Rice. The only finding tending to support any consent on the [582] part of Rice to the transfer of the goods by Schowe to Du-pree, or to the bank, is the finding of fact by the trial court that on the 15th day of July, 1890, D. M. Bell, for the bank, took possession of the stock of goods, with the consent of C. R. Rice. ° Bell, the president of the bank, on the next morning after the bills of sale were executed, went to Preston. He testified that “ he then took charge of the stock of goods, and that everything was satisfactory;” but it appears from his own evidence that he did not reach Preston until about 10 o’clock in the morning and left at 12:30, noon, of the same day. He told Rice he represented the bank; that he had a bill of sale from George Schowe for the stock of goods, and had come down to take charge of the same. He gave Rice various orders, and also obtained $5, which he requested him to charge up in his statement to the bank, but he did not exhibit to Rice the bills of sale, and it does not appear that Rice understood their terms at that time. He did not ask or obtain the keys of the store from Rice, and there was no actual transfer of the-possession of,the stock of goods by Rice to Bell, or to anyone for the bank. The evidence is not sufficient to show any actual consent of Rice to a sale or transfer of the firm property in payment of the individual debts of Schowe. Bell acted, in his interview with Rice, as if the latter was a clerk only and had no rights in the firm property or to protect the firm debts. About all he did on his first trip to Preston was to give directions to Rice about the store, and the keeping of the accounts of the business in the future. He did not discuss with Rice the terms of the bills of sale, or notify him of the consideration of the sale, or ask his consent thereto. He merely assumed he had charge, and that Rice would act as directed. Rice did not say that he agreed to the sale or would follow out the directions given by Bell about the store, stock, and accounts. When Bell reached Lyons, where he lived, on the afternoon or evening of the day he was at Preston, he found for him a telegram from C. R. Rice, which read: “ To D. M. Bell, Lyons, Kas.: Will hold this stock in old [583] firm name until all bills are settled to protect my name. See letter at Canton. Charles R. Rice.” 2. Evidence— of crédito ra?lts On the 17th day of July, Bell returned, to Preston, and took actual possession of the goods of the firm of C. R. Rice & Co., in the absence of C. R. Rice, by forcibly opening the door of the storeroom. Rice notified at once the plaintiffs of this, and on the 19th of July, 1890, the plaintiffs instituted their action to recover upon their account for the goods sold to C. R. Rice & Co. As the partnership creditors of C. R. Rice & Co. were entitled to priority of payment out of the partnership assets, unless both members consented, with a full knowledge of all the facts, to the sale of Schowe, and as C. R. Rice was clearly bound with Schowe for the payment of the claims of the plaintiffs, we ought not to sustain any consent to the sale, unless the evidence thereof is satisfactory. Vague and uncertain inferences will not do. To do otherwise would be gross injustice, not only to the creditors of the partnership, but to C. R. Rice. As he neither signed the bills of sale, nor actually consented thereto with a knowledge of their terms, neither Dupree nor the bank became the owner of the property belonging to the firm of C. R. Rice & Co., as against the plaintiffs — the attaching creditors. The order of the district court sustaining the motion to discharge the attached property will be reversed, and the cause remanded for further proceedings. All the Justices concurring.