State Bank of Eastman v. Rawson

Eschweiler, J. In view of the disposition to be made of this case we do not deem it necessary to determine whether the relationship existing between the three defendants by reason of the written agreement between them of January 31, 1919, the substance of which appears in the statement of facts, was one creating a copartnership, a joint adventure, or a lease. The respondent has contended throughout that the relationship was that of a partnership and that thereby there was created by law the right of Williams, as one of such alleged copartners, to bind the appellant, Razuson, in the obtaining of the several loans from plaintiff for which judgment below was obtained. We shall, however, express no< opinion on this question other, than to suggest that such construction of the agreement might be difficult in view of the provision of the Uniform Partnership Act, sub. (4), sec. 1724m — 4, Stats., declaring the rules to apply in determining whether a partnership exists, and to the effect that no inference of partnership shall be drawn from the fact of a sharing in profits where such are rent to a landlord. Judgment should have been entered in favor of defendant Razuson dismissing the complaint as to him upon his motion to that effect, for® the reason that it clearly appears in this [430] case that the evidence does not warrant a finding- of any original promise by Rawson to become jointly or severally liable upon the various promissory notes set forth in the complaint. Such notes were original obligations of the defendants Ed Williams and his wife, and any promise or undertaking by Rawson to assume liability thereon, even if any such promise had been made, was void under the statute of frauds, sub. (2), sec. 2307, because not in writing. It is undisputed that the only conversation between the appellant, Rawson, and any officer or agent of the plaintiff bank.was the one had about January 31, 1919, ánd at which were present defendants Razvson and Williams and Pier, the cashier of the plaintiff bank. They all agree that there was then discussed the desire to obtain a present loan of $600 from the bank. It is undisputed that the cashier then insisted that for such loan both Rawson and Williams were to sign the note, which was so done. Such was a judgment note similar in form with all the ones sued upon here. Williams kept but one account 'at plaintiff bank and in his individual name at this time and subsequently, and into which and from which his individual funds and the farm funds were deposited and checked out. To this fund was credited the $600, proceeds from such loan, Razvson being then given and then cashing a check by Williams for $300, thereby strongly indicating that as to such loan it was not for the purpose, as claimed by Williams and the plaintiff, of carrying on the farm, otherwise such $300 would have been kept in the bank and used for that purpose. It is undisputed that if any arrangements were then made for future credits to Razvson through Williams no writing was asked of Razvson; the agreement between Razvson and Williams for running the farm does not appear to have been examined to determine the relationship thereby created; no provision was made as to kind .or form of additional security if any, and there appears a somewhat startling omission to provide as to the maximum amount to which such credit [431] might be extended. The agreement as to the then loan while Razvson was present at the bank was made, at the bank’s insistence, with due solemnity and full precautions. As to the much larger credits extended subsequently, there was an entire absence of such precautions by the bank so far as Razvson was concerned, yet all such safeguards adopted as to the Williamses. Plaintiff’s version, therefore, as 'to this original transaction, and upon which it must roly to support the judgment, is strongly discredited at the very outset as a business transaction, and especially so as an exhibition of banking. Plaintiff’s version is completely discredited by the subsequent history of the transaction. It is undisputed that at no time did the bank notify Rawson that judgment notes were being signed by Ed Williams, Mrs. Williams, and both (none of them purporting to be partnership or joint obligations so far. as Razvson was concerned) ; that such notes were falling due or were past due; and no demand on Rawson for interest. When over $1,600 was past due in October, 1920, a chattel mortgage was taken for the benefit of the bank from the two Williamses with no suggestion to Razvson as to such a situation or request from him for security on his part. The plaintiff bank held funds on deposit in Razvson’s own account and permitted him to withdraw such funds from time to time as indicated in the statement of facts, and yet, at the time of such withdrawals, the bank was in each instance then holding past-due notes, sued for here, and always in excess of such permitted and unprotested withdrawals. The plaintiff relies upon the testimony of defendants Ed and Mrs. Williams to support the verdict .and judgment; the effect of such testimony, however, is completely swept away by their conceded actions. They send to. Razvson in Iowa from time to time what purport to be statements of the income and outgo, of the farm. Not once do they intimate that they have been incurring these obligations to the [432] bank. They, during the first year, and a half, paid interest on these obligations to the bank and up to October 25, 1920, and as follows: On the notes included in the judgments here, about $47 18 On the note of January 31, 1919, for $600. 42 00 On the notes sued for but not included in the judgment, about. 52 71 A total of interest of at least. $140 00 And yet make no claim or charge for any of it in their statements. Certainly if it was in their contemplation from the start that Rawson was sharing their liability as to all or any of these notes, he must have been considered as so sharing as to the interest payments. Again, their own reports to him show, until February, 1920, a balance of account due him; yet if he were liable with them for this interest, and these notes or any of them, the balance would have been materially different and the other way. From February, 1920, to January, 1921, inclusive, such reports showed a claimed balance due Williams and in the last report of only $426.59; yet at this time their obligations, for. which they now assert Rawson was jointly liable with them, exceeded $2,300 (excluding the $600 note of January, 1919, and, of course, the last note of October, 1921, of $720.72). The defendant Rawson denied that there was any conversation or agreement at the time of his only interview with the cashier, Pier, about there being- any future obligations to be assumed by Williams and for which he, Rawson, was to become in any wise liable. Pie testifies that the sole arrangement at that, time was the negotiating the $600 note upon which the cashier insisted his signature should be placed as one of the joint makers. Pie also denies that at the time of his visit in March, 1920, he authorized or empowered Williams to make loans at the bank. It is an undisputed fact that even at that time Williams did not inform [433] Rawson of the large number and amounts of the then outstanding and past-due obligations. Under all these facts and circumstances we are compelled. to say that the verdict of the jury upon which the judgment of the court below was founded is so unsupported by any credible evidence that the verdict and judgment must be set aside. Were we not so compelled to reverse on the merits, still the plaintiff could not recover, against defendant Razvson because the evidence of plaintiff’s cashier on its behalf, and who transacted the bank’s business with defendants as to all the notes save the one of October, 1921, demonstrates that the respective loans here involved were to the defendants Williams as primary obligors, and that the liability of Razvson, if any, was but secondary and therefore void under the statute, sub. (2), sec. 2307, supra, and well within such decisions as Klee v. Stephenson, 130 Wis. 505, 110 N. W. 479; Parry v. Spikes, 49 Wis. 384, 5 N. W. 794; Rietzloff v. Glover, 91 Wis. 65, 64 N. W. 298; Richardson Press v. Albright, 224 N. Y. 497, 121 N. E. 362; Bugbee v. Kendricken, 130 Mass. 437. By the Court. — Judgment reversed, with directions to dismiss the complaint as against the appellant, Rawson.