Larson v. Marcy , 61 Mont. 1 ( 1921 )

MR. JUSTICE HOLLOWAY

delivered the opinion of the court.

This action was brought to recover $2,582 and interest thereon from April 27, 1909. Plaintiff states his cause of action in four counts. By the first it is sought to charge the defendants as trustees and to impress certain property owned by them with a lien in plaintiff’s favor. The second count sets forth the cause of action as upon a promissory note executed and delivered by the defendants to the plaintiff. The third, count is like the second except that it is alleged that the defendants, as copartners, executed and delivered the note in question. In the fourth count it is alleged that the defendant C. 0. Marcy, acting for himself and as agent for the other defendants, borrowed the money from the plaintiff and agreed to repay the same. Issues were joined and the cause tried, with the result that the court directed a verdict against C. 0. Marcy and granted a nonsuit in favor of each of the other defendants. Judgment was entered accordingly and plaintiff appealed. After the appeal was perfected defendant Harding died and her personal representative was substituted.

'Appellant insists that he made out a prima- facie ease against all of the defendants upon at least one, if not more, of the several theories of liability indicated by the different counts of his complaint. We may eliminate counts 3 and 4 at once, sinee the evidence does not ‘tend to prove a partnership, and any [1] evidence which supports the fourth count will establish the second, and therefore the fourth count should have been stricken out. (31 Cyc. 121.)

The judgment in favor of the defendants who are sought [2] to be held was entered after nonsuit, and therefore the evidence is to be viewed on this appeal from the standpoint most favorable to plaintiff, and every fact will be deemed to be established which it tends to prove. (Lackman v. Simpson, 46 Mont. 518, 129 Pac. 325.)

In 1906 H. R. Marcy, the father of these defendants, executed and delivered to plaintiff his promissory note for $2,100. At that time Marcy resided in Forsyth and owned a large amount of property in Rosebud county. In 1907 he conveyed his personal property to C. 0. Marcy and all of his real estate to the five defendants as tenants in common, share and share alike, and removed to the state of California. For four or five years thereafter the property was managed by the defendants in the name of “C. O. Marcy and Company,” with C. O. Marcy the active manager in charge. In April, 1909, plaintiff visited Forsyth to make investigation concerning the indebtedness then due to him from the elder Marcy and was informed by C. 0. Marcy that he had money from his father for the plaintiff. C. 0. Marcy then commenced to fill a blank check to make payment of the amount due on the note — which amount had been ascertained to be $2,582. — but before completing the task, inquired of plaintiff what he intended to do with the money, to which plaintiff replied that he did not have in mind any particular investment for it, and C. 0. Marcy then solicited plaintiff to let him and his sisters have the use of the money at the same rate of interest (eight per cent) which the note of the elder Marcy bore. .The request was acceded to and a new note for $2,582 was then executed, signed “C. 0. Marcy and Company.” Within ten days or two wéeks thereafter, the other defendants were apprised of the transaction, and though they complained of the act of their brother, nothing further was done by them until in 1913, when a division of the property was made between the several defendants. Upon such settlement the indebtedness to plaintiff evidenced by the note for $2,582 was taken into consideration. It was estimated that the amount then due was $3,000, and one-fifth thereof was charged against each distributee, some of them receiving specific property free from any charge for the indebtedness and others receiving property of a greater value and assuming responsibility for [3,4] the indebtedness. In addition to the foregoing, plaintiff sought to show that the elder Marcy conveyed his property to these defendants under an agreement that the grantees should pay his indebtedness including the indebtedness to this plaintiff, but this offered evidence was excluded. We may assume that this evidence, if received, would have established an implied or constructive trust capable of being enforced by this plaintiff in the first instance (3 Story’s Equity Jurisprudence, 14th ed., sec. 1651), but since the transaction of April 27, 1909, constituted a novation (sec. 4959, Rev. Codes; Kinsman v. Stanhope, 50 Mont. 41, L. R. A. 1916C, 443, 144 Pac. 1083), he could not thereafter rely upon the trust or enforce the same. We have then to consider whether the evidence tends to support the allegation of the second count that the note for $2,582 was executed and delivered by the five defendants.

To defeat liability so far as the sisters are concerned, counsel for respondents invoked the provisions of section 5866, Revised Codes, as follows: “No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided, but one who signs in a trade or assumed name will be liable to the same extent as if he had signed his own name.”

The section does not extend the protection contended for. [5] It is elementary that several persons may conduct business as a voluntary association, using a common or trade name and in tñat name be held jointly and. severally liable upon contracts (5 C. J. 1335), and it is equally true that a person may sign a negotiable instrument by an agent. (See. 5867, Rev. Codes.)

Assuming that the evidence establishes the facts which it tends to establish, it may be said, then, that these five defend-[6] ants constituted such a voluntary association for the conduct of the business incident to the management of the property conveyed to them by their father. They employed the trade name “C. O. Marey and Company” and constituted G. 0. Marey manager for the association. However, considering the nature of the business conducted, we think it cannot be said that C. 0. Marcy had implied authority to execute the note for $2,582 and bind the several members of the association thereby, and the evidence shows that he did not have express authority to do so.

He was, however, the agent of the association, and even though he exceeded his authority and the resulting contract— the note in question — was voidable at the election of his sisters, the other members thereof, such contract could be ratified by them (sec. 4994, Rev. Codes), and, if ratified, it became binding as of the date of its execution so far as this plaintiff is concerned. (31 Cyc. 1283.)

Ratification may be effected by express declaration or by [7] implication, and it may be implied from any acts or conduct on the part of the principal which reasonably tends to show an intention on his part to make the act of the agent his own. And where the agency is shown to exist, the facts will be construed liberally in favor of the approval of the principal, and very slight circumstances and small matters will suffice to raise the presumption of ratification in favor of a third party who has dealt with the agent upon the assumption that he possessed the authority and has surrendered a sub-[8] stantial right upon the faith of such assumed power. While mere acquiescence on the part of the principal is not necessarily conclusive, it is to be considered as evidence of ratification upon the theory that it is the duty of the principal to repudiate the unauthorized act of his agent within a reasonable time after discovery unless he intends to be bound by it, and such repudiation must be brought home to the party beneficially affected. The numerous authorities supporting these propositions need not be cited. They are general rales and are stated in 31 Cye. 1245 and following pages.

Rehearing denied November 14, 1921.

Assuming the existence of the facts which the evidence tends to establish, it follows that the acquiescence of the sisters in [9] the act of the brother in executing and delivering the note for $2,582, coupled rath their subsequent recognition of the indebtedness evidenced by it and the provision made for its discharge, constituted a ratification and gave to the note the same binding force and effect as though express authority to execute it had been conferred in the first instance. No [10] cause should be taken from the jury unless it appears as a matter of law that recovery cannot be had in any view which can reasonably be drawn from the facts which the evidence tends to establish. (Stewart v. Stone & Webster Eng. Corp., 44 Mont. 160, 119 Pac. 568.)

The court erred in granting the nonsuit, and for that reason the judgment is reversed and the cause remanded for further proceedings.

Reversed and remanded.

Mr. Chief Justice Brantly and Associate Justices Reynolds, Cooper and Galen concur