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Hodgev.Garrett,614P.2d420Idaho:SupremeCourt1980GoogleScholar

614P.2d420(1980)
101Idaho397

BillHODGE,PlaintiffRespondent,
v.
LouiseA.GARRETT,RexE.Voeller,StanleyC.Voeller,HelenVoellerCronin,LillianM.VoellerandIrvin
G.Harris,akaI.G.Harris,individuallyanddoingbusinessasPayOntDriveInTheatre,apartnership,
DefendantsAppellants.
No.12964.
SupremeCourtofIdaho.
July24,1980.
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*421JohnK.GatchelofGatchel&Batt,Payette,fordefendantappellantRexE.Voeller.
RichardSmithofParsons,Smith&Pedersen,Burley,fordefendantsappellantsLouiseA.Garrett,StanleyC.Voeller,Helen
VoellerCronin,LillianM.VoellerandIrvinG.Harris.
GeraldL.WestonofGigray,Miller,Downen&Weston,Caldwell,forplaintiffrespondent.
BISTLINE,Justice.
FollowinganonjurytrialthecourtbelowgrantedspecificperformancetotheplaintiffrespondentBillHodge.[1]Alldefendants
joinedinasinglenoticeofappeal,andalldefendantsjoinedinasinglebrieffiledinthisCourt.OnlyMr.Gatchelargued.
HodgeanddefendantappellantRexE.Voeller,themanagingpartnerofthePayOntDriveInTheatre,signedacontractforthe
saleofasmallparceloflandbelongingtothepartnership.Thatparcel,althoughadjacenttothetheater,wasnotusedintheater
operationsexceptinsofarastheeast20feetwerenecessaryfortheoperationofthetheater'sdriveway.[2]Theagreementforthe
saleoflandstatedthatitwasbetweenHodgeandthePayOntDriveInTheater,apartnership.Voellersignedtheagreementfor
thepartnership,andwrittenchangesastothefootageandpricewereinitialedbyVoeller.
VoellertestifiedthathehadtoldHodgepriortosigningthatHodgewouldhavetopresenthimwithaplatplanwhichwouldhave
tobeapprovedbythepartnersbeforethepropertycouldbesold.Hodgedeniedthataplatplanhadeverbeenmentionedtohim,
andhetestifiedthatVoellerdidnottellhimthattheapprovaloftheotherpartnerswasneededuntilafterthecontractwassigned.
HodgealsotestifiedthatheofferedtopayVoellerthefullpurchasepricewhenhesignedthecontract,butVoellertoldhimthat
thatwasnotnecessary.

422

ThetrialcourtfoundthatVoellerhadactualandapparentauthoritytoexecutethecontractonbehalfofthepartnership,*422and
thatthecontractshouldbespecificallyenforced.ThepartnersofthePayOntDriveInTheatreappeal,arguingthatVoellerdidnot
haveauthoritytoselltheproperty[3]andthatHodgeknewthathedidnothavethatauthority.
Atcommonlawonepartnercouldnot,"withouttheconcurrenceofhiscopartners,conveyawaytherealestateofthepartnership,
bindhispartnersbyadeed,ortransferthetitleandinterestofhiscopartnersinthefirmrealestate."60Am.Jur.2dPartnership
149(1972)(footnotesomitted).ThisrulewaschangedbytheadoptionoftheUniformPartnershipAct.Therelevantprovisions
arecurrentlyembodiedinI.C.53309(1)and53310(1)asfollows:
I.C.53310(1):"Wheretitletorealpropertyisinthepartnershipname,anypartnermayconveytitletosuch
propertybyaconveyanceexecutedinthepartnershipnamebutthepartnershipmayrecoversuchproperty
unlessthepartner'sactbindsthepartnershipundertheprovisionsofparagraph1ofsection53309,unlesssuch
propertyhasbeenconveyedbythegranteeorapersonclaimingthroughsuchgranteetoaholderforvalue
withoutknowledgethatthepartner,inmakingtheconveyance,hasexceededhisauthority."
I.C.53309(1):"Everypartnerisanagentofthepartnershipforthepurposeofitsbusiness,andtheactofevery
partner,includingtheexecutioninthepartnershipnameofanyinstrument,forapparentlycarryingonintheusual

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waythebusinessofthepartnershipofwhichheisamemberbindsthepartnership,unlessthepartnersoacting
hasinfactnoauthoritytoactforthepartnershipintheparticularmatter,andthepersonwithwhomheisdealing
hasknowledgeofthefactthathehasnosuchauthority."
Themeaningoftheseprovisionswasstatedinonetextasfollows:
"Ifrecordtitleisinthepartnershipandapartnerconveysinthepartnershipname,legaltitlepasses.Butthe
partnershipmayrecovertheproperty(exceptfromabonafidepurchaserfromthegrantee)ifitcanshow(A)that
theconveyingpartnerwasnotapparentlycarryingonbusinessintheusualwayor(B)thathehadinfactno
authorityandthegranteehadknowledgeofthatfact.Theburdenofproofwithrespecttoauthorityisthusonthe
partnership."CraneandBromburgonPartnership50A(1968)(footnotesomitted).
ThusthiscontractisenforceableifVoellerhadtheactualauthoritytoselltheproperty,or,evenifVoellerdidnothavesuch
authority,thecontractisstillenforceableifthesalewasintheusualwayofcarryingonthebusinessandHodgedidnotknowthat
Voellerdidnothavethisauthority.
Astothequestionofactualauthority,suchauthoritymustaffirmativelyappear,"fortheauthorityofonepartnertomakeand
acknowledgeadeedforthefirmwillnotbepresumed...."60Am.Jur.2dPartnership151(1972).Althoughsuchauthoritymay
beimpliedfromthenatureofthebusiness,id.,orfromsimilarpasttransactions,Smithv.Dixon,386S.W.2d244(Ark.1965),
nothingintherecordinthiscaseindicatesthatVoellerhadexpressorimpliedauthoritytosellrealpropertybelongingtothe
partnership.ThereisnoevidencethatVoellerhadsoldpropertybelongingtothepartnershipinthepast,andobviouslythe
partnershipwasnotengagedinthebusinessofbuyingandsellingrealestate.
Thenextquestion,sinceactualauthorityhasnotbeenshown,iswhetherVoellerwasconductingthepartnershipbusinessinthe
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*423usualwayinsellingthisparcelofland[4]suchthatthecontractisbindingunderI.C.53310(1)and309(1),i.e.,whether
Voellerhadapparentauthority.Heretheevidenceshowed,andthetrialcourtfound:
III.
"Thatthedefendant,RexE.Voeller,wasoneoftheoriginalpartnersofthePayOntDriveInTheatrethattheother
defendantsobtainedtheirpartnershipinterestbyinheritanceuponthedeathofotheroriginalpartnersthatupon
thedeathofapartnerthepartnershipaffairswerenotwoundup,butinstead,thepartnershipmerelycontinuedas
before,withtheheirsofthedeceasedpartnerowningtheirproportionateshareofthepartnershipinterest.
IV.
"Thatattheinceptionofthepartnership,andatalltimesthereafter,RexE.Voellerwastheexclusive,managing
partnerofthepartnershipandhadthefullauthoritytomakealldecisionspertainingtothepartnershipaffairs,
includingpayingthebills,preparingprofitandlossstatements,incometaxreturnsandtheorderingofanygoods
orservicesnecessarytotheoperationofthebusiness."
ThecourtmadenofindingthatitwascustomaryforVoellertosellrealproperty,orevenpersonalproperty,belongingtothe
partnership.Norwasthereanyevidencetothiseffect.Nordidthecourtdiscusswhetheritwasintheusualcourseofbusinessfor
themanagingpartnerofatheatertosellrealproperty.YetthetrialcourtfoundthatVoellerhadapparentauthoritytosellthe
property.Fromthisitmustbeinferredthatthetrialcourtbelievedittobeintheusualcourseofbusinessforapartnerwhohas
exclusivecontrolofthepartnershipbusinesstosellrealpropertybelongingtothepartnership,wherethatpropertyisnotbeing
usedinthepartnershipbusiness.Wecannotagreewiththisconclusion.Foratheater,"carryingonintheusualwaythebusiness
ofthepartnership,"I.C.53309(1),meansrunningtheoperationsofthetheateritdoesnotmeansellingaparcelofproperty
adjacenttothetheater.Herethecontractofsalestatedthatthelandbelongedtothepartnership,and,evenifHodgebelieved
thatVoellerastheexclusivemanagerhadauthoritytotransactallbusinessforthefirm,Voellerstillcouldnotbindthepartnership
throughaunilateralactwhichwasnotintheusualbusinessofthepartnership.Wethereforeholdthatthetrialcourterredin
holdingthatthiscontractwasbindingonthepartnership.
Judgmentreversed.Coststoappellant.
DONALDSON,C.J.,andBAKESandMcFADDEN,JJ.,concur.
SHEPARD,Justice,dissenting.

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Themajority,andIamsureinadvertently,neglectstoincludecertainuncontrovertedfacts.Attheexecutionofthecontractin
questionhere,$100.00changedhands.Ithasnotbeenreturnedandthepartnershipevidentlyfeelsnocompunctioninretaining
it.SomeconsiderabletimeelapsedbetweenthesigningoftheinstrumentandthedecisionofVoellernottohonorthecontracton
behalfofthepartnership.Duringthatperiodoftime,Hodgewasplacedinpossessionofthepropertyinquestion,madeextensive
improvementsthereon,includingtheplacementofacommercialofficestructurethereonwhichHodgerentedtoathirdpartyfor
thesumof$75.00permonth.WhileitistruethatHodge'scountfordamagesforbreachofthecontractwasdismissedbythetrial
court,thatactionofthetrialjudgewas,inmyjudgment,undoubtedlytheresultofhisdecisiontograntspecificperformance.The
majority'sreversalwithdirectionstoenterjudgmentforthedefendanteffectivelypreventsHodge*424fromeverrecoveringany
ofhisuncontroverteddamagesresultingfromVoeller'sbreachofthecontract.
ItshouldberememberedthatVoellerclearlyadmittedtheexecutionofthecontractofsaleonbehalfofthepartnership.Suchwas
notdeniedbytheotherpartners,whoinfactcounterclaimedagainstVoellerforthedamagesthepartnershipmightsustainby
reasonofthesale.Itisuncontrovertedthat,asHodgestated,thepropertyinvolvedhasundergoneanenormousincreasein
valuesincetheexecutionofthecontract.Undoubtedly,thetrialcourtviewedthedefenseprotestationsofVoeller'slackof
authorityinthatlight.Indeed,Voellertestifiedthatthesolereasonthetransactionwasnotconsummatedwasthathelatercame
tobelievethatsuchasalewouldamounttoasubdivisionofthetheatrepropertyandhenceresultinthepartnershipproperty
beingbroughtintothecitylimitswitharesultantincreaseintaxes.
AlthoughthetrialcourtallowedtheselfservingtestimonyofbothVoellerandHarrisregardingthescopeofVoeller'sauthority,the
trialjudgewascarefultonotethathedidnotconsidersuchtestimonytobebindingonhim.Insuchruling,Ibelievehewas
correct.Certainly,objectiontoVoeller'stestimonycouldhavebeensustainedonthebasisthathewasestoppedtodenythe
authoritywhichhehadassertedinwritingtothedetrimentofHodge.Thetrialjudgemayverywellhavebelievedthatthe
testimonyofbothVoellerandHarriswasselfserving,improbable,andevenperhapsviolativeoftheparoleevidencerule.It
shouldbenotedthatthequestionmighthavebeenresolvedbyreferencetothearticlesofpartnership.Thelackofthe
introductionofthosearticlesoranyreferencetospecificpartsthereofmaywellhaveledthetrialjudgetoconcludethatthe
defendantshadfailedtocarrytheirburdenofproofregardingthelackofauthorityinVoeller.
Contrarytotheassertionsofthemajority,therecordrevealsthatthepartnershiphadnottoolongbeforetheinstanttransaction
soldrealestateinEmmett,includingtheentiretheatrebusinesslocatedthereon.Further,oneofthepartnerstestifiedthatthe
entirelandownedbythepartnershipwasnotnecessarytothebusinessandhemightverywellconsiderestablishingadrivein
restaurantbusinessthereon.
Inmymind,I.C.53309(1)iscontrollingwhenitstates,"everypartnerisanagentofthepartnership***unlessthepartnerso
actinghasinfactnoauthoritytoactforthepartnershipintheparticularmatter,andthepersonwithwhomheisdealinghas
knowledgeofthefactthathehasnosuchauthority."(Emphasisadded.)Tome,theinclusioninthestatuteoftheconjunctive
"and"iscontradictedbythe"authority"citedbythemajority,whichconvertstheconjunctive"and"intothedisjunctive"or."
Here,Hodge'stestimony,whichthetrialcourtwasatlibertytobelieve,wasthatHodgehadnoknowledgebutthatVoellerhad
theauthoritytoenterintothetransactiononbehalfofthepartnership.Indeed,Voellersoexecutedtheinstrumentinthenameof
thepartnership.
Iamindeedstartledatthefollowingassertionofthemajority:"***andobviouslythepartnershipwasnotengagedinthe
businessofbuyingandsellingrealestate."Themurkyandcomplicatedhistoryofthepartnershipclearlydemonstratestothe
contrary.Asrevealedintherecord,whathadbeenoriginallypartnershipproperty(suchasthreetheatresinBurley,Idaho)had
beensomehowconvertedintocorporateassets.ThebusinessesinwhichHarrisandVoellerwereinvolved,ineitherpartnership

425

orcorporateform,atvarioustimesincludedtheatresinLogan,Utah,Jerome,Idaho,Emmett,Idaho,Burley,Idaho,Rupert,Idaho,
Ontario,Oregon,Lovelock,Nevada,Evanston,Wyoming,Montpelier,Idaho,Buhl,Idaho,CarsonCity,Nevada,Nyssa,Oregon
realestatebusinessesinRupert,Idaho,Montpelier,Idaho,CarsonCity,Nevada,Nyssa,OregonandhoteloperationsinBurley,
IdahoandEvanston,Wyoming.Exactlywhatrealestatetransactionswereinvolvedbetweenthepartnershipandthesevarious
corporationsisunclear.However,therecordisclearthatthe*425partnershipdidpurchaserealproperty,thatthepartnershipdid
sellrealproperty,andthatVoellerhimself,onbehalfofthepartnership,engagedintherentalofpropertytootherpersons,
includingtheleasingofthetheatreoperationinLovelock,Nevada.Onthebasisoftheabove,Icannotagreewiththemajority's
characterizationofthispartnership,butagainwouldagreewiththetrialjudgeinhisundoubtedconclusion,albeitunstated,that
thepartnershipfailedtocarryitsburdenofproofthatthetransactioninquestionherewasoutsidetheauthorityofVoellerand
outsidetheusualandordinarycourseofbusinessofthepartnership.

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[1]Hodgeallegedanalternativecountfordamagesforbreachofcontract.AtthecloseofHodge'scaseinchiefthecourtorderedthatthatcount
wasnotsustainedandwouldbedismissed.Aspecificwrittenfindingthatnodamageshadbeenprovedwasentered.OnhisappealHodgehas
presentednocontentionthatthetrialcourterredinrulingouthisalternativecount,orinenteringthespecificfindingthatnodamageswere
established.Presumablytheplaintiffdidnotpursuethatcountattrial,and,noerrorbeingassignedhere,thatissueisgivennoconsideration.
[2]ThetrialcourtfoundthatHodgeandVoellerhadorallyagreedthatthis20footstripwouldbeencumberedbyaneasementforingressand
egresstothepartnershiplands.
[3]TheotherpartnershavemaintainedfromtheinceptionofthiscontroversythatVoellerdidnothaveauthoritytosellthisproperty.Intheiranswer
tothecomplaint,theotherpartnersbroughtacrossclaimagainstVoellerforanylossordamagesufferedbythemasaresultofthissuit,alleging
thatVoeller"hadnorightorauthoritytocommitsaidrealpropertyordealwiththesameonbehalfof"theotherpartners.Thetrialcourtconcluded
thatthiscrossclaimshouldbedismissed.
[4]Sinceweholdthathewasnot,wedonotneedtoconsiderwhetherHodgeknewthatVoellerdidnothaveauthority.

SavetreesreadcourtopinionsonlineonGoogleScholar.

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