Opinion
No. 39823.
November 12, 1929.
BILLS AND NOTES: Indorsement — Indorsement Without Authority — 1 Effect. Where, at a sale of the joint property of a landlord and tenant, promissory notes were, without authority from the landlord or the tenant, taken in their names, and later formally indorsed by the tenant in the name of both payees, for the sole purpose of obtaining what was due to the landlord and tenant, held that neither of the so-called indorsers was liable as such, and especially the landlord, who did not even know that the notes had been so executed.
LANDLORD AND TENANT: Leases — Construction — Joint Adventure
(?) or Partnership (?)
Appeal from Poweshiek District Court. — J.G. PATTERSON, Judge.
Action to recover against Jake Weber, as maker, and G.O. Watland and I.S. Rasmussen, as indorsers, of a promissory note payable to Watland and Rasmussen, and bearing the indorsement "Watland and Rasmussen." Judgment for plaintiff. The indorsers, Watland and Rasmussen, appeal. — Reversed.
J.H. Patton, for I.S. Rasmussen, appellant.
J.G. Shifflett, for G.O. Watland, appellant.
Rayburn Rayburn, for appellee.
The note sued upon was given at a public farm sale held by the indorsers, Watland, the landlord, and Rasmussen, the tenant. The note was taken by the clerk at the sale, and, as appellants contend, was, without authority, made payable to 1. BILLS AND "Watland and Rasmussen," and indorsed by NOTES: Rasmussen with the name "Watland Rasmussen," in indorsement: order to get the proceeds of the sale. The indorsement contention of the plaintiff, as we understand, without is that the note was taken in the prosecution of authority: a joint adventure between Watland and Rasmussen, effect. and that they have, by not returning the proceeds of the note, ratified it and its indorsement.
Watland (first party) leased to Rasmussen (second party) a farm "at the rent of share rent as below specified as follows to wit, second party hereto to furnish work horses * * * to conduct said farm. Each party hereto to furnish one half of all other stock and bear equal expense connected with the conducting of said farm and to share equally in the increase of all stock * * * or anything else produced on said premises, second party to furnish all help necessary in the conducting of said farm free of charge to party of the first part, said premises to be used for general farming." Then follow ordinary provisions in reference to payment of rent, farming operations, care of premises, etc., to be observed by the tenant.
Plaintiff alleges in his petition that the defendants were partners. At the conclusion of the evidence, he asked leave to amend his reply, alleging that the enterprise between Watland and Rasmussen was one of joint adventure. Whether 2. LANDLORD plaintiff means that the joint adventure was in AND TENANT: the farming operations or in the sale, or both, leases: is not clear. Under the well established rule in construc- this state, the relationship between appellants tion: joint as the result of the contract of lease was one adventure of landlord and tenant, and not of partnership (?) or or joint adventure. In re Estate of Schultz, 196 partnership Iowa 125; Kelley v. Kelley, 189 Iowa 311; Taylor (?) v. Successful Farm. Pub. Co., 197 Iowa 618. The property sold was jointly owned by appellants, under the lease, and the sale, though advertised in the name of "Watland and Rasmussen," was merely a sale of their joint property, for the purpose of converting it into money in closing up the tenancy. It was in no sense a venture.
Burroughs clerked the sale. Watland testified, without contradiction, that he (Watland) employed his bank to clerk the sale, under an arrangement by which the bank was to take the notes and pay the cash. Asked, "Were you to sell the notes or to indorse them?" he answered, "I was not to have anything to do with it." He had nothing to do with Burroughs, and "never authorized Mr. Burroughs or anyone else to sell any notes taken at that sale." Burroughs at first testified that Rasmussen requested him to clerk the sale, but, Rasmussen having testified that he did not, Burroughs said he couldn't be sure whether the bank asked him to clerk it; that "they might have spoken to me about it; it happened once in a while that, when such business came to the bank, they would ask me to clerk it for them." Burroughs testified, "I had planned to place these notes before the sale. I did not take the notes myself." Asked in behalf of plaintiff, "In clerking the sale, Mr. Burroughs, were you acting for anyone except yourself, as clerk, — were you employed by anyone except the defendants?" he answered, "I was acting for myself alone." Burroughs also says that, for a considerable time after the note was purchased by plaintiff, it was in his (Burroughs's) possession, as agent. Plaintiff says that the note was, for a time, in the possession of Burroughs, and then it was turned over for collection. There is no evidence that Burroughs was authorized to take notes payable to appellants. Burroughs, asked why the note was indorsed by Rasmussen "Watland Rasmussen," answered. "In settlement of the sale account." He says that neither Watland nor Rasmussen told him to take the notes in the name of Watland and Rasmussen; that, "when it came to indorse that note, I just told Mr. Rasmussen to indorse it `Watland and Rasmussen.'" Rasmussen says that he wrote "Watland and Rasmussen" on the back of the note "because Mr. Burroughs asked me to sign it, before I could get my money. He told me to sign it `Watland Rasmussen.'" Burroughs made out checks to Watland and Rasmussen severally for their respective shares of the net proceeds of the sale. These checks came into the possession of the appellants respectively. Just how, is a matter of conflict in the evidence. Watland, however, had no transaction whatever with Burroughs on the subject. Watland received the check signed by Burroughs for his share of the net proceeds of the sale in ignorance that the note in question was made payable or was indorsed as now appears.
Neither Burroughs nor Rasmussen was agent for Watland. Neither of them pretended to have authority of any sort to indorse the note for Watland, nor was the indorsement made as one of a note belonging to and sold by Rasmussen or Watland or both. Rasmussen was merely placing on the back of the note the name "Watland Rasmussen" because Burroughs directed him to. Burroughs, if representing anybody other than himself in the transaction, was representing plaintiff. On the undisputed facts here, what was done by Rasmussen in indorsing the note was done in behalf of Burroughs, not in behalf of appellants. It was to accomplish Burroughs's purpose to perform his duty of accounting to appellants in cash, and to acquire the note for plaintiff. Defendants, particularly Watland, were receiving merely what they were entitled to receive from Burroughs, and not receiving the proceeds of an act assumed to be done by Rasmussen for them. Wycoff, Seaman Benedict v. Davis, 127 Iowa 399; Ritter v. Plumb, 203 Iowa 1001; 2 Corpus Juris 474. As to Watland, further, the transaction in question was wholly without his knowledge or authority, and the fact that the money was used for his benefit in making payment to him of his share of the proceeds of the sale was not ratification. Eggleston v. Mason Co., 84 Iowa 630; McIntosh Cathro v. Penney, 190 Iowa 194, 204; 2 Corpus Juris 499; Huismann v. Althoff, 202 Iowa 70. The concern of the parties in this lawsuit apparently is with Watland. No separate theory as to Rasmussen, — e.g., the question of varying a contract of indorsement by parol evidence, — is presented. — Reversed.
ALBERT, C.J., and STEVENS, De GRAFF, and GRIMM, JJ., concur.