Douglas Reservoirs Water Users Ass'n v. Maurer & Garst

398 P.2d 74, 1965 Wyo. LEXIS 117
CourtWyoming Supreme Court
DecidedJanuary 7, 1965
Docket3265
StatusPublished
Cited by8 cases

This text of 398 P.2d 74 (Douglas Reservoirs Water Users Ass'n v. Maurer & Garst) is published on Counsel Stack Legal Research, covering Wyoming Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Douglas Reservoirs Water Users Ass'n v. Maurer & Garst, 398 P.2d 74, 1965 Wyo. LEXIS 117 (Wyo. 1965).

Opinion

Mr. Justice McINTYRE

delivered the opinion of the court.

Suit was brought in the district court in Converse County against the dissolved partnership of Maurer & Garst and against Joseph Garst individually, seeking to recover $40,100 and interest for sums alleged to have been embezzled by R. C. Maurer, now deceased, who was a member of the partnership in his lifetime.

Parties appear to have made good use of the discovery procedures provided for in our rules of civil procedure, through the use of interrogatories and depositions. Thereafter, defendants filed an affidavit made by Garst and moved for summary judgment claiming there was no genuine issue as to any material fact, and that defendants were entitled to judgment as a matter of law. A counter-affidavit was filed by plaintiff. The motion was sustained and summary judgment was entered for defendants. Plaintiff has appealed.

The existence of a partnership for the practice of law over a long period of years, between R. C. Maurer and Joseph Garst, is admitted. There is no substantial or material dispute of the facts asserted by the parties. For purposes of our decision, we will accept what plaintiff claims to be the undisputed facts.

According to plaintiff’s version of the facts, Maurer received a check for $10,-000 in 1948 from the United States, made payable to Harcourt Land Company, a company which Maurer personally owned or controlled. This $10,000 was for the benefit of and should have been turned over to plaintiff, Douglas Reservoirs Water Users Association. Maurer was the secretary-treasurer of Douglas Reservoirs Water Users Association. He was to pur *76 chase a United States Government bond with the $10,000.00, in the name of plaintiff-association. ' Instead, he deposited the proceeds of the check in his personal checking- account and appropriated them to his own use1. ■ ■ ■'

Also, according to plaintiff’s version of the fdcts, Maurer drew a check, on January-31, 19S3, upon the checking account of plaintiff, in the sum of $5,100 and made payable .to R. G. Maurer, Trustee. The check was 'deposited in his own personal account in-another -bank and the proceeds were appropriated to his own use.

■' 'On May' 25, 1953, as plaintiff states the facts, ’ Maurer wrote a check upon the checking account of plaintiff, in the sum of $5,000 and made payable to R. C. Maurer, Administrator, Roby L. Burkett Estate. This check was deposited in another bank in the, name of the Burkett Estate and used td make up for funds which Maurer either had previously embezzled or subsequently embezzled out of the Burkett Estate.

' Considering the facts and all reasonable inferences therefrom in the light most favorable to plaintiff, we must decide wheth- t er Maurer could be said to be acting within the scope' of his apparent authority as an agent of the defendant-partnership when he. performed the acts complained of, or whether any of the money in question was received by the partnership in the course of its business.

" Section 17-208, W.S.1957, of our Uni- ' form Partnership Act, states:

“The partnership is bound to make . r.good the loss:
J“(a) -Where one partner acting within ■ the scope of his .apparent authority re- - ceives money or property of a third 1 -person and misapplies it; and
“(b) Where the partnership in the course of its business receives money or property of a third person and the money or property so received is misapplied by any partner while it is in the custody of the partnership.”

There is nothing in the testimony or affidavits presented to indicate that any of the money here involved went into partnership funds or that any of it was actually received by the firm of Maurer & Garst. Instead, all of it went into the personal account of Maurer.

No doubt the probating of the Bur-kett estate was a partnership function. However, aside from the fact that none of the funds in question went into a partnership account, the receipt ■ of such funds through the commission of a larceny or embezzlement by Maurer could not be said to be in the course of the partnership business. See In re Steinmetz’ Estate, Sur., 1 N.Y.S.2d 601, 605.

The authority of a partner to act as agent for his partnership is limited to such transactions as are within the scope of the partnership business; and neither the partnership nor other partners are bound by the unauthorized act of one partner in a matter not within the apparent scope of business of the partnership. Swanson v. Webb Tractor & Equipment Co., 24 Wash.2d 631, 167 P.2d 146, 154-155; Refinite Sales Co. v. Fred R. Bright Co., 119 Cal.App.2d 56, 258 P.2d 1116, 1119.

Neither a partnership nor its innocent partners are liable for a conversion which' is not effected in the course of the firm’s business. This is commonly held to be true even though the converted property is subsequently used in the business of the partnership, if the other partners had no actual knowledge of the unlawful origin of the property. Hull v. Minkler, 51 Wash. 2d 508, 319 P.2d 815, 820; First Nat. Bank of Portland v. Connolly, 172 Or. 434, 138 P.2d 613, rehearing denied 143 P.2d 243.

We have no doubt, as stated in the Hull case, that if the property remains intact or identifiable while in the hands of the partnership, the claimant might follow the property into the hands of the partnership and recover it. In the case at bar, however, as we have already indicated, the $5,000 which allegedly went into the Bur- *77 kctt estate did not go into the partnership and did not remain intact.

Counsel for appellant-association admits' Garst did not take part in, received no benefit from, and had no knowledge of the misapplication of plaintiff’s funds. The pleadings, affidavits, interrogatories and depositions fail to show that the activities out of which the defalcations arose constituted- a partnership matter. For -all that appears such defalcations arose out of Maurer’s own private deal and not in the course of partnership business.

The same situation prevails in connection with the alleged embezzlement of $5,100 on January 31, 1953. In that case the money went directly into the personal checking account of Maurer and not through anything similar to the Burkett estate account.

The authority of a partner to bind 'his copartners is based on agency. Ellis v. Mihelis, 60 Cal.2d 206, 32 Cal.Rptr. 415, 384 P.2d 7, 13; Aetna Casualty and Surety Company v. Wofford, Okl., 296 P.2d 967, 971, 60 A.L.R.2d 821; Mading v. McPhaden, 50 Wash.2d 48, 308 P.2d 963, 966.

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