Executive Financial Services, Inc. v. Loyd

715 P.2d 376, 238 Kan. 663, 1986 Kan. LEXIS 296
CourtSupreme Court of Kansas
DecidedFebruary 21, 1986
Docket57,573
StatusPublished
Cited by11 cases

This text of 715 P.2d 376 (Executive Financial Services, Inc. v. Loyd) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Executive Financial Services, Inc. v. Loyd, 715 P.2d 376, 238 Kan. 663, 1986 Kan. LEXIS 296 (kan 1986).

Opinions

The opinion of the court was delivered by

Herd, J.:

This is an appeal from the district court’s grant of summary judgment in favor of Executive Financial Services (EFS) on its breach of contract claim, and the subsequent dismissal of defendants’ counterclaim based on negligence.

This case arose out of the sale and lease/financing of three tractors. EFS purchased the three tractors from Tri-County Farm Equipment Company (Tri-County), a John Deere farm implement dealership corporation owned by James Loyd and Gene Mohr. EFS then leased the tractors to Mohr-Loyd Leasing, a partnership between Mohr and Loyd. The primary business purpose of the partnership was to buy office equipment and vehicles for lease to Tri-County and to act as a tax shelter for Mohr and Loyd. A secondary operation of the partnership involved the acquisition of farm equipment for lease to farmers.

The first transaction involves John Deere tractor model No. 8640. On July 19, 1982, James Loyd executed a purchase order [664]*664on behalf of Tri-County, whereby Tri-County sold John Deere tractor model No. 8640 to EFS for $48,000. Concurrently, Loyd signed an agreement allegedly on behalf of Mohr-Loyd Leasing, whereby Mohr-Loyd agreed to lease the tractor from EFS. Loyd also completed a resolution of the Roard of Directors of TriCounty authorizing Tri-County’s corporate guarantee of the lease transaction. As payment for the tractors, EFS issued a $48,000 check made payable to Tri-County, which was deposited by Loyd into one of his personal business accounts.

Similar documents exist with respect to the second and third lease transactions, whereby two more John Deere tractors were purchased by EFS from Tri-County and leased to Mohr-Loyd Leasing. The second transaction was completed on August 30, 1982, for a purchase price of $19,000. The third transaction was completed November 3, 1982, for a purchase price of $38,000.

Within two months of these transactions, Loyd sold all three tractors to third parties and Mohr-Loyd Leasing and Tri-County defaulted on the leases. EFS then filed the present action on May 6, 1983, alleging breach of contract, fraud, conversion and embezzlement, and seeking money damages and replevin. TriCounty Farm Equipment and Gene Mohr then filed a counterclaim against EFS based on negligence.

The trial court granted summary judgment in favor of EFS on its breach of contract claim and summarily dismissed appellants’ counterclaim. The trial court then stayed execution on the judgment pending the outcome of litigation in two related cases, captioned Executive Financial Services, Inc. v. Donald H. Pagel, et al., case No. 83-C-84 in the Jackson District Court, and Executive Financial Services v. Marvin Allen, Jr., et al., case No. 121639 in the Johnson District Court. Judgment has since been rendered in these cases and they are the subject of a consolidated appeal to this court. See Executive Financial Services, Inc. v. Pagel, 238 Kan. 809, 715 P.2d 381 (1986).

Appellants Gene Mohr and Tri-County appeal from the district court’s grant of summary judgment in favor of EFS and EFS cross-appeals from the district court’s stay of execution on the judgment and dismissal of Count II of its petition.

The first issue on appeal is whether a material question of fact remained as to James Loyd’s actual or apparent authority to act for or on behalf of Mohr-Loyd Leasing or Tri-County Farm [665]*665Equipment Company. The trial court found that Loyd, as an officer and agent of the corporation, had the authority to bind Tri-County and, as a general partner, had the authority to bind Mohr-Loyd Leasing.

The question of Loyd’s authority to act on behalf of Mohr-Loyd Leasing is governed by K.S.A. 56-309(a) and (b), which provides:

“(a) Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he or she is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom the partner is dealing has knowledge of the fact that he or she has no such authority.
“(b) An act of a partner which is not apparently for the carrying on of the business of the partnership in the usual way does not bind the partnership unless authorized by the other partners.”

Thus, we see a partner’s authority to act is limited to transactions within the scope of the partnership business, or within the apparent scope of the partner’s authority.

Appellants contend Loyd’s transactions with EFS were not for the purpose of the “carrying on of the business of the partnership in the usual way” and that Loyd had no authority to act on behalf of the partnership in this particular matter. In other words, they claim Loyd was not authorized to commit illegal acts and that neither the partnership nor corporation should be bound by such acts.

The evidence established, and the trial court held, that the business of Mohr-Loyd Leasing involved the purchase of office equipment and vehicles for lease to Tri-County and the acquisition of farm equipment for lease to farmers. Thus, Loyd was acting within the usual course of the partnership business when he acquired three tractors from EFS for subsequent lease to farmers. The fact that Mohr-Loyd Leasing did not actually lease the tractors to farmers is immaterial. Thus, as a general partner, Loyd had both apparent and actual authority to act within the usual course of partnership business, even though he used his authority illegally. The trial court did not err in so holding.

Likewise, Tri-County is bound by the acts of Loyd since generally a corporation is bound by contracts entered into on its behalf by its duly authorized officers or agents acting within the scope of their authority. Loyd was a director, officer and fifty [666]*666percent shareholder in Tri-County. He was authorized to sign all orders, contracts and notes for Tri-County. Thus, Loyd acted within the scope of his authority in guaranteeing the lease transaction in question. The fact that Mohr was not aware of the lease transactions and did not specifically authorize them is not controlling here since Loyd was acting within the scope of his authority. A corporation may be bound by a contract entered into by an agent or officer even if it is not communicated to the company. 18B Am. Jur. 2d, Corporations § 1666, p. 519.

Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Peoples Nat’l Bank & Trust v. Excel Corp., 236 Kan. 687, 695, 695 P.2d 444 (1985).

The trial court did not err in finding no material question of fact remained as to James Loyd’s authority to act on behalf of either Mohr-Loyd Leasing or Tri-County.

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Executive Financial Services, Inc. v. Pagel
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Executive Financial Services, Inc. v. Loyd
715 P.2d 376 (Supreme Court of Kansas, 1986)

Cite This Page — Counsel Stack

Bluebook (online)
715 P.2d 376, 238 Kan. 663, 1986 Kan. LEXIS 296, Counsel Stack Legal Research, https://law.counselstack.com/opinion/executive-financial-services-inc-v-loyd-kan-1986.