Lyons Savings & Loan Ass'n v. Dire's Lock & Key Co.

885 P.2d 345, 18 Brief Times Rptr. 1775, 1994 Colo. App. LEXIS 309, 1994 WL 571942
CourtColorado Court of Appeals
DecidedOctober 20, 1994
Docket93CA0828
StatusPublished
Cited by7 cases

This text of 885 P.2d 345 (Lyons Savings & Loan Ass'n v. Dire's Lock & Key Co.) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lyons Savings & Loan Ass'n v. Dire's Lock & Key Co., 885 P.2d 345, 18 Brief Times Rptr. 1775, 1994 Colo. App. LEXIS 309, 1994 WL 571942 (Colo. Ct. App. 1994).

Opinion

Opinion by

Judge DAVIDSON.

In this action to collect a deficiency on a promissory note, plaintiff, Lyons Savings & Loan Association (Lyons), appeals from the judgment in favor of defendants, Dire’s Lock *347 and Key Co., Rose Dire, Donna Dire, and C.M. & D. Partnership. We affirm.

The following facts are undisputed. In 1982, a Colorado general partnership known as C.M. & D. Partnership was formed. Joseph Dire, Rose Dire, and Donna Dire owned a one-third interest in the partnership, and defendant Dire’s Lock and Key Co. owned another one-third interest. The remaining partner filed a petition in bankruptcy and is not a defendant in this action.

In 1985, Joseph Dire signed a promissory note in favor of Lyons’ assignor in the amount of $188,000. The note was secured by a deed of trust encumbering an apartment building. Neither the note nor the deed of trust contained any reference to the partnership. The note went into default and Lyons was the successful bidder at the subsequent foreclosure sale. Lyons did not notify any defendant of the default or the foreclosure.

Joseph Dire died in 1987. Lyons filed a claim against his estate for the alleged deficiency, but the claim was disallowed as untimely by the probate court. That ruling was affirmed on appeal. See In re Estate of Dire, 851 P.2d 271 (Colo.App.1993).

Lyons brought this action in 1991 to collect an alleged deficiency of approximately $128,-000 plus accrued interest. In its amended complaint, Lyons alleged that Joseph Dire had signed the note on behalf of the partnership. Defendants filed an answer which alleged that Dire had signed the note in his individual capacity.

Defendants then filed a motion for summary judgment asserting that, because none of them had signed the note, no defendant was hable for any deficiency. Lyons filed a response to the motion asserting that defendants were judicially estopped from denying that the note was a partnership obligation.

In support of this argument, Lyons relied upon the fact that Donna Dire, acting as Joseph Dire’s personal representative in the probate proceeding, had signed an answer to interrogatories which indicated that Joseph Dire executed the note as nominee for C.M. & D. Partnership and that, in the inventory in the probate proceeding, the foreclosed property had been listed as partnership property. In addition, Lyons asserted that Michael Dire, as co-personal representative, had signed several claims on behalf of Joseph Dire’s estate in bankruptcy litigation asserting that the note was a partnership obligation.

The trial court denied the motion for summary judgment and declared that Lyons’ equitable claim of judicial estoppel would be tried to the court.

After a bench trial, the court found that the note and deed of trust were executed solely by Joseph Dire in his individual capacity. In addition, the trial court determined that plaintiff, “on the face of the note itself, knew that Joseph Dire was acting individually.”

In considering the applicability of the judicial estoppel doctrine, the trial court found that, because the representations that the note was a partnership debt never developed into a position asserted after discovery of the true nature of the transaction, Donna Dire had made no intentional misrepresentations to the probate court. It further found that, because the representations had not been successfully asserted to Donna Dire’s benefit in an earlier proceeding, the doctrine of judicial estoppel should not apply. The trial court also found that, because Michael Dire was not a party to the action, the pleadings filed in bankruptcy court could not be used to estop the defendants here. Accordingly, the court entered judgment for defendants.

Subsequent to the trial, Rose Dire died. By agreement of the parties, Donna and Michael Dire, in their capacity as her personal representatives, were substituted on behalf of her estate for purposes of this appeal.

I.

Plaintiff first contends that the judgment should be reversed because defendants, as general partners, should be deemed jointly and severally liable for an obligation the deceased general partner was authorized to incur on the partnership’s behalf. Relying upon § 7-60-109(1), C.R.S. (1986 Repl.Vol. 3A) and A.B. Hirsehfeld Press, Inc. v. Wes ton Group, Inc., 824 P.2d 44 (Colo.App.1991), aff'd on other grounds, 845 P.2d 1162 (Colo. *348 1993), plaintiff argues that the fact that the note appeared to have been signed in decedent’s individual capacity is of no consequence if he, as a general partner, was authorized to bind the partnership. We are not persuaded.

An act of a partner which is not apparently for the carrying on of the partnership in the usual way does not bind the partnership unless it is authorized by the other partners. Section 7-60-109(2), C.R.S. (1986 Repl.Vol. 3A). The record before us demonstrates no basis for concluding that the loan proceeds were used for partnership purposes or to conduct its business. Accordingly, absent evidence showing that Joseph Dire was authorized to sign the note on behalf of the partnership, the decision of this court in A.B. Hirschfeld Press, Inc. v. Weston Group, Inc., supra, is inapposite.

Here, the partnership agreement expressly provides that “no partner shall, without the prior written consent of the other partners on behalf of the partnership ... borrow money in the partnership name or use collateral owned by the partnership as security for loans.” Further, plaintiffs counsel stipulated that, when it took an assignment of the note, plaintiff was unaware of the partnership and did not rely upon the credit of any defendant. Moreover, plaintiffs president testified that there were no documents in its files to show that it relied upon- anyone but Joseph Dire for repayment of the note.

Under these circumstances, we conclude that the evidence supports the trial court’s determination that the note and deed of trust were not executed on behalf of the partnership and were not partnership obligations. Accordingly, we may not disturb this ruling on appeal. See M.D.C./Wood, Inc. v. Mortimer, 866 P.2d 1380 (Colo.1994).

II.

Plaintiff also contends that the trial court erred in concluding that the doctrine of judicial estoppel did not apply. We disagree.

A.

In support of its contention, plaintiff first argues that, when defendant Donna Dire signed an inventory and answers to interrogatories in the probate proceeding as Joseph Dire’s co-personal representative, she stated that the note was a partnership obligation. Plaintiff therefore argues that defendants were judicially estopped from asserting that the note was decedent’s personal obligation. We disagree.

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885 P.2d 345, 18 Brief Times Rptr. 1775, 1994 Colo. App. LEXIS 309, 1994 WL 571942, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lyons-savings-loan-assn-v-dires-lock-key-co-coloctapp-1994.