209 N.W. 863 | Minn. | 1926
For some time prior to December 10, 1923, one Bowman operated a meat market at Pine River and carried a checking account with appellant. He was also engaged in buying and selling live stock and for this branch of his occupation he carried with appellant a separate checking account known as the "cattle account." Apparently Bowman's capital was limited. The bank permitted him to buy cattle and draw checks in payment when he had insufficient funds in the cattle account. In anticipation of this Bowman gave *222 the bank promissory notes in blank with authority to fill in the amount and credit to his "cattle account" when it desired to eliminate the overdrafts. The arrangement between Bowman and the bank required the drafts received from the sale of cattle to be deposited to this account and used to pay such notes. Business was carried on in this way for several years.
On December 10, 1923, one Steadman and Bowman agreed to become partners in the buying and selling of live stock. Each was to contribute one-half the necessary capital and share equally in the profits and losses. Steadman did business at another bank. He bought cattle and paid for them with his individual checks. Each was to contribute the necessary money to pay for his purchases. Bowman followed his usual custom with defendant bank. A $1,500 note was used. The bank thought it was loaning money to Bowman. The money so loaned was used by Bowman in paying for cattle bought for the copartnership. The cattle bought by the two partners were shipped to South St. Paul. Steadman then advised the bank of the existence of the copartnership. The drafts aggregating $1,742.56 for the cattle were sent in the name of Bowman and the bank credited his cattle account and used $1,434.56 to pay on the $1,500 note, leaving $308 which was paid to Steadman by a check from Bowman.
The partnership bought and sold but four carloads of cattle. The plaintiffs received and settled between themselves the proceeds of the first two carloads.
This action was brought in the name of the copartnership to recover the $1,742.56. Perhaps the amount should have been $1,434.56. The court found that by mutual accounting between the partners Steadman was entitled to $907.59 and having received $308 he was entitled to judgment for $599.41, leaving Bowman's share applied upon the debt due the bank.
1. Every partner is the agent of the copartnership for the purposes of its business. G.S. 1923, § 7392. Where a contract is made by an agent, without disclosing his principal, and the other contracting party subsequently discovers the real party, he may *223 abandon his right to look to the agent personally and resort to the principal. Dun. Dig. § 216. The money procured from the bank was used to pay for cattle bought for the copartnership. The copartnership received the benefit of the money. The bank expected to be paid from the drafts representing the proceeds from the sale of the cattle. It acted in good faith. Bowman in his own name procured money to pay for the cattle. He was acting for the firm as shown by the use of the money. His contract with the bank was for the benefit of the partnership which used the money and had the benefit of the transaction. Indeed Bowman did not finance himself through the bank. It financed the copartnership but in the name of Bowman. It financed the business venture. In all reasonable probability it would not have done so had the custom and arrangement under which it was acting not necessitated the proceeds from the sale to be applied in extinguishing the debt. Clearly the bank could not have contemplated anything else. How the proceeds of the first two cars were withheld is not explained. It cannot be said that Bowman did what he had agreed with Steadman. He got the money with the help of the intrinsic or inherent element of safety or moral risk involved in having the proceeds of the shipment used to pay the debt.
Respondent relies upon the principle of law that if a partner borrows money on his own account, the credit being given to him, the fact that he afterwards applies the money to the purposes of the firm will not render the latter liable therefor. Nat. Bank of Commerce v. Meader,
Reversed.