Hodge v. Garrett
Hodge v. Garrett
Hodge v. Garrett
2d 420
HODGE
v.
GARRETT
[RIGHTS AND OBLIGATIONS OF THE PARTNER: RIGHT TO PARTICIPATE IN THE MANAGEMENT: CONVEYANCE OF PROPERTY IN
PARTNERSHIP NAME]
The meaning of these provisions was stated in one text as follows: "If record title is in the partnership and a
partner conveys in the partnership name, legal title passes. But the partnership may recover the property (except
from a bona fide purchaser from the grantee) if it can show that:
a.
the conveying partner was not apparently carrying on business in the usual way, or
b. he had in fact no authority and the grantee had knowledge of that fact. The burden of proof with respect to
authority is thus on the partnership." (Crane and Bromburg on Partnership, 1968)
Thus the contract is enforceable IF Voeller had the actual authority to sell the property, or, even if Voeller did not
have such authority, the contract is still enforceable if the sale was in the usual way of carrying on the business
and Hodge did not know that Voeller did not have this authority.
As to the question of actual authority: Such must affirmatively appear, "for the authority of one
partner to make and acknowledge a deed for the firm will not be presumed. . . ."
Although such authority may be implied from the nature of the business or from similar past transactions,
nothing in this case indicates that Voeller had express or implied authority to sell real property belonging to
the partnership.
There is no evidence that Voeller had sold property belonging to the partnership in the past, and the
partnership was not engaged in the business of buying and selling real estate.
2. WON Voeller was conducting the partnership business in the usual way (in selling the parcel of land
such that the contract is binding under I.C. 55 53 310(1) and 309(1), or if Voeller had apparent
authority). NO.
The Trial Court found that Voeller was the exclusive, managing partner of the partnership and had the full authority
to make all decisions pertaining to the partnership affairs, including paying the bills, preparing profit and loss
statements, income tax returns, and the ordering of any goods or services necessary to the operation of the business.
HOWEVER, the court made no finding that it was customary for him to sell real property, or even personal property
belonging to the partnership.
For a theater "carrying on in the usual way the business of the partnership" means running the operations of
the theater. It does not mean selling a parcel of property adjacent to the theater.
Here the contract of sale stated that the land belonged to the partnership, and, even if Hodge believed that
Voeller as the exclusive manager had authority to transact all business for the firm, Voeller still could not
bind the partnership through a unilateral act which was not in the usual business of the partnership.
DISPOSITIVE:
Judgment reversed. Costs to appellant.
kathleen