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533S.W.2d751(1976)

BettyL.COOKetal.,Petitioners,
v.
BRUNDIDGE,FOUNTAIN,ELLIOTT&CHURCHILL,aPartnershipforthePracticeofLaw,Respondents.
No.B5371.
SupremeCourtofTexas.
February11,1976.
RehearingDeniedMarch24,1976.
MaryNealSisk,Dallas,forpetitioners.
Jackson,Walker,Winstead,Cantwell&Miller,DonaldL.CaseandJackPew,Jr.,Dallas,forrespondents.
STEAKLEY,Justice.
752

Asthiscasereachesus,itisasuitbyBettyL.Cook,etal,againstBrundidge,*752Fountain,Elliott&Churchill,apartnershipfor
thepracticeoflaw.[1]Thesuitsoughttorecoveractualandexemplarydamagesagainstthelawfirmarisingfromalleged
breachesoffiduciarydutyintheattorneyclientrelationship,andfromallegedfraudulentacts.Thebreachesandfraudulentacts
wereallegedtohavebeencommittedbyWarrenC.Lyon,apartnerinthefirmatthetimesinquestion.Themotionofthelawfirm
forsummaryjudgmentwasgrantedbythetrialcourtandthishasbeenaffirmedbytheCourtofCivilAppeals.522S.W.2d740.
ThequestionfordecisioniswhetherthelawfirmestablishedconclusivelythatitisnotliablefortheactsofLyon.Weholdthatit
didnotandsoreversethejudgmentsbelowandremandthecausefortrial.
Welearnthefollowingfromthesummaryjudgmentrecord.Brundidge,Fountain,Elliott&Churchillisapartnershipengagedin
thepracticeoflawinDallas,Texas.WarrenC.Lyonwasapartnerofthelawfirmatthetimesinquestion.Assuch,in1969,he
representedtheplaintiffBettyL.CookinadivorceproceedinghealsopreparedawillforherandforIsabelleGriffin,another
plaintiff.FeeswerechargedbythelawfirmfortheseservicesandpaidbyBettyL.CookandIsabelleGriffin.Lyonwasalso
engagedintherealestatebusinessandwasanofficerandstockholderinTexasYummers,aTexascorporation.Healsoowned
stockinaCaliforniacompanyknownasUnitedStatesFranchiseCorporationwhichassistedwiththeorganizationofTexas
Yummers.FeeswerealsopaidtothelawfirmbyTexasYummers.
Sometimein1969,duringaconferencewithLyonconcerningherdivorce,BettyL.CookinformedLyonthatshe,togetherwith
heraunt,Mrs.IsabelleGriffin,andhersister,WinifredBaker,werereceivingapproximately$60,000fromthesaleofsome
propertywhichhadcometothemfromanestateinIllinois.BettyL.CookaskedLyonifheknewofsomeonewithwhomthey
couldconsultconcerningtheinvestmentofthismoneyinsomerealestateinTexas.Lyontoldherhewasasilentpartnerinareal
estatefirmandmightbeabletohelpher.HesuggestedseveralinvestmentsandthentoldheraboutYummers,afastfood
franchiseoperationbasedinCalifornia,inwhichhehadinvestedat,hesaid,substantialprofit.Lyonsaidhehadobtaineda
YummersfranchiseandwasintheprocessofformingaTexascorporationtohandleit.
BettyL.Cook,etal,decidedtoinvestinYummers.TheydirectedtheirattorneyinIllinoistosendLyonacheckfortheproceedsof
thesaleofthelandinIllinois,whichhedid.ThecheckwasdatedJuly3,1969,andwasinthesumof$60,343.25itwasmade
payableto"WarrenLyonasAttorneyforIsabelleM.Griffin,WinifredBakerandBettyCook."Thecheckwasmailedtoand
receivedbyLyonattheofficeofthelawfirmbutthereisnoshowingthatthefundsweredepositedinorhandledbyorthrough
anyaccountofthelawfirm.
OnJuly9,1969,BettyL.Cook,etal,conferredwithLyoninthelawfirm'soffice.Acontractwasexecutedwherebytheyloanedto
TexasYummersCorporationaminimumof$50,000tobeusedintheconstructionofaYummersstoreinDallas.Lyonsignedthe
contractaspresidentofTexasYummers.BettyL.Cook,etal,allegedunderoaththatLyonrepresentedtoPlaintiffCook,Mrs.
GriffinandMrs.Bakerthathehadpreparedthecontract,thatitwasagoodandvalidmortgagecontractandthatastheirattorney

753

hecouldassurethemthattheirinterestswerewellprotected.BettyL.CooktestifiedthatLyonrepresentedtothemthattheir
fundshadbeenplacedinatrustaccountuntilitcouldbeinvestedinthenewstore:"Themoneywas*753goingtobehelduntil

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actuallythepropertywasboughtandthebuildingbegunandthepaybackstarted,whichwasSeptember15....Itwastobepaid
backtousatonethousanddollarsamonthtobedividedequallybetweenthethreeofusforfifteenyears."
ThepaymentdueSeptember15,1969,undertheJuly9contractwasnotmade.OnOctober16,atBettyL.Cook'srequest,Lyon
sentIsabelleGriffinacheckfor$250fromTexasYummersCorporationtocoverherlivingexpenses.
DuringOctoberandNovemberof1969,LyonpersuadedBettyL.Cook,etal,toexchangetheirrightsundertheJuly9contractfor
stockinTexasYummers.BettyL.Cook,etal,agreedtotake12,000shareseach,at$1.00pershare,plusa$19,000notefrom
TexasYummers.BettyL.CookalsogaveLyon$5,000for5,000moresharesonNovember14.OnDecember4,Lyonand
WeaverexecutedandBettyL.Cook,etal,receivedthe$19,000notefromTexasYummers.OnDecember23,BettyL.Cook
signedan"investmentletter"promissingtopurchase17,000sharesIsabelleGriffinandWinifredBakersignedsimilarlettersfor
12,000shareseach.InFebruaryof1970,BettyL.Cook,etal,receivedwhatpurportedtobestockcertificatesforTexasYummers.
ThefactsregardingTexasYummersCorporationwerethese:aTexasYummersCorporationwasincorporatedonFebruary27,
1969Lyonwasdesignatedasanincorporatoranddirector.ThelawfirmwasretainedbyUnitedStatesFranchiseCorporation,a
Californiacorporationwhichownedandoperated"Yummers"storesinCalifornia,tosetupthisTexascorporation.OnMarch3,
1969,TexasYummerspaidthelawfirm$500asaretainerthecheckwassignedbyLyon.$50,000ofthefundsofBettyL.Cook,
etal,wasdepositedinanaccountofTexasYummers.
OnDecember2,1969,TexasYummerswasdissolved,andanewTexasYummersCorporationwasformedLyonwasagainan
incorporatoranddirector.OnJuly21,1972,aPetitionforInvoluntaryBankruptcyofTexasYummerswasfiledonAugust11,the
corporationwasadjudgedbankrupt.OnSeptember12,ameetingofthecreditorsofthecorporationwasheld.Soonthereafter,
thissuitwasinstituted.
Asindicatedintheforepartofthisopinion,theseveredproceedingbeforeusseekstherecoveryofdamagesagainstthe
partnershiplawfirmuponthetheoryofvicariousliabilityfortheactsofLyon,apartner.Weareconcernedatthisstagewiththe
motionofthelawfirmforsummaryjudgmentthatwassustainedbythetrialcourtandupheldbytheCourtofCivilAppealsupon
thestatedconclusion:
...thatthesummaryjudgmentproofestablishedasamatteroflawthatLyonhadneithertheactualauthoritynor
theapparentauthoritytorepresentthelawfirminthefraudperpetrateduponplaintiff.Suchproofshowsthe
fraudulentactsbyLyonwerenotconsentedto,authorized,ratified,oradoptedbytheothermembersofthislaw
firm.522S.W.2d740,742.
ThisholdingoftheCourtofCivilAppealsstatestheessentialpositionofthelawfirm.
Itshouldalsobestatedthattheproblemathanddoesnotinvolveinanyrespectthequestionofthepersonalliabilityofalawyer
whodefraudsaclient,whateverthecircumstances.
Themotionofthelawfirmforsummaryjudgmentreliedforsupportonitsfiledanswer,ontheaffidavitsofLyon,andofRalphD.
Churchill,aseniormemberofthefirmanduponthedepositiontestimonyofBettyL.Cook,aplaintiff,andCharlesA.Girand,a
licensedTexasattorneyengagedinthepracticeoflawinDallas.
TheanswerofthelawfirmadmittedthatLyonwasapartnerinthepracticeoflawbutdeniedthathewasapartner,orthathewas
754

actinginthecapacityofapartner,"ingivingtheadvice,performingtheservicesanddoingoromittingtodotheactscomplained
*754ofbyplaintiffs."Astosuch,hewas,thelawfirmalleged,actinginhisindividualcapacity.
TheaffidavitofLyonwastothesameeffect,i.e.,thatinalltransactionswithBettyL.Cook,otherthanwithrespecttothedivorce
proceedingandthepreparationofawillforher,hewasactinginhisindividualandpersonalcapacity,forwhichthelawfirm
receivednofeeorpaymentfromBettyL.Cook.
TheaffidavitofChurchillwastotheeffectthatthefirmisengagedexclusivelyinthepracticeoflawthatLyonasapartnerwasnot
authorizedtoactasaninvestmentcounselor,securitiesbrokerordealer,ortoactasarealestatebroker,dealeroragent,and
thatLyonwasnotapartnerintheperformanceofanysuchservicesperformedforBettyL.CookthattheonlyserviceLyon
performedasapartnerwasthehandlingofadivorceforBettyL.Cookandthepreparationofawillforherandperhapsawillfor
oneoftheotherplaintiffsthatLyonwasactinginhisindividualcapacitywithrespecttohisrealestatebusinessandasa
stockholderinUnitedStatesFranchiseCorporation,andinthecorporationknownasYummersandthat"thisfirmreceivedno
fee,payment,commission,orprofitinanyofsuchtransactions."

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ThedepositiontestimonyofGirandwasdirectedtothereasonsforthedissolutionoftheoriginalincorporationofYummersand
theformationofthesecondcorporation.
ThedepositionofBettyL.Cook,whowasdeposedasawitnessonbehalfofthedefendants,LyonandWeaver,dealtprincipally
withthesequenceofeventsinherrelationshipwithLyon.Shealsofiledanaffidavitinsupportofherresponsetothemotionof
thelawfirmforsummaryjudgment.Inthisshestated:
AtnotimeinmydealingswithDefendantLyondidheindicatethathewasactinginanycapacityotherthanasmyattorneyatlaw
orseparatefromthelawfirmofwhichhewasapartner.StuartL.Mamer,anattorneyofChampaign,Illinoishadrepresented
membersofmyfamilyandmeforseveralyearsandheactedasattorneyforme,Mrs.Baker,Mrs.Griffinandmyfather,Professor
B.F.Timmons,withregardtothesaleoftheIllinoisproperty.BasedonmyconversationswithDefendantLyon,Mr.Mamerwas
toldbyme,Mrs.GriffinandMrs.BakerthatwehadretainedDefendantlawfirmthroughitspartner,DefendantLyon,torepresent
usinTexas,andhadbeenacceptedasclientsbytheDefendantlawfirmthroughitspartner,DefendantLyon.Mr.Mamermade
thecheckfor$60,343.25payableto"WarrenLyon,asAttorneyforIsabelleM.Griffin,WinifredBakerandBettyCook"because
DefendantLyonhadassuredusthatasourattorneyhewouldprotectandholdthefundsforuspendingtheirinvestment.
TherewasalsofiledbyBettyL.Cook,etal,theaffidavitofStuartM.Mamer,theirattorneyinChampaign,Illinois.Hisactivities,
withparticularreferencetothelawfirminTexas,weredescribedasfollows:
IntheSpringof1969,IwasretainedbyProfessorTimmonsandMmes.Cook,BakerandGriffintorepresenttheminthesaleof
ChampaignpropertyandwasinformedthatMmes.Cook,BakerandGriffindesiredtoreinvesttheproceedsinrealestatein
Dallas,Texas.IwasinformedbytelephonecallsandcorrespondencefromeachofthethreePlaintiffshereinthattheywere
representedbycounselinDallas,Texas.TheyinformedmethattheirattorneywasWarrenC.Lyon,amemberoftheDallaslaw
firmofBrundidge,Fountain,Elliott&Churchill.
AfterthesaleoftheIllinoispropertywasconsummated,IdepositedtheproceedstherefromintheseparateTrustAccount
755

maintainedbyourlawfirmintheFirstNationalBankofChampaign,Illinois,forthepurposeofsegregatingourclients'funds.On
July3,1969,I*755drewacheckonthisTrustAccounttotheorderof"WarrenLyon,asAttorneyforIsabelleM.Griffin,Winifred
BakerandBettyCook."
IreceivedaletterdatedJuly14,1969,fromthelawfirmofBrundidge,Fountain,Elliott&Churchillbearingthesignature"Warren
Lyon."IreceivedaletterdatedAugust12,1969,inthesamestyle.Thefirstoftheselettersshowedthatcopiesthereofhadbeen
senttoMmes.Cook,Baker,andGriffin.
Asrequestedinthelawfirm'sletterofJuly14,1969,Ididindeedcomputethecapitalgainstaxesandpreparedthenecessary
schedulesforthe1969incometaxreturnsofMmes.Cook,Baker,andGriffin.
TheJuly3,1969,checkonourTrustAccountintheamountofSixtyThousandThreeHundredFortyThreeand25/100Dollars
($60,343.25)wassubsequentlypaidbyourbank.Itwasendorsed"WarrenLyon,AttorneyforIsabelleGriffin,WinifredBaker&
BettyCook."
VicariousliabilityofthelawfirmfortheallegeddamagessufferedbyBettyL.Cook,etal,isnotclaimedonthebasisofany
negligenceorbreachofdutyonthepartoftheothermembersofthelawfirmnorisitclaimedthattheothermembersofthelaw
firmbecamecognizantoftheactsofLyon,orinanywiseconsentedtoorratifiedhiscourseofdealingswithBettyL.Cook,etal.
Cf.KelseySeyboldClinicv.Maclay,466S.W.2d716(Tex.1971).Thereisnoclaim,ontheotherhand,thatLyonorthelawfirm
gavenoticetoBettyL.Cook,etal,thatLyon'sauthorityasapartnerwaslimitedinanyrespect,or,morespecifically,thatanyact
ofLyonforhisindividualprofit,orinwhichhehadapersonalinterest,wouldbeoutsidehisauthorityasamemberofthe
partnership.
Thequestionoftheliabilityofaprofessionalpartnershipofattorneysfortheactsofapartnernotstrictlylegalinnature,butwhich
occurduringtheexistenceoftheattorneyclientrelationshipinrecognizedlegalmatters,isoffirstimpressioninourjurisdiction.
Otherjurisdictionshavedealtwiththeproblemofdeterminingthescopeofbusinessofaprofessionalpartnershipinvarious
ways.InRousev.Pollard,130N.J.Eq.204,21A.2d801(Ct.Err.&App.1941),thepartnerofalawfirmpersuadedaclientwhom
hewasrepresentinginadivorcetoentrusthimwithsomeofhermoneyforinvestmentwith"thefirm."Theclientsuedthepartner
andthepartnershiptorecoverherfunds,andthetrialcourtdismissedthesuitastothepartnershiponthegroundthatthe
partner'sactionswerenotwithinthenormalscopeofbusinessofalawpractice.Affirmingthetrialcourt'sdismissal,theNew
JerseyCourtofErrorsandAppealsreliedonadistinctiondevelopedinEngland:

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TheEnglishcasessustaintheprinciplethatwheremoneyisreceivedbyonememberofalawpartnershipforthe
expressedpurposeofaspecialinvestment,...theremaybeliabilitybyonepartnerforthemisconductofanotherin
themisapplicationofthefund,butthatifoneofthepartnersreceivesmoneyindefinitely,tolayoutwhenaproper
securitymaybefound,heisnotactingwithinthecharacterofanattorneyanddoesnottherebymakehispartner
liable.21A.2dat804.
InDouglasReservoirsWaterUsersAss'nv.Maurer&Garst,398P.2d74(Wyo.1965),Maurer,apartnerinthelawfirm,
misappropriateda$10,000checkgiventohimbytheWaterUsersAssociation,ofwhichhewasamemberandthetreasurerthe
fundsweresupposedtobeusedtopurchaseabondinthenameoftheassociation.TheWyomingSupremeCourtaffirmeda
summaryjudgmentinfavorofthelawpartnership,holdingthatMaurerwasnotactingwithintheordinaryscopeofthepartnership
businessasamatteroflawwhenhemisappropriatedthefunds:

756

ThereisnothingtoindicatethatlegalworkhadbeeninvolvedincollectingmoneyfromtheUnitedStatesfor
Douglas*756ReservoirsWaterUsersAssociation,orthatthe$10,000checkhadbeenentrustedtoMaurerfora
transactionordinarilyperformedbylawyers.398P.2dat77.
InBlackmonv.Hale,1Cal.3d548,83Cal.Rptr.194,463P.2d418(1970),theplaintiffgaveanattorneyacheckpayabletothe
attorney'spartnershiptrustaccount,inorderthatfundswouldbeavailabletotheattorneyinnegotiationsforplaintiff'spurchaseof
anoteandmortgageonsomerealproperty.Thepartnermisappropriatedthefunds,andplaintiffsuedthepartnershipfortheir
recovery.Reversingthetrialcourt'sjudgmentinfavorofthepartnership,theCaliforniaSupremeCourtheldthatthepartnership
wasliableforthepartner'smalfeasanceonthegroundthatthepartnerwasactingwithinthescopeofhisapparentauthorityin
acceptingplaintiff'sfunds.
TheCourtstated,at83Cal.Rptr.194,199,463P.2d423,424:
Althoughthefirm'srecordsindicatethatAdamsandHaleregardedplaintiffasaclientofAdamsonly,thereisno
evidencewhateverthateitherAdamsorHaleeverinformedplaintiffthatAdamswasnotrepresentingplaintiffasa
memberofthefirm.Moreover,AdamsandHaleheldthemselvesouttothepublicandtoplaintiffaspartners.The
partnershipdisplayedasignviewablefromthestreetreading"AdamsandHale,AttorneysatLaw."Suchsignsare
commonlyusedbylawfirmstoindicateapartnership.(SeeFletcherv.Pullen(1889)70Md.205,213,16A.887,
888.)PlaintifftestifiedthatheknewthatthefirmwascalledAdamsandHaleandthathedealtwithAdamsinthe
firm'soffices.Furthermore,AdamsinstructedplaintifftomakehischeckpayabletotheAdamsandHaleTrust
Account.Intheabsenceofotherevidencethesefactswouldjustifyareasonablemaninbelievingthathewas
dealingwithapartnership.
InZimmermanv.Hogg&Allen,P.A.,286N.C.24,209S.E.2d795(1974),Greene,whowasaprincipalshareholderinHogg&
Allen,aprofessionalassociationforthepracticeoflaw,representedZimmerman,whowasanofficerandemployeeofa
companywhichhadengagedHogg&Allenasitsgeneralcounsel,insomepersonallegalmatters.ZimmermansentGreene
$24,000tobeusedinthepurchaseofsharesofKentuckyFriedChicken.ZimmermansuedGreeneandHogg&Allenfor
misappropriationofhismoney.Reversingthetrialcourt'ssummaryjudgmentinfavorofHogg&Allen,theNorthCarolina
SupremeCourtheldthattherewasafactquestionwhether,inacceptingZimmerman'smoney,Greenewasactingwithinthe
normalscopeofbusinessoftheprofessionalassociation.Thecourtstateditsconclusionsasfollows:
Undertheseparticularcircumstances,weareoftheopinionthatplaintiff'sevidencewassufficienttojustifya
reasonableandprudentbeliefbyplaintiffSamZimmermanthattheProfessionalAssociationhadconferred
authorityuponGreenetoreceivethefundsfromhimforinvestmentwhileactingasitsagent.Thusplaintiff's
evidenceraisedagenuinematerialissuefortrialastowhetherGreeneactedwithinthescopeofhisauthorityand
asagentfortheProfessionalAssociationatthetimescomplainedof.Theissuesoraisedwasmaterialbecause
withoutestablishingagency,plaintiffcouldnotrecover....209S.E.2dat804,805.

757

InCroisantv.Watrud,248Or.234,432P.2d799(1967),plaintiffhadengagedanaccountingfirmtoadviseherontaxmatters
andtopreparetaxreturnsforherbusinessenterprises.Aftersellingoneofherbusinesses,shemadearrangementswitha
memberoftheaccountingfirm,whohadhandledthebusinessofplaintiffforthefirmpreviously,tocollectpaymentsunderthe
contractofsale,aswellassomecollectionofrentsfromotherproperty,andtomakevariousdisbursementsofthemoney.The
fundscollectedweredepositedinan*757accountofplaintiff,fromwhichtheaccountanthadauthoritytomakewithdrawals.The
accountantmisappliedsomeofthefunds,andplaintiffsuedtheaccountant'spartnershiptorecovertheloss.TheOregon

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SupremeCourt,reversingajudgmentinfavorofthepartnership,heldthatthepartnershipwasliableforplaintiff'sloss,even
thoughtheaccountant'sservicestoplaintiffwerenotservicesordinarilyperformedbyaccountingfirms:
Ifathirdpersonreasonablybelievesthattheserviceshehasrequestedofamemberofanaccountingpartnership
is[sic]undertakenasapartofthepartnershipbusiness,thepartnershipshouldbeboundforabreachoftrust
incidenttothatemploymenteventhoughthoseengagedinthepracticeofaccountancywouldregardasunusual
theperformanceofsuchservicebyanaccountingfirm.
Thereasonablenessofathirdperson'sbeliefthatapartnerisactingwithinthescopeofthepartnershipshouldnot
betestedbytheprofession'sowndescriptionofthefunctionofitsmembers.Thosewhoseekaccountingservices
maynotunderstandtherefinementsmadebyaccountantsindefiningtheservicestheyoffertothepublic.Whether
athirdperson'sbeliefisreasonableinassumingthattheserviceheseeksiswithinthedomainoftheprofessionis
aquestionwhichmustbeanswereduponthebasisofthefactsintheparticularcase.432P.2dat803.
Itisdoubtfulifthetreatmentoftheproblembythesevariousjurisdictions,andtherationaleappliedforsolutions,canbe
harmonizedorthatanacceptedrulecanbesaidtoappear.Astricterviewagainsttheliabilityofaprofessionalpartnershipfor
themisdeedsofapartnerwithaclientisindicatedinRouseandDouglasReservoirsamoreliberalviewisindicatedin
Blackmon,ZimmermanandCroisant.Surprisingly,also,onlytwoofthejurisdictions,CaliforniaandWyoming,consideredthe
probleminthelightoftheirrespectiveuniformpartnershipactswhich,inourviewareparticularlyrelevant,ifnotcontrolling.
Indeed,theconclusionswereach,laterstated,restingreatmeasureupontheprovisionsoftheTexasUniformPartnershipAct,
Vernon'sAnn.Civ.St.art.6132b.
PriortotheenactmentoftheTexasActin1961,theredidnotexistacomprehensivecorpusofsubstantivelawgoverningthe
partnershipformofbusinessassociation.SeeSherandBromberg,TexasPartnershipLawinthe20thCentury,12Sw.L.J.263
(1958).ApplicationoftheActtoaprofessionalpartnershiphasnotbeeninvokedasyetalthoughthedissentingopinionin
KelseySeybold,supra,involvingamedicalpartnership,recognizedthattheUniformPartnershipAct,art.6132b,"providesfor
liabilityofthepartnershipforwrongfulactsofapartner`actingintheordinarycourseofthebusinessofthepartnership.'"In
KelseySeybold,supra,however,itwasassumedinthewritingforthemajoritythatinengagingintheactsinquestionthedoctor
partnerwasnotactingintheordinarycourseofthebusinessofthemedicalpartnershipwhereas,thisistheproblemnowat
hand.
Thereare,admittedly,compellinganduniqueconsiderationswithrespecttopartnersengagedinthepracticeoflaw.Thefiducial
obligationsofalawpartnershipsetitapartfromcommercialpartnerships.Foradiscussionofthehighobligationsofafiduciary
seeKinzbachToolCo.v.CorbettWallaceCorp.,138Tex.565,160S.W.2d509(1942).Thesecharacteristicsandobligations
inherentinthepracticeoflawareuniversallyunderstoodandacknowledgedbythelegalprofession.Nevertheless,the
provisionsofart.6132bareexpresslyapplicabletoaprofessionalpartnershipsuchasoneoflaw.Section6oftheActdefinesa
partnershipas"anassociationoftwoormorepersonstocarryonascoownersabusinessforprofit."Section2defines
"business"asincluding"everytrade,occupation,orprofession."Governingtheissueathand,i.e.,theconditionstoliabilityofa
partnershipfortheactsofapartner,Sections9,13and14oftheActprovide:
758

*758Sec.9.(1)Everypartnerisanagentofthepartnershipforthepurposeofitsbusiness,andtheactofevery
partner,includingtheexecutioninthepartnershipnameofanyinstrument,forapparentlycarryingonintheusual
waythebusinessofthepartnershipofwhichheisamemberbindsthepartnership,unlessthepartnersoacting
hasinfactnoauthoritytoactforthepartnershipintheparticularmatter,andthepersonwithwhomheisdealing
hasknowledgeofthefactthathehasnosuchauthority.(Emphasisadded)
(2)Anactofapartnerwhichisnotapparentlyforthecarryingonofthebusinessofthepartnershipintheusual
waydoesnotbindthepartnershipunlessauthorizedbytheotherpartners.
Sec.13.Where,byanywrongfulactoromissionofanypartneractingintheordinarycourseofthebusinessofthe
partnershiporwiththeauthorityofhiscopartners,lossorinjuryiscause[d]toanyperson,notbeingapartnerin
thepartnership,oranypenaltyisincurred,thepartnershipisliabletherefortothesameextentasthepartnerso
actingoromittingtoact.(Emphasisadded)
Sec.14.Thepartnershipisboundtomakegoodtheloss:

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(a)Whereonepartneractingwithinthescopeofhisapparentauthorityreceivesmoneyorpropertyofathird
personandmisappliesitand
(b)Wherethepartnershipinthecourseofitsbusinessreceivesmoneyorpropertyofathirdpersonandthe
moneyorpropertysoreceivedismisappliedbyanypartnerwhileitisinthecustodyofthepartnership.
Wehaverecentlyspokenofapparentauthorityintermsofestoppel,andhavesaidthatoneseekingtochargeaprincipalthrough
apparentauthorityofanagentmustprovesuchconductonthepartoftheprincipalaswouldleadareasonableprudentperson
tosupposethattheagenthadtheauthorityhepurportstoexercise.Douglassv.Panama,Inc.,504S.W.2d776(Tex.1974).The
extentofauthorityofapartnerisdeterminedessentiallybythesameprinciplesasthosemeasuringthescopeoftheauthorityof
anagent.InRandallv.Meredith,76Tex.669,13S.W.576(1890),thisCourtwroteoftheimpliedpowerspossessedbyapartner:
Betweenpartnersthemselves,andbetweenthefirmandpersonsdealingwiththefirm,itmustbepresumedthat
eachpartneristheagentofthefirm,empoweredtocarryoutitsobjects,andtotransactthebusinessforwhichthe
partnershipwasformed,intheusualandcustomarywaypursuedbyotherfirmsengagedinalikebusinessand,
intheabsenceofrestrictionsonthispower,rightsmustbeadjustedinviewofitsexistence.Thirdpersonsdealing
withamemberofafirminreferencetopartnershipmatters,intheabsenceofpowerexpresslyconferred,must
recognizethefactthatthepartner'spowertobindhisfirmisrestrictedtothedoingofsuchthingsasarewithinthe
scopeoftheparticularbusiness.Betweenthepartnersthemselves,andbetweenthefirmandpersonsdealing
withitthroughapartner,thereisnodoubtthattheusagesoffirmsengagedinthesamecharacterofbusinessin
thesamecountry,aswellasthegeneralusageofthefirmintheconductofitsbusiness,maybelookedtoto
ascertaintheimpliedpowerspossessedbyapartner.Ifthepowerexercisedinagivencasebeoneusually
exercisedbypartnersinalikebusiness,allthemembersofthefirmmustbesupposedtohaveintendedtoconfer
alikepoweroneachother.Ifthepowerbehabituallyexercisedbyapartner,andacquiescedinbytheother
membersofthefirm,itisbutfairtoconcludethatthemembersofthefirmintendedittobeexercised.13S.W.at
581,582.

759

Asstatedbefore,itisnotclaimedeitherthatLyonwasauthorizedbythepartnershiptoactashedidintheYummersmatteror
thatBettyL.Cook,etal,had*759noticeorknowledgethatLyonhadnoauthoritytoactforthepartnershipinwhathedid.
Assumingmisapplicationofthefunds,thecrucialconsiderationindeterminingwhetherthelawfirmisboundbytheactsofLyon
byforceofthestatutoryprovisionsiswhetherinreceivingthefundsofBettyL.Cook,etal,inthesumof$60,343.25,Lyonwas
"apparentlycarryingonintheusualwaythebusinessofthepartnership"(Sec.9)or,asalsoexpressed,whetherhewas"acting
intheordinarycourseofthebusinessofthepartnership"(Sec.13).Ifso,itwouldfollowthatLyonwas"actingwithinthescopeof
hisapparentauthority"whenhereceivedthemoneyandpropertyofBettyL.Cook,etalandthatthelawfirmis"boundtomake
goodtheloss"fromhismisapplicationofthefunds(Sec.14).
Itwastheburdenofthelawfirmasthedefendantmovantforsummaryjudgmenttoestablishasamatteroflawthatnofactissue
standsinthewayofjudgmentinitsfavor.Cf.Burnsv.Gonzalez,439S.W.2d128(Tex.Civ.App.1969,writref'dn.r.e.)with
respecttotheburdenintrialonthemerits.Thesummaryjudgmentburdenwasthatofestablishingthenegativeofthestatutory
issues,namely,thatLyonwasnotapparentlycarryingonintheusualwaythebusinessofthelawfirm,i.e.,wasnotactinginthe
ordinarycourseofitsbusinessandhencewasnotactingwithinthescopeofapparentauthoritybyforceofstatute.SeeTorresv.
WesternCasualty&SuretyCo.,457S.W.2d50(Tex.1970)Gibbsv.GeneralMotorsCorp.,450S.W.2d827(Tex.1970).The
defendantisrequiredtomeettheplaintiff'scaseaspleadedandtodemonstratethattheplaintiffcannotprevail.Glennv.
Prestegord,456S.W.2d901(Tex.1970)Guidryv.NechesButaneProductsCo.,476S.W.2d666(Tex.1972).Therecanbeno
furtherburdenupontheplaintiffiftherequisitefactsforsummaryjudgmentarenotestablishedbythesummaryjudgmentrecord.
SeeTorres,supra,andBoxv.Bates,162Tex.184,346S.W.2d317(1961).
Asnotedearlier,thethrustoftheaffidavitsofChurchillandLyoninsupportofthemotionforsummaryjudgmentwasthatthelaw
firmisengagedexclusivelyinthepracticeoflaw,andthatLyonwasnotactingforthepartnershipinperformingtheservicesin
question.Butattheleast,theacceptancebyLyonofthecheckof$60,343.25payableto"WarrenLyonasAttorneyfor"BettyL.
Cook,etal,togetherwiththedepositiontestimonyofBettyL.Cookuponwhichthemotionofthelawfirmforsummaryjudgment
alsoreliedforsupport,and,further,theaffidavitofBettyL.CookandthatoftheIllinoisattorney,demonstratetheexistenceoffact
issueswithrespecttothestatutoryconditionstoliabilityofthepartnership.Thisbeingso,therecorddoesnotestablish
conclusivelythatthelawfirmisnotaccountabletoBettyL.Cook,etal,fortheactsofLyon.
ThejudgmentsofthetrialcourtandoftheCourtofCivilAppealsarereversedandthecauseisremandedfortrial.

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DissentingopinionbyMcGEE,J.,inwhichGREENHILL,C.J.,joins.
McGEE,Justice.
Irespectfullydissent.IwouldholdthatinthiscasethesummaryjudgmentproofestablishedasamatteroflawthatLyonhad
neithertheactualnortheapparentauthoritytorepresentthelawfirminthefraudperpetrateduponthepetitioners.Further,no
liabilityshouldrestuponthelawfirmunderanyofthecontrollingprovisionsoftheTexasUniformPartnershipAct.
Tex.Rev.Civ.Stat.Ann.art.6132b(1970).

760

TherecordclearlyrevealsthatMrs.CookinitiallyaskedLyonwhetherheknewofsomeonetowhomshecouldspeak
concerningthepossibleinvestmentofcertainmoniesinTexasproperties.Thus,asidefromherlegalproblemsMrs.Cook
inquiredofLyonwhetherheknewofsomeoneshecoulddiscussinvestmentswithapparentlyrealizingthatanydiscussion
relativetolegalmattershadceased.Shespecifically*760inquiredastowhetherheknewof"eitheraninvestmentcounselorora
realestateperson."Lyon'sanswerwasthathewasasilentpartnerinadifferentfieldarealestatefirm,andthathecould
thereforeheofsomeservicetoherinthatseparatecapacity.ItisundisputedthatnomemberofthelawfirmotherthanLyon
playedanypartin,orreceivedanybenefitfrom,Lyon'sallegedmisapplicationoffunds.Thefundswerenotdepositedin,nor
handledby,orthroughanyaccountofthelawfirm.Thus,itisclearthattheinvestmentcounselingbyLyonwasdonewithoutthe
knowledgeofanyoneelseinthelawfirmandthatthefirmneitherreceivedafee,norprofitedinanywaybyLyon'sactions.The
endresultisthatthepleadings,affidavitsanddepositionsrevealthattheactivitiesoutofwhichthedefalcationsarosedidnot
constituteapartnershipendeavor.
InRandallv.Meredith,76Tex.669,13S.W.576,581(1890),thecourtstated:
"Thirdpersonsdealingwithamemberofafirminreferencetopartnershipmatters,intheabsenceofpower
expresslyconferred,mustrecognizethefactthatthepartner'spowertobindhisfirmisrestrictedtothedoingof
suchthingsasarewithinthescopeoftheparticularbusiness."
Nevertheless,themajorityhasheldthattheliabilityofthelawfirmmayultimatelybeestablishedundertheapplicableprovisions
oftheTexasUniformPartnershipAct.Section4(3)oftheActexpresslystatesthat"[t]helawofagencyshallapplyunderthisAct."
Uponrecognizingthisfactthemajoritystatesthatassumingmisapplicationofthefunds,thecrucialquestionsdeterminativeof
whetherthelawfirmistobeheldliableforLyon'smisdeedsare:"...whetherinreceivingthefundsofBettyL.Cook,etal,inthe
sumof$60,343.25,Lyonwas`apparentlycarryingonintheusualwaythebusinessofthepartnership,'(Sec.9)or,asalso
expressed,whetherhewas`actingintheordinarycourseofthebusinessofthepartnership'.(Sec.13).Ifso,itwouldfollowthat
Lyonwas`actingwithinthescopeofhisapparentauthority'whenhereceivedthemoneyandpropertyofBettyL.Cook,etaland
thatthelawfirmis`boundtomakegoodtheloss'fromhismisapplicationofthefunds.(Sec.14)."
Thus,asviewedbythemajority,thekeyisobviouslythereceiptofthefunds.ThoughIwouldnotlimittheconstructionoftheAct
simplytothemerereceiptofthefunds,andasidefromtheconfusioninherentinthemajority'sstatement,Imaintainthatthe
liabilityprovisionsoftheactareclearandwelldefined.Inthepresentcase,itisnotclaimedthatLyonhadbeenauthorizedbythe
partnershiptoactashedidwithreferencetotheYummersinvestment.NordoesanyoneclaimthatBettyCook,etal,hadnotice
orknowledgethatLyonhadnoauthoritytoactashedid.Thus,thekeyquestionsthatmustbeansweredinordertodetermine
whetherthelawfirmistobeheldliablearewhetherLyonwas"actingintheordinarycourseofthebusinessofthepartnership."
(Sec.13)or,whetherhewas"apparentlycarryingonintheusualwaythebusinessofthepartnership."(Sec.9).Further,liability
mayalsoattachtothelawfirmifLyonwas"actingwithinthescopeofhisapparentauthority."(Sec.14).

761

BasedonmyconstructionofthestatutoryliabilityprovisionssetoutintheTexasUniformPartnershipActastheyapplytothe
presentfactsituation,Iwouldupholdthesummaryjudgmententeredinfavorofthelawfirm.Iwouldholdthatthelawfirmmetits
summaryjudgmentburdenandestablishedthatLyonwasnotactingintheordinarycourseofthepartnershipbusiness.Iwould
furtherholdthatLyonwasnotactingwithinthescopeofhisapparentauthority,norwasheapparentlycarryingonintheusual
waythebusinessofthepartnershipwithinthemeaningoftheTexasUniformPartnershipAct.Theauthorityofapartnertoactas
anagentforhispartnershipislimitedtosuchtransactionsasarewithinthescopeofthepartnershipbusinessandneitherthe
partnershipnortheotherpartnersareboundbytheunauthorized*761actsofonepartnerinamatternotwithintheusualor
apparentscopeofbusinessofthepartnership.Neitherapartnershipnoritsinnocentpartnersareliableforaconversionwhichis
noteffectedinthecourseofthefirm'sbusiness.Similarly,aswasrevealedintheRandallcase,supra,thirdpersonsdealingwith
amemberofafirmmustrecognizethatthepartner'spowertobindhisfirmisrestrictedtodoingthingsthatarewithinthescopeof
theparticularbusiness.PerhapstheinitialrespectwhichMrs.CookentertainedforLyon'sbusinesssagacityandinvestment
acumenwasseededinthefactthathewasamemberofthatparticularlawfirmbuthewasamemberofthatfirmforthepractice

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oflaw,andthatmembershipdidnotpersecreateliabilitybyhispartnersforhisactsoutsidethegeneralscopeofthepracticeof
law.Rousev.Pollard,130N.J.Eq.204,21A.2d801(1941).
Mrs.Cook'sinquiryrelatedtowhetherLyonknewofanindividualwhocouldserveinthedistinctcapacityofaninvestment
counselor.Lyon'sanswerclearlyindicatedtoherthathewouldbeactinginherbehalfinaseparate,nonlegalcapacity.It
thereforemaynotbesaidthatLyonwas"apparentlycarryingonintheusualwaythebusinessofthepartnership."Such
representationsandfinancialfailurearoseoutofLyon'sownprivatedealandnotinthecourseofthepartnershipbusiness.
Whereapersondealswithoneofthepartnersinamatternotwithinthescopeofthepartnership,theintendmentofthelawisthat
hedealswithhimonhisownprivateaccount.
WhenMrs.CookwenttotheofficesofBrundidge,Fountain,Elliott&Churchillinrelianceupontheirreputationasalawfirmto
obtainlegaladviceandmetwithLyonasamemberofthefirmwhowouldrenderthedesiredservice,shehadnojustification
thereinforrelyingupontheresponsibilityofthepartnershipforanydisconnectedserviceassumedbyLyonoutsideonethatwas
characteristicallywithinthepracticeoflaw.WhenLyonvolunteeredhimselfasarealestateandinvestmentcounselorinthe
presentcaseduetoMrs.Cook'sinstigatinginquiryhewasnot"apparentlycarryingonintheusualwaythebusinessofthe
partnership,"norwashe"actingintheordinarycourseofthebusinessofthepartnership"withinthemeaningofthePartnership
Act.InthiscaseLyonwasactinginaprivate,nonlegaladvisorycapacity,andhewasthereforeentirelyoutsidethescopeofhis
authorityandwithoutthescopeofthebusinesscarriedonbythislawfirm.Suchactionswerenotincidentaltothebusinessofa
firmengagedexclusivelyinthepracticeoflaw.Becauseoftheseconclusions,itisclearthatLyonwasalsonot"actingwithinthe
scopeofhisapparentauthority"whenhereceivedthemoniesofBettyCook,etal.
Thiscourtdescribed"apparentauthority"inDouglassv.Panama,Inc.,504S.W.2d776,778(Tex.1974),asfollows:
"Apparentauthorityisbasedonestoppel,andoneseekingtochargeaprincipalthroughapparentauthorityofan
agenttobindtheprincipalmustprovesuchconductonthepartoftheprincipalaswouldleadareasonably
prudentpersontosupposethattheagenthadtheauthorityhepurportstoexercise."[Emphasisadded].

762

Sinceapparentauthorityisbasedonestoppel,itcannotbeestablishedbytheactsoftheagent"itmustarisefromwordsor
conductoftheprincipal."CustomLeasing,Inc.v.TexasBankandTrustCompanyofDallas,516S.W.2d138,144(Tex.1974)
Rourkev.Garza,19Tex.Sup.Ct.J.36,530S.W.2d794(Tex.1975).Further,apparentauthorityinsuchcasesexistsonlyasto
thosethingsordinarilyentrustedtooneoccupyingsuchaposition.Rourke,supra.Intheinstantcasewefindnoactionsbythe
principallawfirmthatwouldinduceMrs.CooktobelievethatLyonwasauthorizedtoactforthefirmasarealestatebrokeror
investmentcounselor.ThefirmdidnothingtoindicatetoMrs.CookthatLyonwasauthorizedtoactintheirbehalfoutsideofthe
practiceoflaw.Mrs.Cookherselfstated*762inheraffidavitanddepositionthatshehadnocontactwithanyothermemberofthe
lawfirmbeyondgreetingMr.Churchillbrieflyonafewoccasions.ThemerefactthatthelawfirmhadconferreduponLyonthe
authoritytopracticelawwithinthescopeoftheirpartnershipwouldnotcreatetheapparentauthoritytoengageininvestment
counselingtransactionsasaservicedisconnectedfromthepracticeoflaw.See,GreatAmericanCasualtyCo.v.Eichelberger,37
S.W.2d1050(Tex.Civ.App.Waco1931,writref'd).
Asafinalnote,Imaintainthatitisclearlyevidentthatthemajorityhasfailedinitsdutytolendaguidinghandtothetrialcourt
below.Forinstance,inwhatfashiondothethreestatutoryliabilityprovisionsinterrelatesoastopossiblyaffixliabilitytothelaw
firm?Sincetheultimateoutcomeisdependentuponthesepertinentliabilityprovisions,whatarethespecialissuesthatshould
besubmittedinsuchcases?Whoseviewpointoractionsdeterminetheexistenceornonexistenceofliability?Whatdoes
"apparentlycarryingonintheusualwaythebusinessofthepartnership"mean?Itisinevitablethatthejurywillrequiresome
formofinstructionastothesematters.And,sincetheterm"apparentauthority"assetoutinthestatutehasobviouslynotreceived
itstraditionalinterpretation,thatconceptwillalsorequirefurtherspecificationanddelineation.Thatproblemsandconfusionare
createdisevident.Thequestionswhicharisecallforanddeserveanswers.Thiscasepresentstheinitialinstanceinwhichthe
partnershipliabilityprovisionshavebeendirectlyconfrontedandanalyzedinsuchafashion,andtherefore,furtherguidanceis
essential.
Nevertheless,asIviewtheTexasUniformPartnershipAct,evenunderthepetitioners'versionofthefactstherewasnogenuine
issueastoanymaterialfact,andthemattersbeforethecourtfailedtoshowanyliabilityonthepartofthelawfirm.Accordingly,
summaryjudgmentwasproperlyenteredandthejudgmentofthecourtofcivilappealsshouldbeaffirmed.
GREENHILL,C.J.,joinsinthisdissent.

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[1]Asoriginallyfiled,thesuitcomplainedalsoofWarrenC.Lyon,JerryL.WeaverandRogerMiltonuponmotionofBettyL.Cook,etal,thetrial
courtseveredthecauseofactionagainsttheotherdefendants,andthisseveredcausenowpendsinthetrialcourt.

SavetreesreadcourtopinionsonlineonGoogleScholar.

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