Case Name: Kiefer et al. v. Klinsick
Court: Appellate Court of Indiana
Jurisdiction: Indiana
Decision Date: 1894-06-22
Citations: 13 Ind. App. 253
Docket Number: No. 1,127
Parties: Kiefer et al. v. Klinsick.
Judges: Beinhard and Davis, J. J., concur in this opinion.
Reporter: Indiana Court of Appeals Reports
Volume: 13
Pages: 253–275

Head Matter:
No. 1,127.
Kiefer et al. v. Klinsick.
Estoppel. — Married Woman. — Business in Name of Husband.— Mortgage by Husband. — Rights of Creditors. — Where a wife furnishes money to her husband for the purpose of purchasing a retail drug store, clothes Mm with all the usual indicia of title, and permits him to carry on the business in Ms own name and to hold himself out to the world as the absolute owner, she is estopped to deny such ownersMp and his right to mortgage the stock, as against creditors who, in the regular course of business, and in reliance upon Ms apparent ownerslnp, sold goods to him on credit and after-wards took a mortgage thereon to secure the debt. Case ordered transferred to supreme court with recommendation that Mcdrr v. Sell, 60 Ind. 249, be overruled.
Lotz, C. J., flies dissenting opinion.
Same. — Evidence.—Husband's Declaration of Ownership. — Giving Credit Upon. — Declarations made by the husband in such case, to one from whom he purchases goods, that he is the owner of the business, are admissible to prove, in an action by the wife against such creditor, that credit was given to the husband on the faith of Ms ownersMp.
From the Cass Circuit Court.
J. C. Nelson, Q. A. Myers, N. Morris, L. Newberger and J. B. Curtis, for appellants.
M. D. Fansler, M. Mahoney, Winfield & Taber, for appellee.

Opinion:
Gavin, J.
The facts which there is at least evidence tending to prove are set out quite fully in the opinion prepared by Lotz, C. J. Upon these facts the appellee was, upon the plainest principles of honesty and fair dealing, estopped to assert title to the goods as against the appellants. She permitted her husband to be clothed, not with the possession merely, but with ail the usual indicia of title, and to hold himself out to the world as the absolute owner of the stock. That the world would deal with him as such was the natural — nay, more, the inevitable result.
Relying upon the husband's appearance of ownership, appellant's debts were contracted and their mortgage rights accrued.
The authorities, both within and without our State, forbid that appellee should be heard in court to deny the rights thus acquired by appellant.
The principle at the basis of all estoppels in pais is, that whenever one of two innocent persons must suffer by the act of a third, he who has enabled such third person to occasion the loss must sustain it. Lickbarrow v. Mason, 2 T. R. 70; Preston v. Witherspoon, 109 Ind. 457.
As expressed by the supreme court of the United States, the vital principle is that he who by his language or conduct, leads another to do what he would not otherwise have done, shall not subject such person to loss or injury by disappointing the expectations upon which he acted. Such a change of position is sternly forbidden." Dickerson v. Colgrove, 100 U. S. 578, approved in Quick v. Milligan, 108 Ind. 419.
Neither is it essential in order to the existence of an equitable estoppel that there should be at the time a design to deceive or defraud. "The person against whom the estoppel is asserted must by his silence or his representations, have created a belief of the existence of a state of facts, which it would be unconscionable to deny." Anderson v. Hubble, 93 Ind. 570; Quick v. Milligan, supra; Maxon v. Lane, 124 Ind. 592; 2 Herman on Estop., section 953.
In Moore v. Moore, 112 Ind. 149, where one by fraud procured the assignment by indorsement of a promissory note not payable in bank, the real owner was held estopped to claim the note as against subsequent assignee for value without knowledge of the fraud. The court in its opinion says: '1 The more modern rule upon the subject under consideration seems to be, that where the owner of things in action, although not technically negotiable, has clothed another, to whom they are delivered, in the method common to all mercantile communities, with the usual apparent indicia'of title, he will be estopped from setting up against a second assignee, to whom the securities have been transferred for value and without notice, that the title of the first assignee was not perfect and absolute."
In Hirsch v. Norton, Admr., 115 Ind. 341, Hirsch had transferred to Study certain shares of bank stock in regular form, but with a written agreement that the stock actually remained the property of Hirsch. The court held that as against those with whom Study dealt and who gave him credit on the faith that he owned the stock, he was in equity to be deemed the owner. Elliott, J., in the course of the decision says: ££The transfer made by the appellant gave to Study all the evidence of title that it was possible for the one to create or the other to acquire, and as to those who in good faith gave Study credit on the faith of his legal ownership, the appellant cannot be allowed to make available the secret agreement between him and his assignee. He voluntarily put it in the power of Stildy to secure credit upon the faith of his ownership of the stock, and as against creditors he cannot be heard to aver that the secret agreement secured to him the ownership of the capital stock. Where a party, by clothing another with all the legal indicia of ownership, enables him to mislead others, he, and not those who are misled by his acts, must be the sufferer. If loss comes, the man who invested the debtor with the evidence of absolute title, and thus misled creditors, must bear it, and not the creditors. The conclusion we assert involves little more than the application of the familiar general principle, that where one of two innocent persons must suffer by the act of a third, he must suffer who put it in the power of the third, to do the act. "
The case of Minnich v. Shaffer, 135 Ind. 634, decides that if A allows lands paid for by her to be deeded to B, and third persons extend credit to B upon the faith of his ownership of the land, A will be estopped to assert title against such creditors.
These cases establish the proposition that it is unnecessary to the existence of an estoppel, that the party estopped should have acted with reference to the particular creditor injured.
Effort is made to distinguish the last three cases from the one in hand because of the fact that in them the legal title was actually vested in the apparent owner.
As we regard the law it is immaterial whether the legal title is vested or only the apparent legal title.
So far as concerns all the reasoning and principle on which these decisions are based, they apply to an apparent title and right of disposition as well as to a legal title. The equities, and it is with these we are dealing, are as strong in the one case as in the other.
The law applicable here is correctly laid down in Preston v. Witherspoon, supra, by Zollars, J. There, certain farmers deposited their wheat with an elevator company to be returned in kind. They knew the custom of the company was to mix the wheat apd ship and sell from a common bin. The company sold part of the mass of wheat to Witherspoon et al. from whom the depositors sought to reclaim it. The court determined the rights of the parties upon the theory that the company was a bailee of the wheat, and says: "We think, as concluded by the court below, that by the voluntary acts of appellants (the depositors), Runcie and Wallace, the persons composing the elevator company, were clothed with the apparent title and right to sell, and •that as Witherspoon, Barr & Co. were innocent purchasers in the usual course of business, they should be protected.
"As a general proposition, it is well settled, both in law and reason, that no one can convey a better title to property than he has. In other words, no one without title to property can convey title thereto, and thus defeat the claims of the rightful owner. But there are many cases where the owner of property will be estopped to assert his title thereto as against an innocent purchaser for value. We think this is such a case. As we have seen, appellants knew that their wheat was to be, and was commingled with wheat purchased by the elevator company, and that company was selling and publicly shipping from the common mass. They, therefore, knew that others were purchasing the wheat from the elevator company, in the usual course of business, and paying their money therefor. By thus putting their wheat into the possession of the elevator company, and allowing it to sell and ship from the common mass, they clothed that company with an apparent ownership of, and authority to sell, the wheat, which estops them to assert their title thereto, as against W., B. & Co., who invested their money in good faith, believing that to be a fact which appellants by their conduct permitted to appear to be a fact.
' 'As between appellants and the elevator company, the question is, what authority did the elevator company in fact have to sell and dispose of their wheat ? As between appellants and W., B. & Co., the question is, with what apparent authority did appellants clothe the elevator company to sell and dispose of their wheat ?"
This case we regard as conclusive as to the merits of the cause in hand.
The position which we take is in exact harmony with the views of the most eminent text writers upon this subject.
In Bigelow on Estop., the law is thus declared: "In accordance with this case it is now a well established principle that where the true owner of property, for however short a time, holds out another, or allows another to appear, as the owner of or as having the full power of disposition over, the property the same being in the latter's actual possession, and innocent third parties are thus led into dealing with such apparent owner, they will be protected. "
In Herman on Estop., section 97 8, we find the following: "Where the owner holds out another, or allows him to appear as the owner of, or as having full power of disposition over, the property, and innocent third parties are led into dealing with such apparent owner, they will be protected. "
In Anderson v. Armstead, 69 Ill. 152, Justice Schofield, speaking for the court, says: ' ' The law is familiar, that where the owner of property holds out another, c allows him to appear, as the owner, or as having full power of disposition over the property, * they will be protected. Their rights in such cases do not depend upon the actual title or authority of the party with whom they have directly dealt, hut they are derived from the act of the real owner, which precludes him from disputing, as against them, the existence of the title or power he caused or allowed to appear to be vested in the party, upon the faith of whose title or power they dealt."
Again, in the same case, it is said: "It is immaterial as we have already shown, whether she in fact authorized the particular contract to be made or not. The question is not what power did her husband actually have over the property, but what power did she, by her acts and omissions, permit him to represent himself to the appellant to have. "
The application of the principles declared by these authorities appears to me to make it clear that in this case, if the appellee permitted her husband to run this business in his own name, buy the goods in his own name, return them for taxation as his, appear to the world as in all things the absolute owner of them with the power of disposition which belongs to such an owner, and contract debts in the course of his business as such owner, she is estopped to deny such ownership as against appellants, who in the regular course of business, relying on such apparent ownership, sold him goods on credit and then took a mortgage thereon to secure the debt, granting an extension of time in consideration thereof. Whatever there may be in the case of McGirr v. Sell, 60 Ind. 249, asserting an opposite doctrine, is in our judgment contrary to the principles of the law and to the later authorities, both within and without our State.
The instructions of the trial court were not in harmony with the views of the law which we have expressed. If they are right the judgment should be reversed.
Under the decision in Hirsch v. Norton, Admr., supra, the declarations of appellee's husband made to appellants-concerning his ownership, of the property were admissible to prove that credit was given him on the faith of his ownership of the goods.
Filed June 22, 1894.
In view of the fact that the supreme court has in Hirsch v. Norton, Admr., supra, distinguished the case of McGirr v. Sell, and has never in terms overruled it, this case is ordered transferred to the supreme court with the recommendation that that case be overruled.
Beinhard and Davis, J. J., concur in this opinion.
Boss,. J.,does not participate.