Court Opinion

ID: 9664510
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:20:07.32092+00
Date Added: 2024-06-11T18:15:02.213550
License: Public Domain

SPAIN, Justice,
dissenting.
Respectfully, I dissent and would reverse the Court of Appeals and affirm the judgment entered by the trial court in favor of the bank. In so deciding, I, like the learned circuit judge, am fully aware that a creditor cannot ordinarily apply partnership funds to pay the individual debts of any partner without the consent of the *897remaining partners. Perry Bank & Trust Company v. Napier, 240 Ky. 469, 42 S.W.2d 694 (1931). Under the facts in the case at hand, however, the trial judge found that all the partners expressly or by implication consented to setoffs by the bank from the partnership account of debts of individual partners.
In the first place, it is uncontradicted that the notes of Jerry and Bobby Elder which were paid in whole or in part by the bank’s setoffs, were actually signed by their father, Damien Elder, pursuant to powers of attorney. This is the same man who unquestionably signed the bank account card which is in dispute in this case. As such, Damien clearly waived his partnership lien in the funds so set off, since the agreement unequivocally authorized the bank to set off deposits in the account against any debts owing by any partner, jointly or severally. This is the clear thrust of Hagan v. Hurst, 228 Ky. 645, 15 S.W.2d 446 (1929), cited by the majority.
In the second place, the trial court correctly found as a fact from the evidence of record before it, that all three Elder sons, although they admittedly did not sign the account card at the bank, fully consented to the agreements contained therein as demonstrated by their conduct. Specifically, each son admitted in his deposition on cross-examination that he had signed checks on the partnership account. The bank honored these checks just as if each son had personally signed the account card. Under the majority’s view of the agreement — that is, that the sons were in effect strangers to it — the bank certainly had no obligation to honor any such checks. In truth and fact, however, Damien Elder and all three sons, by their participation in the account, embraced the account agreement just as fully as if the sons had individually signed it.
No one contends that the facsimile signatures of the three sons were attached to the account agreement by the bank as any sort of attempt to fraudulently make it appear that they had, in fact, signed this agreement, Rather, it is clear that they were affixed to the card for comparison purposes by bank employees to insure that checks signed by any of them as partners would be honored and to protect all against forgery. This being so, where is the “mutuality of obligation” between the sons and the bank to which the majority gives lip service, citing Marcum v. Wilhoit, 290 Ky. 532, 162 S.W.2d 10 (1942), if we let the sons disavow the bank’s right of set-off?
In my opinion, the trial court correctly invoked the doctrine of equitable estoppel as applicable to these facts. Hicks v. Combs, 311 Ky. 149, 223 S.W.2d 379 (1949), cited by the trial court, succinctly defines the doctrine’s application “... to transactions in which it would be unconscionable to permit a person to maintain a position which is inconsistent with one in which he has acquiesced.” (Citations omitted.) Id. 223 S.W.2d at 381. It is further stated: “Where one accepts and retains benefits of a transaction or of an instrument which he was not required to take, an estoppel operates to prevent the party that benefited from questioning the validity of the transaction or basis of it.” (Citations omitted and emphasis added.) Id.
To me, it is unconscionable under these circumstances to let Damien Elder and Sons maintain a lawsuit against the Mor-ganfield National Bank for offsetting the admitted debts to the bank of Jerry and Bobby Elder.