IV. Management

IV. Management

SMITH v. DEXON

Supreme Court of Arkansan, 1965.

238 Ark. 1018,386 S. W.2d 244.

Holt, Justice

The appellee,as purchaser,brought this action against appellants,as sellers,for the specif­ic performance of a contract for the sale of realty and in the alternative sought damages for non­performance of the contract.

The appellants are E. F. Smith,his wife,and their children and spouses. This entire family constitutes a business firm known as E. F. Smith & Sons,A Partnership. The" Contract for Sale of Realty with Lease "was signed by one of the appellants, W. R. Smith, on behalf of the family partnership.

By the terms of the contract,executed in March 1962,the partnership agreed to sell the 75 - acre" Cracraft" plantation for $200,000. 00 and convey title to the appellee on January 3 , 1963. In the interim,by the lease provisions,the appellee took possession,farmed,and improved a portion of the property. Upon refusal of thee appellants to convey the land as recited in the contract, the appellee instituted this action. The chancellor denied specific performance and a- warded appellee special damages in the amount of $11,512.73.

____ The partnership was created a short time after the lands in controversy were acquired by

the family in 1951. The court found that;

"Soon after the purchase of Cracraft'[the lands in question] and the Sterling Place,'the Smiths, at the suggestion and on the recommendation of the financial institutions, who were to finance the farming operations for them on the farms, organized and formed a partnership known as E. F. Smith & Sons. They term the partnership an operating partnership' The general purpose of the firm was to engage in farming operations on the farms, including direct cultivation and renting to others. The operation was later expanded to engage in the general farming business in the area. The partnership agreement was oral and has never been reduced to writing. Mr. W. R. Smith is the predominant member of both the partnership and the Smiths. He serves as the man­aging partner with general powers, with Mr. Charles Smith in charge of production. The other members of the partnership did not, nor at the present time, appear to have any direct participa­tion or responsibility in the operation.

"The firm,by and through its managing partner,Mr. W. R. Smith,has acted as agent for or under contract with ,the Smiths, in the sale of the Sterling Place'to Mr. Rankin, in a similar ca­pacity in another land conveyance and as trustee for another purchase. "

It appears undisputed that appellant W. R. Smith was authorized by the members of the partnership to negotiate for the sale of the lands in question to the appellee. However, it is claims that his authorization was based upon different terms of sale, mainly, a price of $225,000.00 instead of $200,000. 00. Therefore,it is urged that the contract is unenforce­able since it was not signed nor ratified by other members of the family.

In the case of May v. Ewan, 169 Ark. 512,275 S. W. 754, we held that a partnership is bound by the acts of a partner when he acts within the scope or apparent scope of his authority. There we quoted with approval;

In order to determine the apparent scope of the authority of a partner, resource may fre- quentiy be had to past transactions indicating a custom or course of dealing peculiar to the firm in question.

See,also [ UPA( 1914) § § 8 - 10]. In the case at bar it was customary in past transac­tions, as in the present one,for the partnership to rely upon the co - partner, W. R. Smith, to transact the business affairs of the firm. We agree with, the chancellor that appellant W. R. Smith was acting within the apparent scope of his authority as a partner when he sighed the contract and that it is binding and enforceable upon the partnership.