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Big Sandy Realty Co. v. Stansifer Motor Co.

December 19, 1952


Combs, J., not sitting.


CULLEN, Commissioner. Big Sandy Realty Company, a corporation, brought an action against Stansifer Motor Company, also a corporation, to recover money claimed to be due under a written contract alleged to have been made between the two corporations. A jury found for the defendant, and the plaintiff has appealed from the judgment entered on the verdict, dismissing its action.

The contract on which the action was based purported to be signed on behalf of the Realty Company by Harry Malkin, its president, and on behalf of the Motor Company by Ben Stansifer, its vice-president and general manager. The contract recited that the Realty Company was to advance $9,000 to the Motor Company for the purpose of buying and selling automobiles; that the Realty Company, 'by their representative, Mr. Harry Malkin,' was to receive 50% of the profits, and that Malkin was also to receive $80 per week 'as long as this money is in operation with' the Motor Company. The contract acknowledged receipt by the Motor Company of the sum of $2,000. Another document produced by the plaintiff, which was signed only by Ben Stansifer, recited that $4,100 in cash and $4,900 in checks had been received from the Realty Company, and that 'this money is to apply to buying and selling automobiles, which Harry Malkin is to get fifty per cent of the proceeds'.

The plaintiff sued for the recovery of the original $9,000 mentioned in the contract, plus $2,000 for alleged profits, $150 for expenses, and $480 representing compensation at $80 per week for 6 weeks. The defense was, first, that no such contract ever was executed by Stansifer, and second, that if he did execute the contract it was beyond the scope of his authority as an office of the defendant corporation and was not binding on the corporation.

The contract was dated June 21, 1949. Ben Stansifer died in August 1949, and this action was brought shortly after his death. Naturally, the death of Stansifer was a handicap to both parties in the presentation of their proof.

A number of grounds of error are asserted by the appellant. We think one of the grounds is well taken, and we will discuss that one first. It has to do with the right of the defendant to question the execution and genuineness of the contract sued on, without having denied the execution and genuineness by affidavit or by verified pleading.

The original petition of the plaintiff referred to the written contract of June 21, 1949, and stated its substance, but the contract was not filed with the petition. The defendant moved that the plaintiff be required 'to file herein the alleged written contract sued upon in the petition,' and thereafter the plaintiff filed the contract and the receipt. An order was entered filing the two papers, but the order did not state specifically that they were filed as a part of the petition. After various demurrers had been disposed of, the defendant filed an answer consisting of a general denial. Later, an amended answer was filed, alleging Stansifer's lack of authority to execute such a contract on behalf of the defendant corporation. Neither of the answers was verified, and at no time was an affidavit filed denying the genuineness of the contract. After the trial had commenced, the defendant asked permission to verify its answers, which was denied.

The plaintiff objected to the introduction of any evidence on the trial questioning the execution and genuineness of the contract, and asked for an instruction to the effect that the contract must be accepted as genuine. The objections were overruled and the instruction was rejected.

The appellant maintains that it was entitled to have the contract read as genuine, by virtue of Section 527 of the Civil Code and KRS 454.010. The Code section provides that a writing 'referred to in, and filed with' a pleading may be read as genuine unless the adversary deny its genuineness by affidavit before the trial is begun. The statute section provides that the execution of a writing 'on which a suit or defense is founded' may be denied only by a pleading verified by oath.

The appellee maintains that the contract was not 'filed with' the petition and therefore the Code section does not apply. However, we think the effect was the same as if the contract had been filed with the petition. Section 120 of the Civil Code requires that a writing on which an action is founded be filed as a part of the pleading, and it is clear that the motion by the defendant in this case, to require the plaintiff to file the contract, was made in reliance on Section 120. The motion was, in effect, to compel the plaintiff to file the contract as a part of its petition, and we think the filing pursuant to the motion made the contract part of the petition. See Robertson v. Robertson's Adm'r, 174 Ky. 836, 192 S.W. 878.

It may further be observed that the statute section KRS 454.010, does not say that the writing must be filed with the pleading in order to invoke the requirement of verification by the adversary who wishes to deny its execution.

The appellee suggests that the appellant waived the requirement of verification by failing to request a rule requiring verification. However, it was held in Overbee v. Fordson Coal Co., 245 Ky. 94, 53 S.W.2d 210, that failure to demand verification does not constitute a waiver of the right to object to the introduction of evidence denying the genuineness of the writing sued on.

It may be that the appellee was entitled to question the genuineness of the receipt filed with the contract, because it did not purport to be executed by the defendant corporation. But the contract did purport to be executed by the corporation, and in our opinion it was prejudicial error to permit the execution and genuineness of the contract to be attacked by the defendant. However, we will point out that an affidavit denying the genuineness of the contract may ...

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