## Facts

- Frontier Refining Company supplied gasoline and related items on an open account for operation of a Cheyenne service station and truck stop conducted under the name “Kunkel’s, Inc.”
- Frontier sued Kunkel’s, Inc. and individuals Clifford D. Kunkel, George Fairfield, and Harlan Beach, alleging an oral agreement to operate the business as a partnership and seeking to collect an unpaid balance of about $6,732.
- Kunkel told Frontier’s representative that the business would be incorporated and financed by Fairfield and Beach; Fairfield and Beach later invested funds and purchased equipment, expecting to receive stock in a corporation.
- The business was never incorporated, and Kunkel commenced operations without Fairfield’s or Beach’s knowledge of key contracts with Frontier.
- Frontier’s agreements and billing identified the customer as “Clifford D. Kunkel dba Kunkel’s, Inc.”; Fairfield and Beach did not sign the agreements and did not directly communicate commitments to Frontier.
- After Frontier discovered unpaid equipment deliveries, it obtained a chattel mortgage from Kunkel as an individual, not in any corporate capacity.
- Fairfield and Beach denied being partners, asserting they were only creditors/investors and that Kunkel alone managed the business and was responsible for incorporation.

## Issues

1. Whether Fairfield and Beach were partners or joint venturers with Kunkel, making them personally liable for the open-account debt.
2. Whether Fairfield and Beach were jointly and severally liable for debts incurred in the name “Kunkel’s, Inc.” under a doctrine imposing liability on persons who assume to act as a corporation without authority.
3. Whether Fairfield and Beach were liable under an estoppel theory based on alleged representations or holding out to Frontier.

## Decision

- The Wyoming Supreme Court affirmed judgment for Fairfield and Beach.
- The court upheld the trial court’s finding that no partnership or joint venture existed and that Fairfield and Beach were creditors/investors rather than co-owners.
- The court refused to impose liability for acting as an unauthorized corporation because the evidence did not show Fairfield or Beach assumed to act as a corporation, or authorized Kunkel to act for them, in dealings with Frontier.
- The court rejected estoppel-based liability because Frontier’s belief about Fairfield’s and Beach’s involvement stemmed mainly from Kunkel’s statements rather than authorized representations by Fairfield or Beach.
- The court deferred to the trial court’s permissible factual inferences and declined to disturb findings supported by the record.

## Legal Principles

- A partnership requires proof of an agreement or relationship showing co-ownership and participation consistent with carrying on a business for profit; providing financing or expecting stock in a contemplated corporation, without more, does not establish partnership liability.
- Liability for debts incurred by an entity purporting to be a corporation without authority generally requires that the person to be charged actually acted as a corporate participant or authorized being held out as such; third-party statements alone are insufficient.
- Estoppel-based liability for partnership or corporate status requires a representation (or knowing allowance of a representation) attributable to the person to be charged and reliance by the creditor on that representation in extending credit.
- Appellate review gives substantial deference to trial-court fact-finding and reasonable inferences when supported by evidence.

## Conclusion

The court held that Fairfield and Beach were not personally liable for Frontier’s open-account claim because the evidence supported findings that they neither formed a partnership with Kunkel nor authorized or engaged in conduct that would treat them as participants in an unauthorized corporation or subject them to estoppel.


Frontier Refining Co. v. Kunkel’s, Inc., 407 P.2d 880 (Wyo. 1965)