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The action was brought to secure the dissolution of an alleged partnership between the parties and for an accounting. A trial was had before the court sitting without a jury and judgment was entered dissolving the partnership and awarding plaintiff damages, with interest and costs, amounting in the aggregate to $6,960. The appeal is by defendant from said judgment.
Appellant contends that the evidence is insufficient to support several of the findings of the court, the first finding attacked being numbered 1, which stated that the parties hereto "formed a partnership."
The finding that the relation existing between the parties was that of a partnership was based upon a written instrument (hereinafter to be called the "Keyes-Nims contract") which is in the following language:
"Stockton, California, September 26th, 1916.
"It is hereby agreed between F. B. Nims of Stockton, California, and A. V. Keyes of Stockton, California, that all dealings and contracts entered into with the Samson Sieve-Grip Tractor Company of Stockton, California, after the 27th day of September, 1916, that each shall have an equal interest, that is, share and share alike.
"F. B. NIMS. "A. V. KEYES."
It is argued by appellant that the above agreement did not contain the essential elements of a partnership agreement, and that the parties, at the time of the signing thereof, did not intend to become partners. It is also contended by appellant
that the said Keyes-Nims contract was never acted upon so as to "launch" a partnership. The above propositions will be considered in their order.
The consideration of the points thus relied upon by appellant will be clarified by first presenting a brief statement of the facts leading up to the execution of the said instrument and of the subsequent dealings between the parties.
The plaintiff testified that he had been engaged for about ten years in the business of selling investment securities and that, in 1916, he secured a contract from the Samson Sieve-Grip Tractor Company (hereinafter called the Samson Company), under the terms of which he was to endeavor to sell one hundred and fifty thousand dollars' worth of the capital stock of the company on a ten per cent commission basis. On September 20, 1916, plaintiff presented to defendant a "form" letter of introduction from J. M. Kroyer, president of the Samson Company, and endeavored to interest defendant in the purchase of stock. Plaintiff had previously suggested to Mr. Kroyer the advisability of establishing a manufacturing plant in the middle west. In the course of the conversation with defendant, plaintiff mentioned the matter of building a factory in the middle west. Defendant said that he had just returned from Michigan and that he had a friend there who was desirous of entering into a contract for the agency of some tractor company. Plaintiff testified: "I told Mr. Nims at this time, 'Mr. Nims, I feel that I can get a contract from the Samson Company if I had some man with me who was financially responsible,' that I knew that the Samson Company would not give me a contract because I did not have the means to carry out the idea that I had, and asked him if he was . . . and he said that he was, that he would go as strong as forty thousand dollars." Plaintiff said that defendant requested him to take the matter up with the Samson people, which he did, with the result that, on September 26, 1916, the Samson Company addressed to plaintiff a letter in which it was stated that at a directors' meeting it was decided to enter into such an agreement if satisfactory arrangements could be made. The letter also made tentative proposals for the execution of a contract. Plaintiff immediately submitted this letter to defendant, its terms were discussed and defendant suggested that plaintiff write a counter-proposal, which he did. During this conversation
plaintiff said: "Mr. Nims, would you mind signing some kind of a simple agreement that in case anything happened to us, you having the contract in your name as we have discussed it, I will have something to show that I have an interest therein?" Defendant replied: "Certainly." Plaintiff prepared the Keyes-Nims contract and it was signed by defendant. The witness testified that in several conversations he had with defendant they had talked generally about how the matter should be financed. He testified: "I stated to Mr. Nims that I didn't have money enough at that time hardly to pay the expenses incurred in the sale of this stock, and that I would have to wait before I could put in any money until such time as I had sold that stock and derived the commissions therefrom." Plaintiff showed defendant a copy of his commission contract with the Samson Company and witness stated that defendant said "that he was willing to finance me until such time as I got in returns from the sale of this stock."
A contract between the Samson Company and defendant was drawn up and plaintiff said he had four or five interviews with defendant in which its terms were discussed by them. The contract was executed on October 23, 1916. By its terms defendant was given the right to erect one or more plants and to sell tractors in certain designated territory in the United States and Canada. Certain payments by defendant to the company were specified, the first being two thousand five hundred dollars to be paid upon the signing of the contract.
Plaintiff testified that, about the 15th of October, 1916, defendant said to him that he, defendant, had a friend, of the name of Mr. Clarke, whom he had taken the liberty to invite into the proposition. Two or three days later a meeting was held at the Hotel Stockton at which were present plaintiff, defendant, and C. D. Clarke. As to what then occurred plaintiff testified: "There was a general discussion regarding different methods that we should finance this company in the middle west, and Mr. Nims told Mr. Clarke, in so many words, that I would receive from the sale of the stock of the Samson Company something over ten thousand dollars; . . . I had a ten per cent contract to sell one hundred and fifty thousand dollars' worth of stock. I replied that was true, and followed that up by stating that I would
be perfectly willing, when that stock was sold and I would receive my money from it, to put in any amount that would be agreed upon by us gentlemen at a later date, five or ten thousand dollars. . . . Mr. Nims stated to Mr. Clarke that he had to take care of me until such time as I sold the stock . . . Mr. Clarke suggested that he would come in with us and put up his third and send a check in a few days. Mr. Nims said, 'Well, boys, I am going through with it anyway.' Mr. Clarke says, 'Be assured in a few days I am going to come in.' . . . During this conversation no mention was made of the contract between Mr. Nims and myself."
It further appears, and the court found, that on or about October 17, 1916, and prior to the obtaining of the royalty contract from the Samson Sieve-Grip Tractor Company, the plaintiff and defendant, by mutual consent, both offered to C. D. Clarke one-sixth of their respective interests, that said Clarke accepted said offer, and that thereupon the interests of said partnership and its assets of said Clarke, plaintiff and defendant were equal, each acquiring a one-third thereof; "that, during the month of January, 1917, defendant, without the knowledge or consent of plaintiff, agreed to return to said Clarke all moneys which he had theretofore advanced toward the aforesaid partnership business, and in return therefor the said Clarke agreed, without the knowledge or consent of plaintiff, to assign to defendant his one-third interest in and to said partnership and its assets"; that during the month of April, 1917, the said agreement between said Clarke and the defendant was consummated in accordance with the terms thereof, and that thereupon the said Clarke ceased to have any interest in said partnership or its assets.
On or about April 3, 1917, defendant sold to the Samson Company his royalty contract with the company and received the sum of twenty-two thousand five hundred dollars. When plaintiff learned of this fact he asked defendant what he was "to get out of it," to which defendant replied, "You don't get a thing."
Upon an accounting, subsequent to the trial, it was stipulated that defendant received twenty-two thousand five hundred dollars; he was credited with two thousand five hundred dollars the payment made by him on account of the contract, and $574.20, disbursements made by him, leaving net proceeds in his hands of $19,425.80. Plaintiff waived all
claims for expenses and disbursements made by him, and the judgment in his favor was for one-third of said $19,425.80.
It is proper to say and briefly to show herein that the defendant's version of the transaction between him and the plaintiff was, in material particulars, wholly at variance with that of the latter. The defendant testified that, at the time of the conference at the Hotel Stockton, it was understood that he and plaintiff owned the contract jointly. "I guess," he continued, "there is no question as to Mr. Keyes being a partner up to that time. Mr. Clarke understood it so, so did I." Referring to conversations leading up to the execution of the Keyes-Nims contract, witness said plaintiff told him "that he had a contract with the Samson Company by which he would make fifteen thousand dollars, and, outside of a thousand he wanted to pay on his house, he could put the entire balance into the business"; that as the expenses accrued each was to put in his share of the money. The witness said that he told plaintiff that Mr. Clarke was desirous of coming into the business; that plaintiff consented to Clarke coming in and "said we would divide it three ways, that we would each put up $833.33, which would have to be paid to the Samson Company within two or three days." As to the meeting at the Hotel Stockton, which defendant said was on October 17th, he testified: "It was discussed that we would raise a fund of either five or ten thousand dollars each as a nucleus upon which to start our new plant. Mr. Clarke said, 'Mr. Keyes, are you ready to put up this money?' Mr. Keyes says, 'Yes, I will put up my money right off, right away.' . . . I said, 'Whether either one of you go in or not, I have decided I am going to take on this contract.' Mr. Clarke said, 'Anyone who doesn't put up his money doesn't get in.' Mr. Keyes said that was agreeable to him. He sanctioned that." Clarke and defendant each paid $1,250 of the first payment of two thousand five hundred dollars to the Samson Company.
C. D. Clarke testified, regarding the meeting at the Hotel Stockton, as follows: "We discussed the financing of the contract with the Samson Company. I said, 'Boys, I am going to pay this money anyhow; I am going to take care of the contract.' And we each agreed to pay our share at once; that is to say, I agreed and Mr. Keyes agreed. I said, 'I will take one-third of it.' Mr. Keyes said he would pay one-third
of it. The matter of failure to pay was brought up and I said, 'Who fails drops out.' Mr. Keyes said, 'That is O. K.' " The witness said that defendant did not say at the meeting that he would carry plaintiff for his share of the money that was to be paid upon the Samson Company contract.
[1] But, in determining whether the findings of the court are supported, we are required only to look to the testimony presented by the plaintiff and, if sufficient, we may disregard, in such consideration, any adverse showing made by the defendant. It cannot be doubted that the testimony of the plaintiff amply supports all the vital findings made by the trial court; hence, the following must be regarded and accepted as the established facts of the case: That the Keyes-Nims agreement, as given above, was made and entered into by and between the plaintiff and the defendant; that the intention of the parties, as expressed or contemplated by said agreement, was, according to an admission by the defendant, to enter into copartnership with respect to all dealings and contracts which they might have or enter into with the Samson Sieve-Grip Tractor Company, and that they were each to have an equal interest in such dealings and contracts; that, after the said agreement had been made, one Clarke was invited to enter as a third party into the agreement, and upon the consent of the plaintiff as well as that of the defendant did join the two latter in the proposed arrangement as a party thereto; that Clarke and the defendant advanced their respective proportions of the aggregate amount of money required to carry out the agreement, and that the defendant agreed to advance the plaintiff's part thereof upon the agreement and understanding that the plaintiff, upon receiving certain moneys he had in prospect, would repay the defendant the money so advanced for plaintiff.
The theory of the respondent, and the complaint proceeds upon that theory, is that the relation between the plaintiff and the defendant as produced by the agreement was that of a partnership; and the court below so decided. Counsel further contends, however, that if, strictly, the relation so produced was not that of a partnership, it certainly was that of a joint adventure.
It is obvious that the agreement, as originally formed, contemplated that there should be a division between the plaintiff
and the defendant of the profits derived from the business or enterprise in which they agreed to jointly engage, and to this extent the relation created between them by the agreement bears the earmarks of a partnership, which, as defined by our Code, is an "association of two or more persons for the purpose of carrying on business together, and dividing its profits between them." (Civ. Code, sec. 2395) On the other hand, the agreement related to a single transaction, viz., the procurement of a contract from the Samson Company whereby the plaintiff and defendant would be permitted and authorized to erect one, or more plants and to sell said company's tractors in certain designated territory in the United States and Canada, the plaintiff and the defendant, as seen, to share equally in said contract and the profits accruing therefrom. [2] It is said by the authorities that one of the distinctions differentiating a partnership from a joint adventure lies in the fact that, while a partnership is ordinarily formed for the transaction of a general business of a particular kind, a joint adventure relates to a single transaction, although the latter may comprehend a business to be continued for a period of years. It is also said that another feature distinguishing a partnership from a joint adventure is the fact that a corporation incapable of becoming a partner may bind itself by contract for a joint adventure, the purposes of which are within those of the corporation. (23 Cyc., p. 453.) There are other features which differentiate the two relations, among which may be mentioned the element of principal and agent which inheres in the partnership relation, each partner embracing the character both of a principal and agent, being the former when he acts for himself in the partnership. (Story on Partnership, sec. 1;Jackson v. Hooper, 76 N.J. Eq. 185, [74 A. 130, 135].) In a joint adventure, no one of the parties thereto can bind the joint adventure.
[3] But there is a considerable amount of law upon this subject, the discussion of which here may well be regarded as academic, since it is a matter of absolutely no consequence, so far as the decision of this case is concerned, whether the relation created between the parties to this action is that of a partnership or a joint adventure, or a limited partnership, which we are inclined to believe it to be; for it is held by the cases that the resemblance between a partnership and a joint adventure is so close that the rights as between adventurers
are governed practically by the same rules that govern partnerships. (15 Ruling Case Law, p. 500.) Accordingly, a joint adventurer, as a partner in a partnership may do, may sue in equity for an accounting of the profits flowing from the joint adventure. [4] It is true that one party in a joint adventure may sue the other at law for a breach of the contract or a share of the profits or losses or a contribution for advances made in excess of his share, as where the adventure has been closed and a party thereto is entitled to a sum certain as his share of the adventure, but the right thus to sue at law does not preclude a suit in equity for an accounting. (15 Ruling Case Law, p. 507.)
[5] The complaint here proceeds, as we have stated, upon the theory that the agreement between the parties involved the establishment of a partnership relation, and the court's decision was according to that theory, the interlocutory judgment decreeing a dissolution of "said partnership," that plaintiff is entitled to one-third of the net profits realized from "said partnership business," and that plaintiff have an accounting of said "partnership business" to determine the amount of said net profits, etc. Conceding that it is difficult to determine with accuracy from the pleaded facts and the evidence, or the agreement itself, whether the relation created by said agreement was a partnership or a joint adventure relation, still it is, of course plain that either one or the other of those relations is thus disclosed, and, since the enforcement of the rights of the parties may be accomplished by or through the agency of remedies applicable and pertinent alike to both relations, it is, as above suggested, a matter of no consequence here whether the relation between the parties be that of a partnership or that of a joint adventure. An accounting and a termination of the relation in either case may be had in a proceeding appropriate to such relief in a court of equity (Jackson v. Hooper, supra), and, therefore, if we assume that the relation between the parties was that of a joint adventure rather than that of a partnership, the decree herein comes as clearly within the issues made by the pleadings as though the complaint had specifically alleged that the agreement was a joint adventure. It follows that, whether the relation between the parties was that of a partnership or that of a joint adventure, the evidence is, upon its face, sufficient to have warranted the
court below in finding and adjudging, as it did find and adjudge, that the plaintiff was entitled to one-third of the profits realized from the joint enterprise which was the subject of the agreement between him and the defendant and to an accounting for the purpose of determining the extent or amount of such profits.
The second point made by the appellant is that the original partnership, if such it was, whereby the plaintiff and the defendant associated themselves together for the purpose of securing the contract referred to in their written agreement was never "launched" — that is, the partnership as then formed at no time proceeded to or did carry out the purposes for which it was organized.
The position of appellant with respect to that proposition may perhaps the better be stated in the language of his brief, viz.: "In the case at bar, the terms of the two contracts were inconsistent. There were two parties to the Keyes-Nims agreement. There were three parties to the Clarke agreement. Nothing was said in the Keyes-Nims agreement as to what amount of money each of the parties was to advance, or when. A condition precedent to obtaining an interest in the Clarke agreement was the payment of $833.33 forthwith by each party who desired to 'come in.' Everything done by appellant in protecting the Samson contract, and subsequently disposing of said contract, was in pursuance of the Clarke agreement. After giving Keyes a reasonable time within which to advance his $833.33, as stipulated in the Clarke agreement, he no longer considered that Keyes had an interest in the project. If Keyes had intended to rely on the original Keyes-Nims agreement, he should have declined to accept the three-cornered proposition made at the conference at the Hotel Stockton on October 17, 1916."
This position involves an attack upon the findings that the interests of plaintiff and defendant in "such partnership, as originally formed," were equal, each being entitled to three-sixths interest, and that on or about October 17, 1916, and prior to the procurement of the royalty contract from the Samson Company, "plaintiff and defendant, by mutual consent, both offered to C. D. Clarke one-sixth of their respective interests"; that Clarke accepted said offer and that thereupon each of the parties to the agreement, plaintiff, defendant, and Clarke, owned a one-third interest "in said partnership"
and its assets. It also involves the question whether there is a variance between the plaintiff's pleading and the proof — that is to say, whether the agreement declared upon by plaintiff is the agreement proved.
It is argued that, when Clarke was admitted into the partnership or association, upon the terms then agreed upon, viz., that each should contribute an equal amount to finance the concern, an entirely new contract was made which superseded and abrogated the original agreement between plaintiff and defendant; that Keyes having failed to pay his proportion of the amount which it was then agreed would be necessary to carry out the purpose of the association, he forfeited whatever rights he might have acquired in the new arrangement or agreement.
As has been shown, the plaintiff testified and the court found that when the agreement between him and the defendant was entered into it was agreed that he was to share equally in the profits, and that the defendant promised and agreed to advance for plaintiff his share of the expenses of the venture or partnership and also any other sums of money which might become due from plaintiff to the partnership, "until such time as plaintiff would be financially able to reimburse defendant for such advances." The plaintiff testified, as seen, that such was also the understanding and agreement between him and defendant at the time Clarke was brought into the arrangement or agreement.
[6] It is clear that, so far as plaintiff's right to a share of the profits realized from the enterprise is concerned, it is immaterial whether it be true or not that the circumstance of admitting Clarke into the association or partnership worked a new agreement which superseded and abrogated the original agreement between Keyes and Nims. The original agreement by Nims that he would advance whatever sums of money that might become due to the partnership from Keyes was reaffirmed by him at the time Clarke entered into the agreement as a party thereto. Moreover, Clarke was admitted into the partnership, if such it was, upon the consent and agreement of the plaintiff as well as that of the defendant; hence, if it was a new agreement, it was one which was made by all the parties, including the plaintiff. But, if the effect of the original agreement was to create a partnership relation between Keyes and Nims, as we believe it was,
the fact of the taking of Clarke into such partnership did not constitute the making of such an agreement as would operate to supersede and abrogate the original agreement between Keyes and Nims. The situation, upon Clarke entering the partnership, was simply this: That Keyes and Nims had entered into an agreement of partnership for carrying on a certain designated business, and before carrying out the purpose of the agreement, took into the partnership, already so established and formed, another party as a partner therein. There was nothing in the terms of the so-called "new agreement" different from those of the agreement between Keyes and Nims, except that said parties disposed of certain of their interests to the new partner and entered into an understanding that each of the three should contribute equally to the financing of the enterprise, should share equally in the profits accruing therefrom, and bear equally the burdens thereof. In fact, no more can be said of the effect of taking Clarke into the partnership than that it was either a qualification of the original agreement, to which Keyes as well as Nims actually subscribed, whereby another partner was taken in and the terms more definitely specified, or that it was merely an agreement subsidiary or ancillary to the original.
The cases cited by appellant are not in point here because the facts thereof are materially variant from those of this case. For instance, in the case of Black v. Hunter, 169 Cal. 632, [147 P. 463], cited by appellant, the original agreement, which involved a combination or association of the parties thereto for the purpose of effectuating a sale of particular tracts of land to the county of Los Angeles, to be used by the county for the erection thereon of a hall of records, had been entirely abandoned by the parties after a futile effort by them to make a sale of the properties. It appears that the parties to said agreement were one Hunter and the appellant Black, who, having learned that Rowan Co., real estate brokers, had other lands which they were trying to sell to the county, to be used for the same purpose, took said Rowan Co., in with them and made them parties to their agreement, the purpose being to put an end to the rival propositions of said brokers. It was this agreement that was abandoned because of a failure to make the sale. Subsequently Hunter and Rowan
Co. entered into a contract
whereby they agreed between themselves to secure the right to sell the same lands to the county and, if successful, to divide equally between themselves the commissions realized from the sale. The sale was effected by them, and they received the stipulated commissions, whereupon Black, who was not a party to the second agreement, brought suit to recover a share of the commissions, claiming that "the first contract was one of copartnership; that the second was not a substitution for it, but merely took Rowan Co. into the transaction as an agent of the copartnership and, therefore, the cancellation of the second contract (and appellants admit that it is no longer in existence) did not abrogate the original agreement of copartnership." The supreme court, through Mr. Justice Melvin, held that the finding that the tripartite agreement had been terminated by the parties themselves and said agreement abandoned was fully sustained by the evidence. And, even if, as the appellant in that case contended, the original agreement had not been abrogated by the subsequent or tripartite agreement but was a part of the latter, the abandonment and cancellation of the tripartite agreement by all three parties thereto would necessarily have involved the abandonment and cancellation by said parties of the original agreement.
But be that as it may, in this case there was not an abandonment of the original agreement, by the acts of the parties themselves, as was true in the case above considered, nor was there any evidence or pretense that the agreement to which Clarke became a party was independent of any and all consideration of the original contract. Keyes had conceived and proposed the scheme to Nims, who, in writing, agreed with the former to enter upon its consummation with him upon the understanding that they should share equally in the profits resulting from it. Nims suggested to Keyes the advisability of "taking in Clarke," because the latter was able to assist in financing the proposed enterprise, and in taking him in, both Keyes and Nims acted with reference to, and in view of, the agreement between them as originally formed. They, in other words, merely brought Clarke into their agreement, as originally formed, as a party thereto with themselves. Indeed, there was nothing to take Clarke in on but the agreement, for the business itself to which the agreement
related had not been started or even the facilities for its operation obtained at that time.
The other cases cited by the appellant in their facts bear no nearer analogy to the instant case than does the case ofBlack v. Hunter, above considered. The principles discussed in those cases are therein soundly applied, but the facts to which they are therein applied are entirely different from those with which we are here confronted.
The judgment is affirmed.
Chipman, P. J., and Burnett, J., concurred.
A petition for a rehearing of this cause was denied by the district court of appeal on September 24, 1919, and the following opinion then rendered thereon: