Appellee, Romine, by bill in equity sought (1) to have established in and conveyed to himself a one-third interest in nine mineral and royalty leases on an aggregate of 884 acres of land in Yazoo County, Mississippi, and
(2) for an accounting of the profits and recovery of one-third thereof which defendants had realized on such leases. The bill prayed for an attachment against the interest of said defendants in such leases and joined as defendant-garnishee the Union Producing Company, which concern was developing for oil the lands covered by one of the leases and was indebted to Sample and Mrs. Mucher through such operations. The leases stood in the names of J.C. Falvey and Clark Sample. The rights of Romine were grounded on a verbal arrangement he claims to have had with Falvey and Sample and acts and conduct of the parties pursuant thereto, as will be more fully set out hereinafter. Mrs. Mucher is the widow and sole devisee in the will of Dr. J.C. Falvey, deceased.
Sample and Mrs. Mucher denied the material allegations of the bill and the rights asserted therein; plead Section 3348, Code of 1930, requiring creations of trusts to be in writing, stale claim and laches.
The chancellor found the facts substantially as hereinafter set out; held that Romine was entitled to a one-third interest in the leases and the minerals and that Sample and Mrs. Mucher held title thereto as trustees for Romine's interest; ordered them to convey to Romine such one-third within thirty days, failing in which he empowered and ordered the clerk of the court as a commissioner thereof to execute the conveyance, and appointed a master to state an account of the income and profits from the operations under the leases.
The first question we must determine is the relation which existed between Romine and Falvey and Sample. This necessitates a statement of our conception of the ultimate facts shown by the evidence.
Dr. Falvey and Sample and Romine were friends and all lived at El Dorado, Arkansas. Falvey and Sample were then bachelors and lived together. Dr. Falvey was a general medical practitioner, Sample a prominent business man, and Romine operated a large restaurant. Falvey
and Sample were men of financial means, and Romine a man of considerable experience and knowledge in the oil and gas business and especially in procuring mineral leases. On November 1, 1929, Dr. Falvey called Romine into his office and told him that he had been informed by a "scout" for a large oil company that prospects were good for oil in Yazoo County, where a well was then being drilled. Dr. Falvey suggested that he would put up five hundred dollars and would get another person to put up a like sum and turn that over to Romine if Romine would go to Yazoo County and buy oil and gas leases, scattered through such area as Romine might think wise, and the three would share one-third each in the enterprise, after repayment of the thousand dollars, the leases to be taken in the names of Falvey and the other party. Romine agreed to that proposition. On November 4, 1929, Dr. Falvey informed Romine that Mr. Sample was agreeable to the plan, and had paid to him, Falvey, the other five hundred dollars, which, in fact, he had done. This arrangement was all verbal. Falvey and Romine went to a bank in El Dorado, where Dr. Falvey procured a cashier's check for one thousand dollars, payable to Romine, and delivered it to him. Romine and his wife, in Romine's automobile, left for Yazoo County. Romine placed the amount of this check to his credit in a bank in Yazoo City. He went about over the county, contacting landowners, and finally procured the nine leases, all in the name of Falvey and Sample, scattered and blocked as he thought advantageously. He worked at that for six days. He paid the owners one dollar per acre for the leases, aggregating $884.00 for the nine, by checks drawn in his name on the Yazoo bank. He witnessed the signatures of the lessors to all of the leases and made affidavit of their execution for purpose of having them recorded. He filed all of the leases with the chancery clerk for record and procured from the clerk certified copies thereof. He also obtained maps and plats of the county and the leased premises and data on the titles
of the lessors. He then went back to El Dorado and made a written report to Dr. Falvey, showing all of the leases, the amount paid for each, and showing also he had expended $33.60 for recording the leases, for certified copies, maps, etc., leaving $82.40 which, by direction of Dr. Falvey, he applied on his expenses, which had exceeded that amount. Under the arrangement Romine kept in his possession all of the papers, bank records, paid checks, data, leases, and documents. It appears the original leases, after being recorded, were mailed to Dr. Falvey, who delivered them to Romine. It was also understood that Romine was to keep in touch with developments in Yazoo County and mainly look after the handling of the properties, Dr. Falvey suggesting they would try to sell some of the leases and "clear out" — meaning, we assume, the repayment of the furnished money — and retain and develop the remainder.
The well then being drilled proved to be a dry hole, and oil activity in that section died out.
Dr. Falvey and Sample moved to Texas, from which place they, as well as Romine, had come to Arkansas.
In December, 1938, Dr. Falvey died, leaving a will in which his widow was the sole beneficiary. She remarried and became Mrs. Mucher.
In August, 1939, there were again signs of oil in Yazoo County from another well then being drilled. Romine returned to Yazoo County to investigate and look over the situation. He was impressed with the possibility of oil in that territory. He called Sample over the telephone and he also wrote him a letter, giving an account of the oil prospects, and recited in his letter the understanding he had had with Dr. Falvey. To this time the matter had not ben discussed personally between Romine and Sample, although witnesses testified to hearing conversations between Falvey and Sample, and some also quoted Falvey and Sample in conversations with the witnesses, substantiating the arrangement as heretofore set out. Following up this letter Romine mailed the
leases to Sample. He also wrote one Clapp, who had been secretary to Dr. Falvey and who was assisting Mrs. Mucher in the handling of her business, reporting the oil situation in Yazoo County and setting out the oral arrangement with Dr. Falvey and, in substance, what had been done thereunder, later sending to Clapp, in response to Clapp's written request, a copy of the statement he had furnished Falvey on his return to El Dorado.
The Union Producing Company, when suit was filed, had brought in an oil well on one tract of the leased premises, and Sample and Mrs. Mucher had received from the operation of the properties more than the thousand dollars.
There were conferences between Sample, Mrs. Mucher and their attorney and Romine. Sample and Mrs. Mucher then denied all claims of Romine.
The leases conveyed a one-half interest in each (1) the minerals in place, (2) the royalties and (3) future rentals to keep the leases alive, all under and subject to prior leases on the premises in favor of one Evans.
The chancellor admitted over objection proof of prior similar dealings between Romine and Dr. Falvey and between Romine and Sample and one Lake, all verbal, in which each party had an interest in the property and which were handled generally in the same manner as the venture under consideration was to be handled, some of the former leases being taken in the name of one, or more, but not all, of the interested parties, some being in the name of Mrs. Romine, but all held and used for the common benefit. In some, but not all, of these cases letters were later written by the title holders to the other interested parties confirming the oral arrangement.
We are not certain of the particular bases on which the chancellor grounded the rights of Romine growing out of the foregoing state of facts, but one was that of a joint adventure. We think that is the true relation between the parties.
While perhaps no exact definition of a joint adventure can be given, nor can a general rule be laid down by which the question as to what amounts to a joint adventure can be answered, the answer in each case depending on the terms of the agreement, the acts of the parties, the nature of the undertaking and other facts (30 Am.Jur., page 680, Sec. 7; State ex rel. Ratliffe v. Superior Court, 108 Wn. 443, 184 P. 348), some definitions have been attempted. In 30 Am.Jur., page 677, Sec. 3, it is said: "A joint adventure has been broadly defined as an enterprise undertaken by several persons jointly, and, more particularly, as an association of two or more persons to carry out a single business enterprise for profit . . . an association of persons to carry out a single business enterprise for profit, for which purpose they combine their property, money, effects, skill and knowledge." In Simpson v. Richmond Worsted Spinning Co., 128 Me. 22,145 A. 250, 253, the Court said a "`joint adventure' has been defined as `an association of two or more persons to carry out a single business enterprise for profit.' . . ." A federal court said "`Joint adventure' exists when two or more persons combine in joint business enterprise for their mutual benefit with understanding that they are to share in profits or losses and that each is to have voice in its management." Chisholm v. Gilmer, 4 Cir., 81 F.2d 120, 121, affirmed 299 U.S. 99, 57 S.Ct. 65, 81 L.Ed. 63, rehearing denied 299 U.S. 623, 57 S.Ct. 229, 81 L.Ed. 458. Other definitions will be found in the notes in 48 A.L.R., beginning at page 1055, and in 63 A.L.R., beginning at page 910.
The contributions may be in money, materials, services — "something promotive of the enterprise." Simpson v. Richmond Worsted Spinning Co., supra.
There must be a joint proprietary interest and right of mutual control. 30 Am.Jur., page 682, Sec. 11; Franco v. Vakares,35 Ariz. 309, 277 P. 812; Dempsey-Kearns Theatrical Motion Picture Enterprises v. Pantages, 91 Cal.App. 677, 267 P. 550; Atlas Realty Co. v. Galt, 153 Md. 586, 139 A. 285; Darling v. Buddy, 318 Mo. 784,1 S.W.2d 163, 58 A.L.R. 493; Bloom v. Leech, 120 Ohio St. 239,166 N.E. 137; Marcus v. Grant, 289 Pa. 1, 137 A. 120; Virginian R. Co. v. Farr, 147 Va. 217, 136 S.E. 668. The joint purpose and proprietary interest and control distinguish joint adventures from tenancy in common.
An agreement, express or implied, for sharing in the profits is essential to a joint adventure, but the courts differ as to whether there must be an agreement to share in the losses. However, there need be no specific agreement to share in the losses, and if the nature of the undertaking is such that no losses other than those of time and labor in carrying it out are likely to occur, an agreement to share the profits may stamp it as a joint adventure, although nothing is said about sharing the losses. Keiswetter v. Rubenstein, 235 Mich. 36, 209 N.W. 154, 48 A.L.R. 1049; Alderton v. Williams, 139 Mich. 296, 102 N.W. 753.
A contract between the parties is necessary, but it need not be express or embodied in a formal agreement. It may be inferred from the facts, the conduct of the parties and the circumstances. Cooperstein v. Shapiro, 122 N.J. Eq. 238, 192 A. 826; Wyoming-Indiana Oil Gas Co. v. Weston, 43 Wyo. 526,7 P.2d 206, 80 A.L.R. 1037; Annotations 48 A.L.R. 1058, 63 A.L.R. 910.
It differs from a general partnership in that a joint adventure relates to a single transaction, while a partnership usually relates to a general and continuing business of a particular kind; the relation of joint adventurers is usually of shorter duration and less formal in the agreement than a general partnership (Champion v. D'Yarmett, Tex. Civ. App., 293 S.W. 587; Dempsey-Kearns T. M.P. Enterprises v. Pantages, supra; Dolan v. Dolan, 107 Conn. 342, 140 A. 745; Fuller v. Laws, 219 Mo. App. 342, 271 S.W. 836; Central Trust Co. v. Creel, 184 Ky. 114, 211 S.W. 421; Boles v. Akers, 116 Okla. 266, 244 P. 182; Annotations 48 and 63 A.L.R., supra), and the authority of the interested parties, growing out of the
relation, is less extensive in a joint adventure than in a general partnership. Champion v. D'Yarmett, supra; Toof, Phillips Cirode v. Duncan, 45 Miss. 48; Davis v. Richardson, 45 Miss. 499, 7 Am.Rep. 732; Prince v. Crawford et al., 50 Miss. 344. However, the rights and duties of the parties inter se are practically the same in both relations. Goss v. Lanin, 170 Iowa 57, 152 N.W. 43; Swanson v. Lindstrom, 151 Minn. 19, 185 N.W. 950; Johnson v. Farmers' M. State Bank, 152 Minn. 442, 189 N.W. 583, 584; Kaufman v. Catzen, 100 W. Va. 79, 130 S.E. 292; Boles v. Akers, supra; Pritchett v. Thomas Plater Co., 144 Tenn. 406, 232 S.W. 961.
Such venture exists in real property where there is ". . . an agreement to combine money, effort, skill, and knowledge, and to purchase land for the purpose of reselling or dealing with it at a profit . . ." 30 Am. Jur., page 684, Sec. 15.
A joint adventure, or partnership, was held to exist in the acquisition of oil and gas leases and operations thereunder where the facts and circumstances were very similar, and in some of them practically identical, with those here under consideration, in the following cases: Kirkpatrick v. Baker, 135 Okla. 142, 276 P. 193, where the lease was taken in the name of one of the four parties; Wyoming-Indiana Oil Gas Co. v. Weston, 43 Wyo. 526,7 P.2d 206, 80 A.L.R. 1037, where the lease was also taken in the name of one of the parties; Grennan v. Forgeron, Tex. Civ. App., 101 S.W.2d 885, based on oral agreement and one party furnished services and the other advanced money and the leases were taken in the name of one party, a case practically the same on its facts as the one at bar; Thompson v. Corbin, Tex. Civ. App., 137 S.W.2d 157; Lavaca Petroleum Corp. v. Runk, Tex. Civ. App., 111 S.W.2d 1113; Strack v. Strong, Tex. Civ. App.,114 S.W.2d 313; Brady v. Brady, 48 Ariz. 308, 61 P.2d 390
(a mining partnership); Mildren v. Root, 262 Ky. 826,91 S.W.2d 523; Shoemake v. Davis, 146 Kan. 909, 73 P.2d 1043; Wolfe v. North, 182 Okla. 520, 78 P.2d 674, an oral agreement to purchase and sell royalties, title to which was taken in name of one party.
In such cases, although the title to the property is permitted to be taken in the names of some of the co-adventurers, the rights of the others are not impaired thereby, and the one holding the title becomes in equity a trustee for all. The trust thus imposed follows the property until it passes into the hands of innocent bona fide purchasers. Authorities in paragraph next preceding; Irvine v. Campbell, 121 Minn. 192, 141 N.W. 108, Ann. Cas. 1914C, 689; Floyd v. Duffy, 68 W. Va. 339, 69 S.E. 993, 33 L.R.A. (N.S.), 883; Seymour v. Freer, 8 Wall. 202, 19 L.Ed. 306; Austin v. Stephen, 89 Colo. 177, 300 P. 364; Dierks Sons Lumber Co. v. Bruce, Mo. Sup., 239 S.W. 133; Lind v. Weber, 36 Nev. 623, 134 P. 461, 135 P. 139, 141 P. 458, 50 L.R.A. (N.S.), 1046, Ann. Cas. 1916A, 1202; Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 62 A.L.R. 1.
The relationship between the joint adventurers is fiduciary in character and imposes upon all the participants the utmost good faith, fairness, and honesty in their dealings with each other as respects the enterprise. "This is especially true of those . . . to whom the property involved therein is intrusted." 30 Am.Jur., pg. 695, Sec. 34.
In such cases parol evidence is admissible as between the parties themselves to show the facts and circumstances even as to real estate. Burroughs v. Lasswell, Mo. App., 108 S.W.2d 705; Shoemake v. Davis, supra; Annotation 27 L.R.A., pages 464, 465, and 466. 65 C.J., page 373, Sec. 150. For admission of parol evidence in resulting trust cases not based on partnership see Perry on Trusts, Vol. 1, page 181, Sec. 137; Miazza v. Yerger,53 Miss. 135; Moore v. Moore, 74 Miss. 59, 19 So. 953; Wilson v. Hoffman, 104 Miss. 743, 61 So. 699. The trust arises and results by operation of law from the facts and circumstances attending the transaction
and the relation of the parties. This is true even though as a part of the original understanding it was orally agreed title should be taken in one of the parties, if there are other facts and circumstances surrounding the transaction which cause a trust to result. 65 C.J., supra. As was said in Thomas et al. v. Thomas, 62 Miss. 531: "It is well settled by authority that where, on the facts proved, a trust would result in the absence of an express agreement, the fact that such agreement was made will not prevent the trust from arising." In 40 Am.Jur., page 195, Sec. 96, it is said ". . . A partner is whose individual name is vested real estate belonging to a partnership is accordingly treated in equity as a trustee holding the property for the benefit of the partnership to the same extent as if the conveyance had named all the partners as grantees. In such case a court of equity may compel the particular partner to make such conveyance as the necessity of the business and the rights of the co-partner require, and this is true although a trust may not have been declared in writing." Grennan v. Forgeron, supra; Dutton v. Interstate Investment Corp., Cal. Sup.,119 P.2d 138. Resulting trusts are expressly excepted from Section 3348, Code of 1930, requiring declarations of trusts to be in writing, by these words ". . . but where any trust shall arise or result, by implication of law, out of any conveyance of land, such trust or confidence shall be of the like force and effect the same as it would have been if this statute had not been passed."
But appellants say Romine is not entitled to minerals because in his bill he said the agreement was that he was to get one-third of the profits after repayment of the thousand dollars. And it is true the bill so stated in setting out the agreement. However, in another part of the bill he alleged the parties "engaged in a joint interprise of purchasing minerals" and prayed for a one-third interest in the minerals; also in a bill of particulars later furnished, made a part of the bill, while he again used the
term profits, he therein said "that he had purchased minerals prior to that time . . ." for Falvey and Sample "on the same basis," and the testimony as to those prior dealings showed they included the minerals in place, as well as the profits. Romine testified that he understood the word "profits," as used in the bill, to include minerals in place, and the other witnesses of Romine, repeating conversations of Falvey and Sample, used expressions which included minerals and all property and rights acquired. In Grennan v. Forgeron, supra, the court held that profits included royalties. The chancellor held on the entire record that the arrangement here included all the property acquired.
Aside from whether the right to profits from a thing includes a right to the thing itself and whether the fact appellants have denied all rights of appellee and have thereby terminated the venture, entitled appellee to the thing itself for the purpose of realizing profits (Strack v. Strong, Tex. Civ. App.,114 S.W.2d 313), neither of which questions we decide, we are not prepared to say the chancellor was in error in his conclusion.
Appellants say the admission of evidence of past similar transactions between Romine and Falvey and Romine and Sample was reversible error. Romine had alleged in his bill the transaction in this case was the same in nature and effect as the former dealings. Attempting to state facts by reference to other transactions is certainly not the best way of stating the facts, but there was no motion to strike these allegations. However, aside from that, the former transactions ranged over a period from 1925 to, and including, 1929, and were closely connected with the present transactions. "Testimony is sometimes received, however, of other contracts between the same persons for the purpose of proving the contract in question provided the different contracts were so connected as to illustrate a general plan." Jones on Evidence — Civil Cases, Second Edition, Section 140. We think this evidence was competent to throw light on the general plan
used by these parties in procuring and handling oil and gas leases. See Jack v. Mutual Reserve Fund Life Assn., 5 Cir., 113 F. 49, at page 57, and Bernheim v. Dibrell, 66 Miss. 199, 5 So. 693.
Witnesses testified to hearing statements both by Falvey and Sample about the arrangement with and rights of Romine, some between Falvey and Sample themselves and some made by each out of the presence of the other. Laying aside whether even the statements made by each out of the presence of the other would be competent against the other, since this was a joint venture, the separate admissions were competent against the one making them, and those made when both were present were competent against both, and there was sufficient of this, with the other evidence in the case, to support the finding of the chancellor, and "A judgment or decree will not be reversed for the admission of incompetent, when supported by other and competent, evidence." Union Planters' Bank Trust Co. v. Rylee, 130 Miss. 892, 94 So. 796, 799.
Two of the lessors testified to statements of Romine, made to them while he was undertaking to procure the leases from them, that he and others were interested in the leases. These statements were self-serving and incompetent, but there was other and competent evidence sufficient to support the finding of the chancellor, and the rule in the Rylee case, supra, prevents this being reversible error.
Appellants say appellee is barred by laches in asserting his rights. Aside from statutes of limitation, laches, in a legal sense, is not merely delay, but delay that results in injustice or disadvantage to another. Time is only one element. There must be some other element than mere passage of time, some element of estoppel or change in conditions or relations of the parties, or intervention of rights of third persons, so that it would be inequitable to permit the party to then assert his rights. There is
no absolute rule as to what constitutes laches or staleness of demand. Each case must be determined under its own peculiar circumstances. Too, the question of laches is largely addressed to the sound discretion of the chancellor, and his decision will not be disturbed on appeal unless it is clearly wrong and amounts to an abuse of discretion. Comans v. Tapley, 101 Miss. 203, 57 So. 567, Ann. Cas. 1914B, 307; 21 C.J., page 217; 10 R.C.L., page 396, Sec. 143. This suit was filed in January, 1941. Until shortly before this there had been no occasion for appellee to institute a suit. He had kept possession of the papers. Oil interest had been dormant in the area of the leased premises since 1929 until it was revived in August, 1939. Upon the revival of oil interest Romine came back to the scene and began to communicate with Sample and Clapp and recount his interest in the project. About July, 1940, the Union Producing Company produced a well on one tract, through which operations the thousand dollars had been repaid. There were conferences between the parties and attorney for appellants and then a denial of the rights asserted by Romine. These circumstances constitute a natural and reasonable explanation for any delay in instituting suit. There is no attempt to disturb the rights of third persons and the delay has caused no injustice or inequity to appellants.
Affirmed and remanded.