Boice v. Jones — 106 A.D. 547

Majority

p. 547

Hewitt Boice, Respondent, v. Percival S. Jones, Appellant, Impleaded with Henry J. McCormick and The Knickerbocker Trust Company, Defendants.

Headnote

Judgment—when a reversal as to one defendant necessitates a reversal as to the other —status of parties to a joint adventure — a recovery on proof of a joint adventure is not proper where the complaint alleges a general copartnership — concealment of a benefit by one using his influence to further a consolidation—to whom he is liable to account — when a payment of a suni equal to a ceo'tain percentage of the profits of an undertaking is merely a measure of compensation.

Upon an appeal by the defendant Jones from the interlocutory judgment considered in the syllabus of the opinion in Boice v. MaOormick (ante, p. 539; it was'

Held, that the erronous decision that McCormick had no interest in the stock in question and was not liable to account therefor required the reversal of the judgment as to Jones, for the reason that as the firm of Jones & McCormick owned the one-half interest in the stock for which Jones had been required, by the interlocutory judgment to account, the said firm, and not Jones individually, should make the accounting.

The parties to a joint venture may or may not be partners inter sese, but where property is invested or money is- expended, and where property in which .parties are jointly interested is received under such circumstances that an accounting is necessary to enable the rights of the parties to be adjusted, a suit in equity will lie to obtain such an accounting.

Where a defendant is brought into court under allegations of a general partnership existing between him and the plaintiff, a recovery by the plaintiff should not be permitted upon proof that the relation existing between the parties was that of a joint venture and not a partnership.

The fact that a mill owner, after entering into a contract whereby he was to share in the profits arising from the consolidation of a, large number of mills into a single corporation, while concealing the fact of such contract from his fellow-mill owners, used his influence with the latter to bring about the consolidation and led them to infer that his interest was only the same as theirs, does not operate to prevent him from enforcing the contract by which he was to share in the promoters’ fees.

Semble, however, that he might be obliged to account for the promoters’ fees received by him to the mill owners who were not informed of his interest iu the promoters’ fees.

What agreement, whereby persons engaged in an undertaking agreed to pay a third person thirty per cent of the net profits thereof, is merely an agreement for compensation to be measured by a percentage of the profits and does not constitute such third person a joint adventurer and copartner with the other parties, considered.

p. 548

Motion by the defendant, Percival S. Jones, for a new trial upon exceptions pursuant to section 1001 of the Code of Civil Procedure.

Also an appeal by the defendant, Percival S. Jones, from an interlocutory judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 17th day of June, 1904, upon the decision of the court, rendered .•after a trial at the New York Special Term, directing an accounting ,ahd granting other relief. '

William H. Wadnams, for the appellant.

Richard F. Goldsborough, for the respondent.

■The reversal of the interlocutory judgment on the separate, motion for a new trial and appeal of the defendant McCormick, argued herewith (Boice v. McCormick, 106 App. Div. 539 ), requires a reversal as to Jones as well regardless of the merits of his appeal. It is the same judgment rendered in a single cause of action on the same trial and evidence, and it cannot be allowed to stand as an adjudication between this appellant and the plaintiff, that the former is the owner of one-half the promotion fees and is obliged to account to the latter for the other half, and at the same time a decision be made on the separate appeal that the firm of Jones & McCormick owns .the half interest and is liable to account to the'plaintiff for the other half if there be any liability to account therefor. (City of Buffalo v. D., L. & W. R. R. Co., 176 N. Y. 308 ; Altman v. Hofeller, 152 id. 498; Electric Boat Co. v. Howey, 96 App. Div. 410 .) It is necessary, however, to examine the merits of this appeal at least for the purpose of making a proper award of costs. I think it quite clear that, aside from the other points, Jones was justified in appealing on account of the erroneous decision that his partner McCormick had no interest in the stock and was not liable, to account therefor. Since the firm and not Jones owned the half interest in the stock for which Jones has been required to account, it is manifest that the firm and not Jones, individually, should account therefor. Therefore, the ■ appeal was warranted upon that ground alone and the appellant should be awarded costs' regardless of the merits of the other points presented. It is urged, however,

p. 549

that objections have been taken by the appellant and presented by the appeal which should dispose of the issues. It is, therefore, proper that we should consider such objections.

The appellant contends that the plaintiff alleges a copartnership and that since his evidence only discloses a joint venture, which is all that has been found, the complaint should have been dismissed, and he cites as authority for this contention Heye V. Tilford ( 2 App. Div. 346 ; affd., 154 N. Y. 757 ). In that case a general partnership was alleged, and, this being shown and there being some evidence of a joint .venture, it was held that a recovery upon the theory of a joint venture would not be consistent with the complaint. The parties to a joint venture may or may not be partners inter sese (Arnold v. Angell, 62 N. Y. 508 ; Marston v. Gould, 69 id. 220), but where property is invested or money is expended and property in which the parties are jointly interested is received so that an accounting is required to adjust their rights, a suit in equity will lie therefor. (Marston v. Gould, supra ; Weldon v. Brown, 89 App. Div. 587 .) Of course where a defendant is brought into court under allegations of a general partnership, a recovery should not be permitted on proof of a joint venture in which the parties were not partners for this would not be according to the allegations of the pleading, and the defendants might not be prepared to try such issue, but here the facts are alleged and early in the complaint, as appears in the statement of facts in our opinion in the other case, the transaction is characterized as a joint venture and later on as a partnership. In these circumstances the defendants could not be misled. No general partnership was claimed, and it was alleged that the joint venture had terminated which brought the case directly within Marston v. Gould (supra). According to the testimony of the plaintiff he and the defendant Jones, or Jones & McCormick, if Jones represented his firm, were to be equally interested in this venture and joint owners of the stock and bonds received as the promotion fees and to divide the same equally after deducting their respective personal expenses. These facts give equity jurisdiction.

N o question of law arising on this record has been brought to our attention which necessarily precludes a recovery in this action. There is evidence indicating the plaintiff’s right to recover, although

p. 550

his claim cannot impress a court of equity favorably. On account of being a mill owner himself he concealed, from many other mill owners and others interested in the new corporation, the fact that he was interested in the commissions to be received by Jones or Jones & McCormick until after the new company had agreed to pay Jones the 5,000 shares of stock as promotion fees, and in the meantime he used his influence with his fellow-mill owners to bring about this consolidation, leading them to infer that his interest was only the same as theirs. As to those who were not informed of his interest in the promoters’ fees he may be obliged to account for what he receives. As we observed on the former appeal therein (Boice v. Jones, 86 App. Div. 613 ), this does not prevent the maintenance of this action. It should, however, weigh with the trial court in determining liis credibility and considering the merits of his case. The record before us shows that his testimony as to the agreement is corroborated by admissions and declarations made by Jones and testified to by several other witnesses. As has been stated, although the original contract was made with. Jones and the plaintiff was ignorant of the fact that Jones was acting for his firm,- yet the plaintiff’s rights attached to the contract of November eighth, made in the name of the firm. There can be no reasonable doubt that- the stock delivered and to be delivered by the consolidated company was awarded to the defendant Jones or to his firm by virtue of the contract of November 8, 1901, and with- full knowledge.of the plaintiff’s claim to a one-half interest therein. The promoters had undertaken, among other things, as stated in the findings, to finance the company. They experienced difficulty in accomplishing this and gave up the effort and agreed that as' a substitute for the compensation provided in the contract they would accept whatever the advisory committee of the new corporation deemed the services reasonably, worth. Pursuant to that suggestion the award of the 5,000 shares of stock was made. If the plaintiff establishes the original agreement with Jones, which was made before it was known. what agreement for compensation could be made with the mill owners, it would seem that his rights would attach to the stock delivered and to be* delivered by the new company in adjustment of the services thus performed if nothing intervened to waive or cut off su'ch right. There is evidence indicating

p. 551

that the plaintiff abandoned his efforts and that the enterprise was thereafter consummated without his assistance which would disentitle him to share in the stock (Parks v. Gates, 84 App. Div. 534 ), but this is controverted by his testimony which is corroborated. The agreement of November .8, 1901, which fixes the amount of stock and bonds which Jones and MeOortnick were to receive for their services as promoters provided that out of their compensation should be first paid by the company certain expenses including the expenses and services of trustees who were to appraise the different properties that were to be taken over by the new company. The plaintiff was made one of these trustees, but that was not part of the original agreement nov did the defendants bring it about. He was selected by the owners. He presented a claim against the new company for $40,446 for services and disbursements as trustee. It is claimed that this is inconsistent with his claim as now made. It is not necessarily inconsistent therewith, but it would seem to he some indication that he perhaps had abandoned his claim to participate in the stock and bonds received by Jones or that his interest therein was as claimed by Jones rather than as testified to by himself, for if allowed it may materially reduce the amount that Jones was to receive.

The appellant contends that one Charles B. Brown is a necessary party to the determination of the questions involved in this action. Brown was a witness upon the trial. He testified that he had an agreement with Jones and McCormick for thirty per cent of the promotion fees which was reduced to writing on the 31st day of August, 1901, but had been made verbally two or three months before. The agreement on the part of Jones and McCormick was merely to keep an account of the profits resulting to them from the consolidation agreement of November eighth, “and to pay said Brown a sum equal to 30f0 of all such net profits in bonds, stock and cash as they may personally receive thereunder,” after deducting and paying to Brown $2,500 advanced to them by him. This did not give Brown an interest in the stock. It was merely an agreement for compensation to be measured by a percentage of the profits.

We conclude, therefore, that the record presents no insuperable bar to a recovery by the plaintiff. .

It follows, therefore, that the interlocutory judgment should be

p. 552

reversed and the motion for a new trial granted, with costs to appellant to abide the event.

O’Brien, P. J.,'and Ingraham, J., concurred; Patterson, J., concurrid in result.

Judgment reversed, new trial ordered, costs to appellant to abide event. ‘

Cases cited

City of Buffalo v. Delaware, Lackawanna & Western Railroad 176 N. Y. 308 N.Y. 1903-10-30 p. 548
Electric Boat Co. v. Howey 96 App. Div. 410 N.Y. App. Div. 1904-07-13 p. 548
Arnold v. Angell 62 N. Y. 508 N.Y. 1875-09-21 p. 549