Jones v. Gould

• Decision Date: 18 November 1913
• Citation: 209 N.Y. 419,103 N.E. 720
• Parties: JONES v. GOULD et al.
• Court: New York Court of Appeals Court of Appeals

209 N.Y. 419

103 N.E. 720

JONES

v.GOULD et al.

Court of Appeals of New York.

Nov. 18, 1913.

Appeal from Supreme Court, Appellate Division, First Department.

Action by John S. Jones against George J. Gould and others. From a judgment of the Appellate Division (152 App. Div. 881,136 N. Y. Supp. 600), modifying, and as modified affirming, a judgment of the Trial Term on a verdict in favor of plaintiff, defendants appeal. Affirmed.Allan McCulloh, of New York City, for appellants.

Edgar T. Brackett, of Saratoga Springs, for respondent.

PER CURIAM.

We are of opinion that under the syndicate agreement the relation between the subscribers and the managers (the defendants, appellant) was not that of principal and agent (though doubtless fiduciary), but that the managers themselves became the principals in any contract which they might make. The agreement recites that it was proposed by the defendants Gould, Ramsey, and Guy to purchase the Little Kanawha Railroad, a line extending from Parkersburg, W. Va., up the Little Kanawha river, and to extend the same eastwardly, to purchase and build a railroad from Parkersburg to Zanesville, Ohio, and to purchase coal lands in West Virginia. The defendants were to do all acts necessary to construct or purchase said properties, and for that purpose ‘to absolutely control the property so to be constructed or purchased as fully in all respects as if they were the absolute owners thereof.’ The enumeration of the specific powers was not to be construed as limiting the general powers conferred upon the managers. By the agreement the defendants contracted to purchase the properties on such terms as they thought the best obtainable, and, on the other hand, the subscribers agreed with each other and with the defendants to pay the amounts of their respective subscriptions from time to time as called for by the latter, but they were to be liable only to the defendants, and then only to the amount of the subscription.

It was provided that, should the defendants in carrying out the agreement sell and dispose of the properties, the net proceeds of such sale should be divided pro rata to the subscribers from time to time in the discretion of the syndicate managers. Should such railroad properties not be sold, but be capitalized by the formation of a new company or new companies, and the transfer thereto of such properties, the securities received by the defendants for the same should be distributed pro rata to the subscribers or their assigns.

[1] It will thus be seen that, at least as to all those cognizant of the terms of the agreement, the defendants were not empowered to bind the subscribers beyond the terms of their respective subscriptions, but it was contemplated that the necessary contracts for the carrying out of the project were to be made by the defendants on their own responsibility. Under the agreement the subscribers had no right, title, or interest as such in the properties acquired, but only the right upon the termination or closing out of the syndicate to their respective shares of the securities or moneys received by the managers for the property. Such an agreement did not constitute the parties thereto partners as between themselves (Salter v. Ham. 31 N. Y. 321), and the agreement before us expressly provides that nothing therein contained shall ‘constitute the syndicate subscribers partners with the syndicate managers or with one another.’ The defendants at least cannot be allowed to deny the efficacy of the agreement in this respect, and hence there were no principals for whom the defendants could contract as agents.

[2] The work which the defendants undertook to carry out was not the prosecution of any general business, but was limited to a single enterprise-the acquisition of a particular railroad, its extension, the building of another road, the acquisition of coal properties along the routes of such roads, their sale or transfer to a corporation, and the division of the money or securities received therefor among the syndicate subscribers. This was not strictly a partnership, though it had many of the features of such a relation. Williams v. Gillies, 75 N. Y. 197. It was what is now generally known as a joint venture, rather than a commercial partnership. The authorities in some of the states hold that in the prosecution of the venture each party has the same full power to bind his associates in any contract in regard to the venture that an ordinary commercial partner would have. We are not now inclined to hold that doctrine in its full integrity, but such a ruling is not necessary to the...