Bursten v. Tom Sawyer, Inc.

Decision Date18 September 1962
Docket NumberNo. 19050.,19050.
Citation308 F.2d 542
PartiesLeonard BURSTEN, Appellant, v. TOM SAWYER, INC., formerly Sawyer Downtown, Inc., Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Irving Mark Wolff, Miami, Fla., for appellant.

J. Edward Worton, O. B. Cline, Jr., Miami, Fla., for appellee.

Before RIVES, JONES and GEWIN, Circuit Judges.

JONES, Circuit Judge.

The appellee is a Wisconsin corporation. It brought suit in the District Court for the Southern District of Florida against the appellant, a resident of Florida, basing jurisdiction upon diversity of citizenship. In its complaint Sawyer claimed that it had agreed with the appellant, Bursten, to advance to him money for investment in Florida real estate under an oral contract providing that upon the sale of the property purchased, the corporation would be repaid the amount of its advances and one-half of the profits. Sawyer asserted that it made advances and with the funds advanced Bursten purchased property for a joint venture and sold the property at a profit. For its share of the profits, Sawyer sought judgment. Bursten denied generally the corporation's allegations and by counterclaim asserted that it was liable to him in the amount of $165,000 for legal services, and for $177,000 which he claimed to be owing as a result of joint ventures which were unrelated to the claim of the corporation. The case was tried without a jury. The court found for the corporation on its claim and found that the counterclaims had not been established. From a judgment for the corporate plaintiff Bursten has appealed.

The first point urged by Bursten is that the Wisconsin statute of frauds renders unenforceable an oral joint venture agreement and recovery by Sawyer is barred. The principal reliance of Bursten in support of this contention is the opinion in Goodsitt v. Richter, 216 Wis. 351, 257 N.W. 23, 95 A.L.R. 1238. There it was said:

"In Wisconsin, contrary to the great weight of authority in this country, a joint adventure or a partnership to engage in the sale or purchase of real estate is held to be a contract respecting an interest in lands, and void under the statute of frauds, unless in writing, or unless sufficiently performed to take the same out of the statute."

In the Goodsitt case Ellison contracted to sell Oberst a ninety-nine year leasehold. Oberst gave Ellison a promise to pay for a part of the price. Ellison transferred the obligation to Goodsitt who sued Oberst and two others, asserting that they were joint adventurers. In holding that there could be no recovery against the joint adventurers of Oberst, the Wisconsin Supreme Court held:

"The difficulty is that the joint adventurer in this case was not a valid or subsisting one at the time of Ellison\'s dealings with Oberst. At that time Oberst was not in law the agent of his coadventurers. He was not authorized (because of the invalidity of the joint adventure at that stage) to negotiate for or bind the other defendants."

The statute of frauds effectively prevented one of the joint adventurers from creating an obligation to a third person. This is a different situation from the case where the primary purposes of the venture have been completed and one of them is asserting a claim against another for a share of the gains of the venture. The right to recover under such circumstance is recognized in the Goodsitt opinion by this language:

"In all cases which have come to our attention, in which the contract of joint adventure has been deemed sufficiently executed to warrant an accounting, the actions were by one of the coadventurers to secure his share of the profits." Citing authorities.

In Smith v. Putnam, 107 Wis. 155, 82 N.W. 1077, 83 N.W. 288, cited with approval in Goodsitt v. Richter, there was a recognition of the rule that joint adventures to deal in land are within the Statute of Frauds. It was held that:

"Where the parties have fully executed all parts of such a contract relating to or affecting interests in lands, so that the courts do not need to enforce anything with reference to the land itself, the rights and duties of the parties resulting from their dealings may be enforced."

The general rule is succinctly stated in Corpus Juris Secundum in these terms:

"It is generally held that agreements between partners and joint adventurers to share profits and losses arising from the purchase and sale of real estate are not contracts for the sale or transfer of interests in land and need not be in writing." 37 C.J.S. Frauds, Statute of, § 119d, p. 615.

This may be broader than the Wisconsin rule, but that rule, as shown by the Goodsitt and Smith cases, does not prevent the appellee from recovering its share of the profits arising from its joint venture with Bursten. See also Stein v. Soref, 255 Wis. 42, 38 N.W.2d 3; Scharabok v. Murphy, D.C.E.D.Wis., 180 F.Supp. 1.

The case was first set for trial on March 8, 1960. Walter J. Sawyer had come to Florida for the trial. He was President and one of the stockholders of the corporation which he and his family controlled. He acted for the corporation in its dealings with Bursten. The plaintiff moved for a continuance on the ground that its counsel would be engaged...

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