Bradbury v. Nagelhus

• Decision Date: 06 December 1957
• Docket Number: No. 9532,9532
• Citation: 132 Mont. 417,319 P.2d 503
• Parties: W. H. BRADBURY, Plaintiff and Appellant, v. I. NAGELHUS, also known as Ingvald Nagelhus, Borghild Nagelhus, et ux., et al., Defendants and Respondents.
• Court: Montana Supreme Court

Page 503

319 P.2d 503

132 Mont. 417

W. H. BRADBURY, Plaintiff and Appellant, v. I. NAGELHUS, also known as Ingvald Nagelhus, Borghild Nagelhus, et ux., et al., Defendants and Respondents.

No. 9532.

Supreme Court of Montana.

Submitted Sept. 18, 1957.

Decided Dec. 6, 1957.

Burns & Thomas, Chinook, for appellant. Harry L. Burns, Chinook, argued orally.

Hauge & Hauge, Havre, for respondents. Oscar C. Hauge, Havre, argued orally.

CASTLES, Justice.

This appeal arises out of a dispute between long-time neighboring ranchers who signed a writing, agreeing to become 'equal pardners [sic] in the purchase' of adjoining grazing leases and ranch lands. Technically, what they undertook is the form of quasi-partnership activity called a joint adventure. Inter se, joint adventurers are obligated as trustees. The litigation which developed is brought on the theory of a constructive trust.

The parties began their venture by each contributing $1,000 to bind a $19,500 one-year purchase option covering the lands and leases. They optioned without water, planning to obtain that separately through litigation they proposed to finance in the sellers' names. They forfeited the option and the $2,000 total option payment, but they continued their joint activities even, in one respect at least, beyond the date the present suit was filed.

The option was forfeited approximately three months before the water litigation was heard and about twelve months before decree was subsequently entered denying water to the land. Within about nine months thereafter, one party bought all the land and leases, but solely for himself. He paid $14,000 cash. This, of course, becomes a total purchase price of $16,000 as between these parties if the forfeited option down payment is considered. To disregard it, disregards good faith.

The 'pardner' who purchased all for himself is the principal defendant and respondent. He argues that after the option was forfeited he was free to deal for himself alone because the other 'pardner' later failed to raise his part of the money needed to complete the purchase price. This reasoning is somewhat inverse. But granting the assumption, the argument still ignores the irrevocable nature of a trust, the joint adventure proposed by the writing between the parties and their many actions, both before and after the option expired, in furtherance of their agreement, and the bargaining advantage arising to an optionee as ultimate buyer from the fact that although forfeited the $2,000 paid to bind the option had nevertheless reduced the balance of the price.

The other 'pardner' insists that he has always been willing and able to pay his portion of the purchase money. He is the plaintiff and appellant. He testified he could have secured the funds he would have needed through a Federal Land Bank purchase money loan he had been assured he could obtain. The record clearly indicates that he was never given a final opportunity to join in payment of the reduced final purchase price after it was decided. His statements were denied by the defendant, but were not otherwise rebutted. Neither side called corroborating witnesses on the point.

The plaintiff was not sustained in the district court. He now appeals praying that defendants be ordered to account to him as constructive trustees, and that an undivided one-half interest in the lands and leases be conveyed to him by them or by the court. He alleges he stands ready to pay whatever is his portion of the $14,000 purchase price as finally determined by the accounting.

The 'pardner' who purchased all for himself took title jointly with his wife, and they in turn gave their son a deed to a portion of the property covered by the purchase. The wife and son are donees, are joined as defendants and are controlled by their donor's actions. R.C.M.1947, § 86-313; Davidson v. Stagg, 94 Mont. 272, 279, 22 P.2d 152. Hereafter they are included with him under the single term respondent, the husband and father being called, when clarity requires, the principal respondent.

Except that the principal respondent purchased solely for himself and except that he has kept crop income from the property and all gas and oil rentals paid under a lease he negotiated with one of the major oil companies some eighteen months after he purchased all for himself, the actions both of respondent and of appellant have been throughout preponderantly those of quasi-partners engaged in a joint adventure and obligated inter se upon an involuntary trust. A summary of the pertinent testimony clearly shows this.

These men originally contributed equal amounts of capital to the venture. They optioned and they proposed to purchase in respondent's name and they also leased from the owners in respondent's name pending purchase, but the record shows that the option and the lease were intended for the benefit of both. They offered to deal jointly and they dealt jointly with third parties. They jointly leased out land as prospective joint purchasers. They mutually contributed labor and expenses, joined in financing the water litigation, jointly bought and used haying machinery, divided crops shared soil conservation checks and periodically made settlements between themselves. Respondent paid all the purchase money and all taxes. Appellant paid some of the state grazing fees. They tacitly made a sectionline division of some of the property they hoped to buy, still recognized between them even as late as the time their dispute was tried to the district court. The record contains credible testimony, although disputed, that respondent refused tender by appellant of at least some part of appellant's portion of the purchase price ultimately paid, and, according to appellant, once accepted interest from appellant on it. Discussing a joint adventure which similarly had ended in litigation, the late Justice Claude Morris, earlier a banker, wrote: 'It is not usually considered an act of generosity to lend money when interest is collected on the amount let out.' Snider v. Carmichael, 102 Mont. 387, 413, 58 P.2d 1004, 1013.

Respondent disputed all this. He also denied the testimony of appellant's wife that respondent admitted his buying all the leases and lands solely for himself 'wasn't just right', and he disputed her testimony that respondent excused his action by saying the land 'had come up in value and that he wanted to keep it.'

However, respondent's own admissions show that he considered appellant 'in on the deal' up to the time in October 1950 when, according to respondent, appellant refused to raise his half of the purchase money, although respondent insisted he did not consider appellant in on the deal thirty days thereafter when respondent bought all for himself. But to other questions he replied that if appellant 'could have raised the money I would have shared the land with him.'

Respondent's wife also denied that her husband had ever admitted any guilt of conscience, but when asked by respondent's own counsel if she, respondent's wife, had heard her husband tell appellant that he (respondent) had paid for the land and had decided to keep it for himself she answered, 'Yes, sir.'

The venture was undertaken on January 19, 1948. The one-year option is dated February 16, 1948, and was forfeited one year later. The water suit was filed during 1948 and heard in May of 1949. The decree denying water to the land was entered on February 28, 1950. Respondent testified that by the end of October, 1950, he had determined to go forward alone in the purchase after, so respondent insisted, appellant had told him he 'could not raise the money.' We have pointed out that nowhere is there testimony showing that respondent ever directly demanded, after the $14,000 price was decided, that appellant either produce purchase money or withdraw from the venture. Minimum considerations of good faith so require. R.C.M.1947, § 86-301 et seq.

As stated, respondent bought solely for himself in November 1950, taking title in his and his wife's names, and they immediately giving a portion of the land purchased to their son. The various deeds were recorded in February 1951. Respondent and his wife leased for oil and gas in May 1952, receiving first rental income of some $900 when the lease was signed. Respondent testified he told appellant in March of 1951 that he had deeds to all the lands, but denied there was other discussion. This is the record:

Question, by appellant's counsel: 'Did you have any conversation with him [appellant] about the deal, then? Did you tell him that he was out of it? A. We didn't have no conversation on the deal. I just told him I had it.'

This testimony was elicited by appellant's counsel from respondent as an adverse witness at the opening of the trial. Respondent's counsel seeks to minimize it by pleading respondent's deficiency in the use of the English language. But we note that later respondent stated unequivocally that it was June of 1952 before he definitely informed appellant that he (respondent) 'had paid for the land and was going to keep it'. Whether this definite disclosure was deferred by coincidence or by design, pending execution of the oil and gas lease is not made clear. Unexplained, the implications are most damaging to respondent.

On direct examination, appellant gave this version of the conversation occurring in October 1950 on which respondent testified he determined to purchase for himself alone, and which respondent now interprets as appellant's refusal to contribute appellant's portion of the final purchase price, although respondent insists he was free to purchase for himself from the time the option expired in February 1949: '[respondent] wanted to know the price he should offer * * * without the water rights, and I told him to offer * * * about fifteen or sixteen thousand dollars. * * * I told him I didn't have the cash to pay for it, but I had been talking with * * * [a local agent]...