Carey v. Humphries

• Decision Date: 13 January 1961
• Docket Number: No. 34789,34789
• Citation: 107 N.W.2d 20,171 Neb. 578
• Parties: William D. P. CAREY et al., Appellants-Cross-Appellees v. Frank E. HUMPHRIES et al., Appellees-Cross-Appellants.
• Court: Nebraska Supreme Court

Page 20

107 N.W.2d 20

171 Neb. 578

William D. P. CAREY et al., Appellants-Cross-Appellees v. Frank E. HUMPHRIES et al., Appellees-Cross-Appellants.

No. 34789.

Supreme Court of Nebraska.

Jan. 13, 1961.

Syllabus by the Court

1. A consideration by this court of a cause on appeal is limited to errors assigned and discussed, except the court may at its option note a plain error not assigned.

2. To constitute a partnership or joint adventure, in a legal sense, there must be an agreement to share the profits and losses, and an absence of mutual interest in the profits or benefits is conclusive that a partnership or joint adventure does not exist.

3. A joint adventure is in the nature of a partnership and exists when two or more persons contribute cash, labor, or property to a common fund with the intention of entering into some business or transaction for the purpose of making a profit to be shared in proportion to the respective contributions.

4. To constitute a joint adventure there must be an agreement to enter into an undertaking in the objects of which the parties have a community of interest and common purpose in performance, and each of the parties must have equal voice in the manner of its performance and control over the agencies used therein, though one party may entrust performance to another.

5. The existence of a joint adventure is a question of fact and the burden of establishing it is on the litigant who asserts its existence, and more evidence is required to prove the existence of a joint adventure if alleged joint adventure parties are the only litigants than where the controversy is between a third party and the joint adventures.

6. A broker is one who is engaged for others on a commission to negotiate contracts relative to property with the custody of which he has no concern.

7. The generally recognized equitable principle is that persons engaged in a common enterprise by way of a joint adventure or other similar association of persons stand, within the scope of the enterprise with respect to the property related to or employed in the enterprise or to matters pertaining to the enterprise, in a fiduciary relation each to the other and are bound by strict standards of good conduct and fair dealing the one to the other.

8. However, it is generally recognized that if a joint adventure or a like association of persons is formed for the acquisition, ownership, or development of certain defined property, the equitable rule above referred to will not be extended so as to forbid the acquisition, ownership, or development by one of the parties for his own benefit of property not owned by or concerned in the enterprise and which is outside of its scope.

9. The burden of proof is on one seeking to establish the existence of a constructive trust to do so by evidence that is clear, satisfactory, and convincing.

10. A constructive trust is a relationship with respect to property subjecting the person by whom the title is held to an equitable duty to convey it to another on the ground that an acquisition or retention of the property is wrongful and that he would be unjustly enriched if he were permitted to retain the property.

11. The law is that each case in which it is sought to establish a constructive trust must be determined from its facts and circumstances.

Halcomb, O'Brien & Everson, Kimball, for appellants.

Van Steenberg, Myers & Burke, Kimball, for appellees.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

BOSLAUGH, Justice.

Magnolia Petroleum Company, hereafter called Magnolia, was the owner of oil and gas leases covering the west half of the northwest quarter, the west half of the northeast quarter, and the south 58.13 acres of the east half of the southwest quarter of Section 17, and Lot 3 in Section 20, Township 12 North, Range 56 West of the 6th P. M., Kimball County, Nebraska, together with other lands not involved in this litigation. Magnolia proposed in writing to Dan Reinfried, designated herein Reinfried, that if he would commence on or before a stated date the drilling of an oil well to be located at a described location on Lot 3; would prosecute the drilling of the well with due diligence to a depth sufficient to test to the satisfaction of Magnolia the Skull Creek shale at an estimated depth of 6,700 feet unless oil or gas was produced in paying quantities at a lesses distance; would fully comply with all other provisions of the writing; and would complete the well within a reasonable time not later than 60 days from the date of the commencement of it, Magnolia would assign to Reinfried the described oil and gas leases to the extent and insofar as they covered the above specifically described land of about 240 acres more or less. The writing containing the offer of Magnolia to Reinfried stated it was not binding upon Magnolia until it was accepted by Reinfried as it was submitted to him as evidenced by his signature subscribed thereon and its return to Magnolia within 15 days from the date of the writing; and upon Reinfried's signing and returning it and three copies thereof within that time, the writing would constitute a valid and binding contract between Reinfried and Magnolia. Reinfried signed the writing under the words endorsed thereon: 'ACCEPTED in all its terms and conditions, this 28 day of January, 1958.' The offer made by Magnolia to Reinfried as stated above was subject to other definitely stated conditions and obligations not necessary to be recited herein because none of them are involved in this litigation.

Later Sinclair Oil & Gas Company, designated hereafter as Sinclair, offered Reinfried by an instrument designated 'Acreage Contribution Agreement. Our Lease No. 132 Kimball County, Nebraska' that if he commenced operations for the drilling of a well for oil and gas on or before a date stated upon a described location identical with the one designated by Magnolia and drilled it with due diligence to a depth sufficient to test the top of the Skull Creek formation anticipated in this vicinity at approximately 6,650 feet, then, upon being furnished by Reinfried with evidence satisfactory to Sinclair that such test well had been so commenced, drilled, and finally completed either as a producing well or plugged and abandoned as a dry hole on or before May 15, 1958, Sinclair would assign to Reinfried all its right, title, and interest in and to the east half of the southeast quarter of Section 17, Township 12 North, Range 56 West of the 6th P. M., in Kimball County, Nebraska. The offer of Sinclair to Reinfried as above recited was made subject to compliance by the latter with definitely stated conditions not necessary to be set forth herein because none of them are involved in this litigation. The instrument containing the offer of Sinclair to Reinfried provided it should not be binding on Sinclair unless its acceptance by Reinfried was noted on the instrument and it was returned to Sinclair within 15 days from its date. It was accepted and agreed to in writing, endorsed thereon, and signed by Reinfried on the fourth day after its date.

Shell Oil Company, identified herein as Shell, on the date Reinfried accepted the offer of Sinclair above referred to, offered in a writing designated 'Dry Hole Contribution' to contribute $6,500 toward the cost of drilling a test well by payment thereof directly to Braden provided the drilling of the well was completed as a dry hole, the test to be commenced not later than a date specified at a described location on Lot 3 and thereafter drilled with due diligence to a depth of 75 feet below the top of the Dakota 'J' sandstone or to a depth of 6,760 feet, whichever was first reached. Shell specified its offer was subject to other stated conditions but they are not repeated herein because none of them are involved in this litigation. The writing evidencing the offer of Shell was accepted and acted upon.

The Braden Drilling Company was a partnership. Robert G. Braden, hereafter referred to as Braden, was one of the two members of it. He was an active member of the Kansas Bar; resided and had his office in Wichita, Kansas; and he performed legal services for and participated in the activities of the partnership which maintained an office in Denver, Colorado, in charge of Jerry Slater, hereafter called Slater. Any acreage in the Denver-Julesburg Basin in which the partnership was concerned was held in the name of Braden for its convenience.

A letter was signed and transmitted by Braden to Reinfried in which recitals were made concerning the commitment of Magnolia and Sinclair to assign oil and gas leases to Reinfried and the commitment of Shell to contribute dry-hole money as above stated. The letter of Braden stated that it was to confirm the verbal agreement between him and Reinfried relative to the real estate described in the leases and was in substance as follows: Reinfried agreed to assign the acreage covered by the leases to Braden and they understood that Reinfried was to receive an overriding royalty equal to 4 percent of seven-eighths working interest in each of the tracts and a cash consideration of $500; the Braden was to receive a full seven-eighths working interest therein burdened only by the overriding royalty of Reinfried; that Braden was to have all the benefits of the dry-hole obligation of Shell as above recited herein, subject to the conditions recited in the agreement concerning it; and that the oil and gas well was to be commenced not later than March 9, 1958. Reinfried was asked by the letter, if it expressed his oral agreement with Braden, to sign and return one copy of the letter and retain the other copy of it. Reinfried attached his signature thereto under the words written on the original of the letter when he received it:

'ACCEPTED this 4th day of February, 1958.'

The time of the commencement of the oil and gas well was by agreement of the...