Cartier v. Hengstler

• Decision Date: 24 November 1924
• Docket Number: 2
• Citation: 266 S.W. 304,166 Ark. 303
• Parties: CARTIER v. HENGSTLER
• Court: Arkansas Supreme Court

266 S.W. 304

166 Ark. 303

CARTIER v. HENGSTLER

No. 2

Supreme Court of Arkansas

November 24, 1924

Appeal from Ouachita Chancery Court, Second Division; George M LeCroy, Chancellor; reversed.

Decree reversed and cause remanded.

Gaughan & Sifford, for appellants.

1. The parties were tenants in common, not partners nor joint adventurers in the purchase and sale of the lands in controversy, and, such being the case, appellee had no cause of action. Appellee cannot contend that there was a written agreement between him, Rath and Cartier, that neither of them should sell or dispose of his interest in the lands without the consent of the others, and an oral agreement to that effect would have been void as in violation of the statute of frauds. C. & M. Dig., § 4862. Before the purchasers would have become partners or joint adventurers, there must have been some agreement, either expressed or implied, to do something more than merely to purchase the lands. As to joint adventures and limited partnerships, see 27 N.Y.S. 285; 101 N.Y.S. 22; 30 Cyc. 751-752; 23 Cyc. 453. The facts in this case do not create the relationship of partners any more than the facts in the case of Pumphreys v Furlow, 144 Ark. 219. See also 97 Ark. 390; 91 Ark 26.

2. Appellee's allegation that Lucy Rath is not an innocent purchaser, that the conveyance by her and the German Lutheran Synod to Cartier, and by the latter to her, were without consideration, and was merely a scheme to place title in her is denied by the appellant, and the burden therefore is on the appellee to prove by a clear preponderance of the evidence that she is not an innocent purchaser. 35 Ark. 100; 4 Ark. 296; 132 Ark. 158; 39 Cyc. 1785, 1786; 23 Ark. 735.

James F. Lawrence, C. W. German, and Lee C. Hull, for appellee.

If the parties were mere tenants in common, which is denied, that would not be any justification for practicing upon Hengstler a fraud such as the record discloses. These parties were, however, joint adventurers, as is amply supported by the following authorities: 88 Ark. 373, 114 S.W. 714; 36 Nev. 623; Am. Cases, 1916A, 1202; 121 Minn. 192, 141 N.W. 108; 65 W.Va. 493; Am. Cases 1018, and note: 146 Wis. 130, 131 N.W. 339; 133 N.W. 288; 110 P. 705; 68 W.Va. 317, 69 S.E. 1000; 47 W.Va. 63; 15 R. C. L. 500-508; 27 N.Y.S. 785. The contention that the heirs or legatees of William Rath could take title to, or an interest in, these lands, as innocent purchasers for value, under the facts in evidence, is not worthy of consideration. See to the contrary 121 Minn. 192, 141 N.W. 108, Am. Cases 1914C 689; 78 N.J.Eq. 270, 79 A. 419; 122 N.Y.S. 680. Differing materially from a partnership, the rule as to co-adventures is that it is not necessary to prove a partnership agreement, but the only prerequisite is that the individuals associate themselves together for a common purpose for their common good. 152 N.W. 43. And the co-adventurers are bound to exercise the highest degree of good faith toward one another. 227 S.W. 370; 76 N.J.Eq. 592; 74 A. 130; 27 Wyo. 423, 200 P. 96; 117 Minn. 235, 135 N.W. 820; 130 Minn. 450, 153 N.W. 874; 212 N.Y. 507, 106 N.E. 321; L. R. A. 1915B, 160; 194 F. 577. The law not only exacts the utmost good faith, but it also forbids the accrual of any profit or advantage to one member of the adventure that is not shared by all. 165 Ia. 703; 194 F. 534; 121 Minn. 192; 152 N.W. 43; 212 N.Y. 507, 106 N.E. 321, L. R. A. 1915B, 160. A joint adventurer has the right to assume that his co-adventurer has acted in good faith in reporting the cost or sale of property, and is not chargeable with negligence if he relies on the latter's statements. 165 Ia. 703, 147 N.W. 164. He may recover from his associates secret commissions or rebates on purchase price retained by them, his proportionate share. 28 S. Dak. 239, 133 N.W. 288; 36 Nev. 623, 134 P. 461, 50 L. R. A. (N. S.) 1046; 78 So. 160. A joint adventure cannot be terminated at the will of a member. If no date is fixed for the joint adventure's termination, the agreement remains in force until its purpose is accomplished. 152 N.W. 43; 60 So. 591; 155 N.Y.S. 230. Where an agreement is made for the purchase and sale of real estate, it is not material whether the title is taken in the name of one adventurer or all. If it is taken in the name of one or more of the adventurers, it is impressed with a trust for the benefit of the joint adventurers and so continues until it passes into the hands of a bona fide purchaser. 121 Minn. 192, 141 N.W. 108; 117 Minn. 235, 135 N.W. 820. Where an enterprise has been launched and contributions made by parties who subsequently become delinquent, active steps to determine the undertaking must be made by those not in default, to exclude the delinquents from further participation, if it is intended to deny their right to share in the subsequent profits. 67 So. 591; 202 Ill.App. 563; 72 So. 365; 81 W.Va. 1, 94 S.E. 388; 129 Wis. 524, 109 N.W. 576.

OPINION

WOOD, J.

On the 24th of February, 1921, the plaintiff below (appellee here) instituted this action in the chancery court of Ouachita County against the defendants below (appellants here). The appellee alleged that all parties to the action were residents of Ludington, Mason County, Michigan. The appellee seeks to recover a one-third interest in about four thousand acres of land situated in Ouachita County, Arkansas, about three thousand of which he alleged in his complaint were purchased by himself, Warren A. Cartier and William Rath, all of the city of Ludington, Michigan, under parol partnership agreement entered into between them in January, 1902, for the purpose of purchasing the lands, and that about one thousand acres were purchased by Cartier and Rath in their own names. The lands are described in the complaint. The appellee alleged that on the 5th of June, 1912, Cartier and Rath, with the intent to defraud the appellee, negotiated a sale of the timber on the lands with one T. S. Grayson of Magnolia, Arkansas, for the sum of $ 95,000. Cartier represented to the appellee that, on the 12th of June, 1912, he had received an offer of $ 67,500 for the lands; that Cartier and Rath made representations to the effect that the partnership would receive a good profit by accepting the offer, and that, if they failed to accept it, it would result in a great loss, because the price of the timber would go down, and it was subject to be destroyed by fire, which representations Cartier and Rath knew to be false, and that they were made for the purpose of misleading the appellee; that the appellee had no special knowledge of the timber and lands, and relied upon these representations of Cartier and Rath, and joined with them in the execution of a deed to T. J. Gaughan for the express consideration of $ 67,500, which deed bore date of June 12, 1912, and was duly recorded June 17, 1912; that on June 12, 1921, Gaughan reconveyed the lands to Cartier for an alleged consideration of $ 95,000, which deed was also recorded on June 17, 1912; that on June 24, 1912, Cartier conveyed to Rath an undivided half interest in all the lands for the consideration of $ 47,500, which deed was recorded July 3, 1912; that the sale of the timber by Cartier to Grayson, negotiated on June 5, was finally consummated and the deed executed for the same on June 26, 1912, which deed, at the request of Cartier and Rath, Grayson did not have recorded; that, after these transactions, Rath died, September 13, 1916, and appellant Ostendorf was named as executor of his will; that the will devised Rath's interest in the lands to the German Lutheran Synod of certain States, subject to a life estate in his wife; that these lands were conveyed by the synod and his wife to Cartier on July 18, 1918, and Cartier, on the 8th of August, 1918, conveyed an undivided half interest to Lucy Rath for the alleged consideration of $ 5,000, all of which deeds were duly recorded in Ouachita County; that Cartier deliberately misled the appellee by representing that all the lands described in the complaint were to be included in the deed to Gaughan, whereas some 1,000 acres which had been purchased in the name of Cartier and Rath were not included in the deed, but were conveyed in a separate deed to Gaughan for an alleged consideration of $ 27,500 on June 12, 1912, which deed was also recorded on June 17, 1912. The appellee further alleged that he had no knowledge of the circumstances surrounding the conveyances to Gaughan and the negotiations for sale of the timber to Grayson until these circumstances were brought to his knowledge by the representatives of a certain oil company, during the latter days of September, 1919. The appellee further alleged that the title to the lands appeared in Cartier and Lucy Rath, and that they were about to sell the same, and would do so unless restrained; that they were indebted to the appellee in the sum of $ 5,000, balance due him from the partnership on account of the sale of the timber. Appellee prayed for an accounting of the partnership dealings and transactions, that he have his proportion of the proceeds of the sale of timber found to be partnership funds, that Cartier and Mrs. Rath be required to convey their interest in the lands, and that the lands be partitioned according to the interests of the respective parties, and that they be enjoined from conveying or incumbering the lands in any manner, and for such other and further relief as in a court of equity he was entitled to.

The appellants denied that there was any partnership between Cartier, Rath, and the appellee. They admitted the purchase of a large body of the lands in controversy by them with the appellee, but alleged that these lands were not purchased by them as partners, but were held and purchased by...