Donahue v. Davis

CourtUnited States State Supreme Court of Florida
Writing for the CourtSEBRING; ROBERTS, C. J., and THOMAS, J., and PATTERSON
Citation68 So.2d 163
PartiesDONAHUE et al. v. DAVIS et al.

Page 163

68 So.2d 163
DONAHUE et al.
v.
DAVIS et al.
Supreme Court of Florida, Special Division B.
Sept. 22, 1953.
Rehearing Denied Dec. 4, 1953.

Page 164

Anderson & Nadeau, Miami, for appellants.

Sibley & Davis, Ellis, Ervin & Wakeman and W. F. Parker, Miami, for George N. Davis and Joseph O'Connell in proper person for Joseph O'Connell and O'Connell Inv. Co., appellees.

R. P. Terry, Miami, for intervenor Marion Brooks.

SEBRING, Justice.

The appellants, who were the plaintiffs in the court below, instituted this suit in the Circuit Court of Dade County, Florida, against the appellees for the purpose of establishing a joint venture contract alleged to have been entered into by the parties and for an accounting. The decree in the cause was in favor of the defendants and the plaintiffs appealed.

The complaint in the cause alleged, in substance, that early in 1945 the defendands, George N. Davis and Joseph O'Connell, induced the plaintiffs to participate in a joint venture, the object of which was the purchase and sale of a certain tract of real property at a profit. The O'Connell Investment Company was incorporated as a Florida corporation by the individual plaintiffs and defendants for the express purpose of acquiring and holding title to the lands acquired in the venture for the benefit of the four parties. As part of the contract between the parties it was agreed that each of them would contribute one-fourth of the purchase price for the property and receive one-fourth of the capital stock of the corporation. Pursuant to this arrangement the land was acquired and deeded to the corporation.

The defendant George N. Davis represented to his coadventurers that he had acquired title to the land at a price of $15 an acre, and agreed that he would convey the land to the corporation for the consideration he had paid for it, the amount paid by him to be adjusted to his contribution of one-fourth of the purchase price. Based upon the representations as to the cost thereof, the land was conveyed to the corporation for a stated consideration of $18,900, one-fourth of which was to be contributed by each of the parties to the agreement. The plaintiffs each contributed $4725 to the venture, and with these funds plus a relatively small contribution made by O'Connell, the land was purchased.

The representations made by Davis that he owned the property and had paid for it the sum of $15 an acre was false. In truth, he was not the owner of the land at the time but had a mere oral understanding with the owner that he might purchase the land at a price of $9 an acre. By virtue of his breach of duty in failing to apprise his coadventurers of the true facts, and by reason of his making a secret profit out of the deal by purchasing from the owner at $9, instead of $15, an acre, Davis forfeited any right to any profits that he may have realized on the transaction by O'Connell Investment Company and forfeited any right to participate on an equal basis with the plaintiffs in the assets of the O$Connell Investment Company, or the shares of stock of the corporation, acquired pursuant to the joint venture.

The defendant, Davis, at the time of the sale of the lands to O'Connell Investment Company pursuant to the joint adventure, secretly charged a commission for the sale of the land to the corporation. By virtue of his failure to apprise his coadventurers of this fact, Davis forfeited, in addition to the right to profits, any right to the commission on the sale of the lands.

The defendant Joseph O'Connell knew of the breach of trust perpetrated by Davis

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and plaintiffs believe that he participated in said breach, thereby forfeiting any profit which accrued to O'Connell Investment Company from the acquisition of the land subsequently transferred to the corporation at $15 an acre, and the right to one-fourth of the stock of the corporation.

The prayer of the complaint was for an accounting between the parties as to the contributions made by each, and that the individual defendants be adjudicated to have no interest in the lands, or, in the alternative, that the defendants be adjudicated to be trustees of the stock for the plaintiffs and be required to transfer their stock to the plaintiffs in the measure of the respective capital contributions of the parties.

The defendant Davis filed an answer to the complaint in which he admitted that the plaintiffs each contributed $4725 to the capital of O'Connell Investment Company, and that in purchasing the land from the owner he paid less than $15 an acre. He denied that a joint venture existed among the parties or that there was any agreement as to the amount of capital each was to contribute. He alleged upon information and belief that the defendant Joseph O'Connell had contributed only $900 toward the purchase of the land. He also averred 'that in that certain cause now pending * * * styled George N. Davis vs. O'Connell Investment Company, et al., Chancery Cause No. 104824-B, this defendant, by final decree entered, has been decreed to be the owner and holder of one-fourth of the outstanding capital stock of the O'Connell Investment Company, and that each and every other issue raised in the bill of complaint filed in this suit has been thereby settled and adjudicated, and this defendant, therefore, shows * * * that each and every issue raised or attempted to be raised in this litigation is accordingly res adjudicata.'

The defendant O'Connell filed an answer to the complaint in which he denied that he had induced the plaintiffs to participate in a joint venture and that Davis had represented that he had acquired title to the lands and would convey the lands to the corporation for the consideration he had paid for it, but that the true facts were that Davis, at all time, represented to the plaintiffs and to him, O'Connell, that the sale of the property to the corporation was to be from the true owner and not from him, Davis. He also averred that Davis had falsely represented to the plaintiffs and to him, O'Connell, that the purchase price of the land was to be $15 an acre, and that based on these false representations as to cost he and the two plaintiffs each contributed $4725; that he contributed his $4725 by paying to Davis the sum of $1935 in cash, by receiving a credit from Davis in the sum of $900 money then due and owing to him by Davis, and by receiving a credit from Davis in the sum of $1890, as a commission on the sale of the land involved. Finally, he alleged that Davis had informed him that the land was being purchased at a price of $15 an acre, or $18,900 for the whole; that a commission had been allowed by the true owner to Davis and that Davis would in turn give the commission of $1890 to O'Connell, provided he, O'Connell, would pay the balance of one-fourth of the purchase price of the property and procure a purchaser for the other one-half interest, which he did (the plaintiffs being the purchasers); that Davis would then contribute an equal amount for the purchase price of the property, and that a deed would be taken in the name of O'Connell Investment Company; that O'Connell had induced the plaintiffs to contribute one-half of the alleged purchase price; that Davis had paid only $11,367 for the property and had contributed nothing to the transactions; and that Davis had thereby made a secret profit.

The cause thus being at issue on the complaint and answers a special master was appointed to hear the evidence and to make findings. After all evidence had been submitted the master filed a full and comprehensive report in which he found substantially as follows:

1. A fiduciary or confidential relationship existed between the parties and in

Page 166

connection with the acquisition of the land each was acting as the agent of and for the others.

2. A joint venture existed between the parties for the purchase of the property from the owner, a Mrs. Price, through the medium of O'Connell Investment Company.

3. Davis breached his trust to the remaining coadventurers and hence holds his 25% of the stock of the corporation as trustees for the others.

4. Davis was under a duty to disclose to the other parties to the transaction every fact which might in any way influence their judgment, and his failure to do so, and his withholding of material information from the other parties, operated as a legal or constructive fraud against them.

5. Davis represented the purchase price of the property as being $15 an acre, or $18,900, whereas the actual consideration received by the owner for her deed conveying the property to O'Connell Investment Company was $11,232.31.

6. Davis represented that each of the parties was to contribute toward the purchase of the property the sum of $4725. Plaintiffs Donahue and Kilburn each paid this amount to Davis. The defendant O'Connell paid to Davis $1935 in cash, the sum of $900 represented by credits for money due by Davis to O'Connell, making in total cash or its equivalent, the sum of $2835.

7. O'Connell breached his trust to the plaintiffs by not disclosing to them the manner by which he undertook to pay for his proportionate share of the adventure, and his failure to make such disclosure made him trustee to the plaintiffs for the number of shares of stock held by him which were represented by the $1890 commission for which he claimed credit.

8. Davis paid nothing for his stock in the corporation. In addition to this stock, Davis received from Donahue, Kilburn and O'Connell in excess of the purchase price the sum of $1025.69.

9. Equity should restore the parties by reallocating the stock to each party in the ratio that his actual contribution bore to the actual purchase price of the property.

The defendant Davis filed exceptions to the master's report. These were sustained at final hearing and a decree containing the following findings was rendered in favor of the defendants:

1. In the summer of 1945, the defendant,...

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75 practice notes
  • First Union Nat. Bank v. Turney, No. 1D00-2803.
    • United States
    • Court of Appeal of Florida (US)
    • November 26, 2001
    ...disclosure to the beneficiary of all material facts. Breaches of this duty of disclosure have been held to be fraud. See Donahue v. Davis, 68 So.2d 163, 171 (Fla. 1953). See also Restatement (Second) of Trusts § 170(2) (1957) ("The trustee in dealing with the beneficiary on the trustee......
  • In re Jet 1 Center, Inc., Bankruptcy No. 9:03-BK-26514-ALP.
    • United States
    • United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida
    • February 15, 2005
    ...Inc., 861 So.2d 74, 76 (Fla. 4th DCA 2003) (citing Hittel v. Rosenhagen, 492 So.2d 1086, 1089 (Fla. 4th DCA 1986); Donahue v. Davis, 68 So.2d 163, 169 In addition, in support of its position the Debtor contends that the doctrines cannot apply because the decision of the Circuit Court in the......
  • Plantation Key Developers, Inc. v. Colonial Mortg. Co. of Indiana, Inc., No. 76-3055
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • February 6, 1979
    ...94 Fla. 403, 114 So. 431, 433 (1927). Both the option and the underlying contract must be supported by consideration. Donahue v. Davis, 68 So.2d 163 (Fla.1953); Koplin v. Bennett, 155 So.2d 568 (Fla. 1st DCA 1963). In this case, the consideration for the option to bind Colonial to a six mon......
  • State Com'n on Ethics v. Sullivan, No. AL-13
    • United States
    • Florida District Court of Appeals
    • April 19, 1983
    ...seen from the styles of these cases, there was no identity of persons and parties and, thus, no issue of res judicata. Donahue v. Davis, 68 So.2d 163 (Fla.1953). The quoted words from Schooley lend themselves to misapplication, but we have no quarrel with its holding that, in the stare deci......
  • Request a trial to view additional results
75 cases
  • First Union Nat. Bank v. Turney, No. 1D00-2803.
    • United States
    • Court of Appeal of Florida (US)
    • November 26, 2001
    ...disclosure to the beneficiary of all material facts. Breaches of this duty of disclosure have been held to be fraud. See Donahue v. Davis, 68 So.2d 163, 171 (Fla. 1953). See also Restatement (Second) of Trusts § 170(2) (1957) ("The trustee in dealing with the beneficiary on the trustee......
  • In re Jet 1 Center, Inc., Bankruptcy No. 9:03-BK-26514-ALP.
    • United States
    • United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida
    • February 15, 2005
    ...Inc., 861 So.2d 74, 76 (Fla. 4th DCA 2003) (citing Hittel v. Rosenhagen, 492 So.2d 1086, 1089 (Fla. 4th DCA 1986); Donahue v. Davis, 68 So.2d 163, 169 In addition, in support of its position the Debtor contends that the doctrines cannot apply because the decision of the Circuit Court in the......
  • Plantation Key Developers, Inc. v. Colonial Mortg. Co. of Indiana, Inc., No. 76-3055
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • February 6, 1979
    ...94 Fla. 403, 114 So. 431, 433 (1927). Both the option and the underlying contract must be supported by consideration. Donahue v. Davis, 68 So.2d 163 (Fla.1953); Koplin v. Bennett, 155 So.2d 568 (Fla. 1st DCA 1963). In this case, the consideration for the option to bind Colonial to a six mon......
  • State Com'n on Ethics v. Sullivan, No. AL-13
    • United States
    • Florida District Court of Appeals
    • April 19, 1983
    ...seen from the styles of these cases, there was no identity of persons and parties and, thus, no issue of res judicata. Donahue v. Davis, 68 So.2d 163 (Fla.1953). The quoted words from Schooley lend themselves to misapplication, but we have no quarrel with its holding that, in the stare deci......
  • Request a trial to view additional results

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