Grannell v. Wakefield, 38565

• Decision Date: 12 April 1952
• Docket Number: No. 38565,38565
• Citation: 172 Kan. 685,242 P.2d 1075
• Parties: GRANNELL v. WAKEFIELD.
• Court: Kansas Supreme Court

Page 1075

242 P.2d 1075

172 Kan. 685

GRANNELL v. WAKEFIELD.

No. 38565.

Supreme Court of Kansas.

April 12, 1952.

As Corrected May 15, 1952.

Rehearing Denied May 15, 1952.

Syllabus by the Court.

1. In an action of equitable character a court cannot shift its responsibility to an advisory jury and the latter's findings are not conclusive. The ultimate duty rests on the court to determine the truth of disputed facts. It may approve the jury's findings or disapprove them and make its own independent findings. If approved they are as effective as if made originally by the court.

2. Since the submission of factual issues to an advisory jury rests in the court's discretion it is likewise discretionary what issues or how many the court will submit to such a jury. Error in this respect, if any, lies only in abuse of discretion.

3. It is not reversible error to refuse to instruct on issues not submitted to an advisory jury where such issues would not aid the jury in determining the issue, or issues, submitted.

4. Where a court submits one specific question to an advisory jury, approves its finding and later makes the same finding independently, error in instructions to the jury, if any, or a refusal to give additional requested instructions does not constitute prejudicial or reversible error.

5. The mere designation of a relationship by the parties to an enterprise as a 'partnership' or a 'joint adventure' does not determine its true legal character.

6. An agreement that, in addition to a working salary and expenses, one of the parties shall also share in the profits of an enterprise does not alone transform a contract of employment into a partnership or a joint adventure. Sharing of profits may constitute merely additional compensation for services of an agent or employee.

7. The test of sharing losses in some types of partnership or joint adventure may be met by one person losing his financial investment and the other the value of his time, special knowledge and labor.

8. The requirement that joint adventures shall have a joint interest in property, where there is property to be held as a part of the venture, is satisfied if one of them holds an equitable interest therein while the other holds the legal title. But it is possible for one of them to have a sufficient equitable interest in an executed joint adventure, not based on joint ownership of property, to entitle him to an accounting of the profits.

9. While a partnership is ordinarily formed for the transaction of a general business of a particular kind, a joint adventure, as a rule, relates to a single or particular transaction although it may be conducted for a period of years.

10. A joint adventure was unknown at the common law, being regarded as within the principles governing partnerships. Although a joint adventure is not identical with a partnership it is regarded as being of a similar nature and is governed by the same rules of law.

11. A single definition of a partnership or a joint adventure which is accurate, comprehensive and exclusive for all purposes is extremely difficult. The existence of their essential elements, including the power of joint control, may be determined from the over-all facts, including an oral agreement, the conduct of the parties and the peculiar circumstances of each particular case.

12. The record in a suit for an accounting of profits alleged to have resulted from a joint adventure in oil and gas well drilling operations, examined, considered and held: (a) The findings of the trial court that it was the purpose and intention of the parties to form a partnership specifically limited to 'the operations and profits from rotary drilling operations, and in fact was a joint venture', is supported by the evidence; (b) trial errors if any, do not affirmatively appear to have prejudicially affected defendant's substantial rights; and (c) substantial justice was done by directing an accounting.

J. B. McKay, of El Dorado, and D. Arthur Walker, of Arkansas City, argued the cause, and W. L. Cunningham, Wm. E. Cunningham, and William R. Howard, all of Arkansas City, and James B. McKay, Jr., of El Dorado, were with them on the briefs, for the appellant.

Harry O. Janicke, of Winfield, argued the cause, and J. A. Herlocker, of Winfield, was with him on the briefs, for the appellee.

WEDELL, Justice.

Plaintiff instituted suit for an accounting involving an alleged partnership or joint adventure in oil and gas drilling operations and for judgment on the amount found to be owing. The judgment decreed plaintiff, Tom Grannell, was entitled to an accounting. From that judgment the defendant, Earl F. Wakefield, has appealed.

The amount found due to appellee, if any, has not been determined. The trial court retained jurisdiction for that purpose.

Although appellant assigns various errors his fundamental complaints are (1) appellee's evidence failed to establish the agreement alleged in his amended petition; (2) his evidence established neither a partnership nor a joint adventure but a contract of employment; and (3) such contract made in May, 1944, during the war, provided for increased compensation to appellee of ten per cent of the net profits of the enterprise; it violated the Stabilization Act of 1942, 50 U.S.C.A.Appendix, § 961 et seq., and the rules and regulations issued pursuant thereto; it had not been approved by the federal authorities and was void.

In a previous appeal this court held the amended petition stated a cause of action for an accounting. Grannell v. Wakefield, 169 Kan. 183, 217 P.2d 1059. Appellant's third above contention was not advanced on the first appeal. However, as we understand it, that contention applies only to wages under a contract of employment and not to a partnership or joint adventure. We must, therefore, first determine appellant's contentions (1) and (2).

This being an equitable action the trial court called a jury in an advisory capacity. It submitted only one jury question. It was:

'Did the parties, plaintiff and defendant, enter into an oral contract substantially as claimed and as set forth in Number 3 of the instructions?'

That instruction was:

'The plaintiff in his amended petition and amendment thereto claims that on or about the first day of May, 1944, the defendant, realizing the possibility for profits in a widespread drilling operation, and the benefit to his own production business by having drilling outfits available under competent management, entered into, at that time, an oral contract and agreement with the plaintiff, wherein, under the terms of such agreement, it was provided that the plaintiff and defendant should for such length of time as was mutually agreeable to them conduct drilling operations, both for the defendant and for others; that it was specifically agreed that the defendant should advance all necessary funds needed for the purchase of equipment and for the operations to be conducted; that defendant should keep all books of account and should duly account to the plaintiff for all earnings.

'Plaintiff alleges that it was further agreed that from the proceeds realized and earned from the drilling operations that were to be conducted by the parties the plaintiff was to receive as a working salary the sum of $12 a day, plus $1 per day for automobile upkeep, and also his necessary and reasonable away from home expenses; that one-half of the office expense of the defendant pertaining to his oil and gas operations should be charged against the joint enterprise of the parties, as expenses; and that the defendant should draw the sum of $150 per month for his service rendered in accordance with said agreement, all of such sums should be charged against the profits realized and earned from the drilling operations conducted by the parties.

'Plaintiff alleges that the earnings from the drilling operations would include the usual and normal contract and current price for such drilling conducted individually by the defendant, as well as the earnings made upon drilling contracts with other persons; that all of the expense of operations, including the working salarly of the plaintiff and the defendant, as hereinbefore stated, were to be charged against operations, and from the net profits, subject to deductions, plaintiff was to receive ten percent of the net earnings and the defendant to receive 90 percent thereof; that the plaintiff was to act as general manager and superintendent of all of said drilling operations for and on behalf of the parties, and to charge such equipment and supplies as were necessarily required to the defendant; that the plaintiff was at all times referred to herein competent and skilled in the management of and the handling of rotary drilling operations; and that he fully conformed with and fulfilled the letter and spirit of said agreement.'

On the single question submitted the court, in substance, instructed the jury in harmony with our former opinion that it was unnecessary the agreement should have been reduced to formal terms but might be found from the circumstances and the mutual acts and conduct of the parties; it was, however, necessary the agreement be established substantially as alleged and that the burden of so establishing it and its performance, by a preponderance of the evidence, rested on appellee. The jury answered the single question submitted to it in the affirmative.

Appellant moved to set aside the verdict of the jury on the ground it was contrary to the law and the evidence. He also moved for judgment in his favor notwithstanding the verdict for the reason the pleadings and the uncontradicted evidence required such a judgment. He also filed a motion for a new trial. The trial court thereafter made and filed its own findings of fact and conclusion of law as follows:

'1. This is an equity case. A jury could not be demanded as a matter of right.

'2. The court called and empanelled a jury in an advisory capacity...