Greenberg v. Alter Co.

• Decision Date: 12 November 1963
• Docket Number: No. 50632,50632
• Citation: 255 Iowa 899,124 N.W.2d 438
• Parties: HARRY GREENBERG, Appellee, v. ALTER COMPANY, an Iowa Corporation, Appellant.
• Court: Iowa Supreme Court

Page 438

124 N.W.2d 438

255 Iowa 899

HARRY GREENBERG, Appellee, v. ALTER COMPANY, an Iowa Corporation, Appellant.

No. 50632.

Supreme Court of Iowa.

Nov. 12, 1963.

Margaret Stevenson, Lambach, Shorey & Plath, Davenport, for appellant.

Doerr, Dower & Rehling, Davenport, for appellee.

THORNTON, Justice.

Plaintiff and defendant, Alter Company, a corporation, entered into a joint venture in June of 1950 to purchase steel landing mats from the General Services Administration. The intention of course was to resell the same at a profit. Approximately $117,000 was paid for 4,600 tons of steel landing mats. From June, 1950, to May 25, 1953, approximately 1,300 tons of the mats were disposed of by the joint venturers for about $99,000. It was then agreed in writing by the parties to dissolve the joint venture and liquidate the remaining mats, about 3,300 tons, by a public auction sale to be held June 12, 1953, at the place of business of the Alter Company in Davenport. Defendant Alter Company purchased the remaining mats for $30 per ton or approximately $99,000.

Plaintiff's action is in two counts, the first to set aside the sale and defendant be made to account for the sums received for the mats defendant obtained at the sale or for the return of the mats. By amendment at the close of the evidence plaintiff asked for general equitable relief. Under this amendment plaintiff urges the defendant, because of the relation of joint venturers, stood in a fiduciary capacity and could not purchase at the auction sale without full disclosure, and the burden is on defendant to show the sale and price paid were fair and reasonable, and that it is entitled to judgment for the value of the mats placed at $65 per ton by Mr. Greenberg in his testimony. In the second count plaintiff asked a general accounting of funds of the joint venture and for general equitable relief.

The trial court corrected the accounting to date of the auction sale, set aside the sale on the grounds of mistake or misunderstanding of the term 'cash' as it appeared in the dissolution agreement, and ordered the defendant to account for the mats received at the auction sale.

Defendant for reversal urges the sale was held and conducted in accordance with the dissolution agreement and plaintiff is guilty of laches. Plaintiff seeks to sustain the setting aside of the sale on the theory of a fiduciary relation and in its cross appeal urges the court erred in allowing certain expenses, in ordering further accounting, and failed to enter judgment for plaintiff for the value of the mats.

I. The fiduciary relation between the parties as claimed by plaintiff has a pleading weakness as urged by defendant, in that this theory of recovery was not disclosed by the pleadings at least until the amendment at the close of the evidence. We think, however, the better answer to plaintiff's claim of fiduciary relation and the consequent burdens and duties cast on defendant is that it is inapplicable to the dissolution sale before us. There is no question but joint venturers like partners owe the duty of finest loyalty and such loyalty continues throughout the life of the venture and its dissolution. Johanik v. Des Moines Drug Co., 235 Iowa 679, 685, 17 N.W.2d 385; Goss v. Lanin, 170 Iowa 57, 65, 152 N.W. 43; and Joseph v. Mangos, 192 Iowa 729, 732, 185 N.W. 464. But here the reason for holding one joint venturer in a fiduciary or agency relation ceases. This is not a sale made by one joint venturer to himself of which his partner has no knowledge or incomplete knowledge or the purchaser is better informed than his partner. Here plaintiff and defendant had been trying to dispose of these landing mats for three years. Each had been selling and according to the evidence each had been exerting great effort to effect more sales. They agreed in writing to dissolve the venture and dispose of the mats at public auction. It is true this agreement was more or less at the insistence of defendant, but plaintiff did so agree and took part in the sale. The evidence shows defendant disposed of the mats after the sale in much the same way as plaintiff and defendant had and finally disposed of the remaining mats as scrap metal, thus showing no profitable knowledge on his part unknown to plaintiff. However, our decision does not rest there. But on the ground this was a public sale authorized by the joint venturers with the intention on the part of both to dispose of the property as joint venture property, and conducted by an auctioneer and clerk hired by both. It is similar to a sale by a trustee for the benefit of creditors, of partnership assets, Johnson v. Bruzek, 142 Minn. 454, 172 N.W. 700, 701, or a sale by the personal representative of a deceased partner to a surviving partner, Valentine v. Wysor, 123 Ind. 47, 23 N.E. 1076, 1079, 7 L.R.A. 788. Such a sale may be questioned only for fraud or collusion.

II. This leads to the principal question, was the sale conducted in accordance with the dissolution agreement? If it was, plaintiff has no complaint; if it was not and he was thereby damaged, he is entitled to relief.

The trial court held there was a misunderstanding as to the meaning of the term 'cash', that the parties understood it differently. And the effect of the requirement of cash payment prevented a competitive sale.

The dissolution agreement provided for the public auction sale at the Alter Company in Davenport where the mats were located, all sales shall be for cash, that the sale was to be conducted by representatives of both parties, or if they agree, by a disinterested person selected by them, and clerked by a Davenport bank. Paragraph 6 provided the bidder shall deposit with Davenport Bank & Trust Company (bank selected as clerk), 'to be held in escrow pending his withdrawal of whatever quantity of such landing mats the bidder may have purchased. The bidder shall remove on a first come, first served basis the quantity of mats purchased, within thirty (30) days from the date of sale and in so doing shall effect such removal so as not to interfere with the ordinary operations of the Alter Company.'

Paragraph 8 provided the purchasers should as they remove mats deliver to Alter Company a receipt showing tonnage and the bank on Alter Company producing such receipt release to Alter Company the funds to cover the purchase price of quantity received. It further provides if the mats are not removed within 30 days, the sale shall be deemed completed and title to have passed and Alter Company shall be entitled to the purchase price from the bank and in the event the purchaser was prevented from removing the mats because of circumstances under the control of Alter Company such purchaser could notify the bank and the funds would then be released only after notice to the purchaser and bank by Alter Company the mats were ready for delivery.

In interpreting a contract words should be given their plain ordinary meaning and interpreted in the context in which used. The entire contract is to be considered to determine the meaning of each part. A clause or sentence is not assumed to have no effect when it can have reasonable intendment. Mallinger v. State Farm Mutual Automobile Insurance Company, 253 Iowa 222, 233, 111 N.W.2d 647, 653; Nylander v. Nylander, 221 Iowa 1358, 1360, 268 N.W. 7; Hubbard v. Marsh, 241 Iowa 163, 166-168, 40 N.W.2d 488; 17 A C.J.S. Contracts §§ 297, 301 pp. 107-128, 142-147; and 12 Am.Jur., Contracts, § 236, pp. 758-762, and § 241, pp. 772-776.

The term 'cash' is the antonym of credit. 6 Words & Phrases p. 247. It, of course, includes coins and currency and we think properly includes a cashier's check, a primary obligation of the bank, and a certified check, recognized by the bank as an appropriation of the amount specified therein to the named payee. 1963 Pocket Part, 6 Words & Phrases 94, 99, 164. Plaintiff testified '* * * the sale was advertised for cash or certified check.' The language used in paragraphs 6 and 8 shows a clear intent the amount of the bid be placed in escrow prior to the time of the removal of the mats by the bidder. Certainly these provisions for deposit in escrow and use of receipts for Alter Company to obtain the funds from the bank were wholly unnecessary if the purchase price was to be paid on the day of delivery. The only reasonable time for deposit of the amount of a bid was at the sale.

The evidence for both parties shows the terms of the auction sale were announced. The announcement contained a provision requiring cash or certified check to be paid at the time of sale. Both parties agree on this and that Mr. Greenberg complained about the terms as announced. Plaintiff's evidence shows the announcement also contained a provision that if a bidder did not meet the condition of cash or a certified check the mats would be resold and the bidder held for the loss in the two bids. Mr. Greenberg testified on this phase of the sale as follows:

'* * * and onyone who bid on a lot of mats and didn't meet these conditions, the mats would be resold and the bidder held for the difference in the loss in the two bids. As soon as they bid the lot of mats they would have to sign that stipulation. They had a bunch of papers written out in the office in advance that I knew nothing about. I had never seen it done in my life at any sale. Whoever bid on these mats would have to sign this stipulation to meet the conditions of the sale, cash or certified check.'

In this regard the evidence is in sharp dispute. The trial court made no separate finding on this. The best that can be said is the evidence is in equipoise. Therefore plaintiff has not carried the burden of proof by a preponderance of the evidence.

In this state of the record we hold the announcement of the terms of the sale was in accord with the terms of the dissolution agreement and the sale was so conducted.

The only two bidders were Mr. Greenberg and Mr. Alter for Alter Company....