Harline v. Campbell, 19576

• Decision Date: 28 October 1986
• Docket Number: No. 19576,19576
• Citation: 728 P.2d 980
• Court: Utah Supreme Court
• Parties: Wesley G. HARLINE, Plaintiff and Respondent, v. Lewis E. CAMPBELL and Patricia Campbell, Defendants and Appellants.

Page 980

728 P.2d 980

Wesley G. HARLINE, Plaintiff and Respondent, v. Lewis E. CAMPBELL and Patricia Campbell, Defendants and Appellants.

No. 19576.

Supreme Court of Utah.

Oct. 28, 1986.

Thomas A. Quinn, Douglas Matsumori, Penny A. Rodeen, Salt Lake City, for defendants and appellants.

Richard W. Campbell, John Sampson, Ogden, for plaintiff and respondent.

HALL, Chief Justice:

Defendants appeal the judgment of the district court which determined that plaintiff and defendant Lewis E. Campbell ("Campbell") were engaged in a joint venture to develop and sell real property and that plaintiff had a protectible interest in the subject property. The central issue on appeal is that of the sufficiency of the evidence to support the judgment of the trial court.

The facts are not in material dispute. In 1978, Gary L. Carson Investment Co. ("Carson") executed three promissory notes and trust deeds in favor of Bank of America Mortgage ("BA Mortgage") to finance a residential development in Davis County. At the same time, Carson arranged through attorney Richard Richards ("Richards") a $125,000 letter of credit from plaintiff ("Harline") to BA Mortgage to insure completion of the project. Under this agreement, Harline was to be granted an undivided interest in the project or in the proceeds of the project if BA Mortgage drew upon the letter of credit, or a fee in the event BA Mortgage did not do so. Carson defaulted on the BA Mortgage debt. In November of 1978, BA Mortgage picked up the $125,000 letter of credit given by Harline and applied it to the Carson indebtedness. No interest in the property was ever conveyed to Harline or recorded.

BA Mortgage then filed a notice of default on all three trust deeds. On August 31, 1979, Campbell and Richards agreed with Carson that they would purchase the Carson obligation to BA Mortgage from BA Mortgage and, in exchange for a fee, give Carson a thirty-day grace period to repurchase the trust deeds. Campbell borrowed money and paid BA Mortgage $257,000. ¹ Campbell was then assigned the three promissory notes and trust deeds. Carson failed to make the required payments to Campbell. Campbell extended the due date for the payments, but Carson did not pay the fee or the money due under the three promissory notes. Campbell then directed Richards, as the trustee under the BA Mortgage trust deeds, to commence foreclosure proceedings. On March 11, 1980, Richards filed a notice of default on the BA Mortgage trust deeds. On April 11, 1980, Richards noticed a trustee's sale of the subject property for May 20, 1980.

However, subsequent to Carson's execution of the BA Mortgage promissory notes and trust deeds, Carson executed a promissory note to Daniel I. Dipo for $54,000, secured by a trust deed covering the subject property. This trust deed was recorded. Carson also defaulted on this note. Following this default, the trustee for the Dipo trust deed noticed a trustee's sale of the subject property. To prevent the sale, Campbell and Harline paid $42,300, on or before May 20, 1980, to secure assignment to Harline of the Dipo trust deed.

On May 20, Richards sold the property at public auction. Campbell attended and was the successful bidder. On the same day, Harline and Campbell executed an agreement. The agreement ("the May 20th agreement") defined the respective interests of Harline and Campbell ("the parties"). The trustee's sale on May 20 was subsequently held null and void by the court because it was conducted without allowing sufficient time to pass following the recording of the notice of default.

Efforts to refinance or sell the property were unsuccessful. On April 14, 1981, Campbell hand-drafted an amendment to the May 20th agreement which further outlined the respective and mutual interests of the parties and set forth their agreement to work together to protect their interests.

On November 5, 1981, Campbell gave notice by letter to Harline that he was disclaiming any further obligations to Harline and that he was going to foreclose on Harline's interest. The foreclosure sale was scheduled to be held March 29, 1982. On March 26, Harline brought this action to enjoin the scheduled foreclosure sale and for other equitable relief. Harline also secured a temporary restraining order which prevented the scheduled foreclosure sale of the subject property. Following a bench trial, the judge entered judgment in Harline's favor, determining that the parties were engaged in a joint venture and that Harline had a protected interest in the property. The judge also predetermined the amount and order of the disposition of proceeds to the parties in the event a sale to third parties should take place.

Under familiar rules of appellate review, the Court views the evidence in the light most favorable to the judgment of the trial court, ² and the findings of the trial court will not be disturbed unless there is no substantial record evidence to support them. ³ It is incumbent upon the appellant to marshal all of the evidence in support of the trial court's findings and to then demonstrate that even when viewed in the light most favorable to the factual determinations made by the trial court, that the evidence is insufficient to support its findings. ⁴ Application of those standards of review in the instant case prompts the conclusion that the trial court's findings have adequate evidentiary support and therefore should not be disturbed.

The May 20th agreement specifically acknowledged and defined the respective interests of the parties in the property and recited that "each party is desirous of protecting his own interest and displays a willingness to assist the other in protecting his interest." The agreement further recited that the "bidding in said property will be conducted by each of them ... in such manner as to protect the investment and potential profit of each of the parties," and that "each will cooperate fully with the other to insure that the initial investment together with all interest expense incurred by each of them and each of their anticipated profits will be paid."

The April 14th amendment drafted by Campbell again recited that "Campbell and Harline agree that Harline has an interest in the property and will work to preserve both Campbell and Harline's interest in the future." The amendment further recited the agreement of the parties to seek refinancing using the land as collateral and the formula to be followed in dividing the proceeds and any profits realized from the sale of the property.

It was thus without question that Harline had an agreed position and interest in the property. The substance of the written agreement, as amended, coupled with the actions taken by the parties in respect thereto, clearly supports the conclusion reached by the trial court that the parties were engaged in a joint venture. As the Court observed in Bassett v. Baker: ⁵

A joint venture is an agreement between two or more persons ordinarily but not necessarily limited to a single transaction for the purpose of making a profit. The requirements for the relationship are not exactly defined, but certain elements are essential: The parties must combine their property, money, effects, skill, labor and knowledge. As a general rule, there must be a community of interest in the performance of the common purpose, a joint proprietary interest in the subject matter, a mutual right to control, a right to share in the profits, and unless there is an agreement to the contrary, a duty to share in any losses which may be sustained.

While the agreement to share losses need not necessarily be stated in specific terms, the agreement must be such as...