Harris v. Umsted

• Decision Date: 02 July 1906
• Citation: 96 S.W. 146,79 Ark. 499
• Parties: HARRIS v. UMSTED
• Court: Arkansas Supreme Court

96 S.W. 146

79 Ark. 499

HARRIS v. UMSTED

Supreme Court of Arkansas

July 2, 1906

Appeal from Jackson Chancery Court; George H. Humphries, Chancellor affirmed.

Jno. W. & Jos. M. Stayton and Charles T. Coleman, for appellant.

1. The evidence in this case establishes a partnership agreement. 22 Am. & Eng. Enc. Law (2 Ed.), 13; Ib. 41; 37 Ark. 308; 131 F 124; 130 F. 475. Having agreed to engage in the joint venture, each owed the utmost good faith to the other, and neither could surreptitiously circumvent the other. If he should, the law would hold him to account for the profits, if any, and withhold from him the right to demand contribution for losses. 22 Am. & Eng. Enc. Law (2 Ed.), 115; 53 Ark. 152.

2. The conceded facts establish a resulting trust in favor of appellant. Wherever one person is placed in such relation to another, by the act or consent of that other, or of the act of a third person, or of the law, that he becomes interested for him or with him in any subject of property or business he is prohibited from acquiring rights in that subject antagonistic to the person with whose interest he has become associated. 49 Ark. 245; 121 F. 620, and authorities cited.

Stuckey & Stuckey and J. M. Bell, for appellee.

1. Appellant's own evidence does not establish a partnership, which is a thing created by contract, never by operation of law, and must have a valid consideration to support it. George on Part. §§ 2, 5. No money was paid, no capital nor labor employed, nor skill displayed to further a common cause. Ib. § 19; Ib. § 9. If a purchase had been made pursuant to an agreement as stated by appellant, that would have made them tenants in common, not partners. 22 Ark. 381.

2. A contract must necessarily exist before a resulting trust can be established. 9 Ark. 518. The evidence shows that the avoidance of competition was the sole purpose of the agreement, and that the contract that they were not to bid against each other, was for that day only. The negotiations were preliminary, and should not be confused with the contract itself. 7 Am. & Eng. Enc. Law (2 Ed.), 39. Such a contract was illegal and void. Kirby's Digest, § 1976. And the courts will not lend their aid to enforce it. 25 Ark. 210; 30 Ark. 431; 32 Ark. 620; 48 Ark. 489; 92 S.W 865.

RIDDICK, J. Mr. Justice WOOD concurs herein.

OPINION

RIDDICK, J.

This is a suit in equity brought by Walter Harris against Thos. P. Umsted to recover one-half of the profits arising from the purchase and sale of a pearl. Harris and Umpsted both lived in Newport, Arkansas. Harris was a pearl buyer, engaged in the business of buying and selling pearls. Umsted was a member of the firm of T. P. Umsted & Co., composed of himself and his brother, G. B. Umsted, which firm was engaged in the same business. During the morning of June 6, 1902, Harris and T. P. Umsted each received at Newport information by telephone that one DeVault, of Bradford, had found near there in White River a valuable pearl which he desired to sell. Each of these parties learned also that the other had received this information, and was desiring to buy this pearl. Bradford, where the owner of the pearl lived, was about twenty miles from Newport, and, as the morning train going south from Newport had passed before they received the information about the pearl, they were compelled, in order to reach Bradford that day, to go by horse and buggy. To avoid a race between them from Newport to Bradford and subsequent competition in buying the pearl, they agreed to go together in a buggy to Bradford, and to purchase the pearl, together, or jointly, if it could be obtained at a fair price. They went to Bradford, but failed to obtain the pearl. The owner at first demanded over $ 2,000 for the pearl, but finally offered to take as low as $ 1,350, while Harris and Umsted offered $ 1,300 for it. That was the highest price offered, and they returned to Newport without having purchased the pearl. Next day Umsted returned to Bradford on the train, and purchased the pearl, paying therefor $ 1,410. On the day following this purchase Harris was informed of the purchase by Umsted, and he asked Umsted if he, Harris, was not interested in the purchase. Umsted replied that he did not understand it that way, that he had purchased the pearl for the firm of T. P. Umsted & Co. It was over a year afterwards before Harris mentioned the subject to Umsted again. He then tendered Umsted one-half of the money he had paid for the pearl, and notified him that he claimed a one-half interest in the proceeds of the sale of the pearl. In the meantime Umsted & Co., had sold the pearl in New York City for $ 6,700, and the fact that the pearl had been sold for a large sum had become generally known in Newport, and Harris knew it at the time he made the tender.

The chancellor found that there was not sufficient evidence to sustain the allegations of the complaint, and dismissed the complaint for want of equity. The appeal of plaintiff brings the case before us for review.

If we take the evidence of the plaintiff himself as true, it is doubtful if it is sufficient to support the allegation in his complaint that he and the defendant "formed a copartnership between them for the purpose of buying and selling a valuable pearl." It is true that he testified that they agreed to go down to Bradford and "buy it together." And, in response to the question of his own counsel as to whether they agreed to buy the "pearl in partnership," he responded "Yes." But his testimony shows only an agreement to go to Bradford and buy the pearl together; in other words, to become joint purchasers of the pearl. But an agreement by two or more persons to buy a piece of property together does not amount to an agreement to form a partnership when there is no agreement for a joint sale of the property and a sharing of the profits. Nothing was said by these parties about selling the pearl and sharing the profits, and, if the testimony of this witness be taken as literally true, and they had purchased the pearl under that agreement, they would have owned the pearl in common, but as partners. Baldwin v. Burrows, 47 N.Y. 199; Stevens v. McKibben, 15 C. C. A. (U.S.), 498.

But the question of partnership is not very material in this case for, if these parties were owners of this pearl in common, and one of them sold it and received the proceeds thereof, the...