Ivins v. Hardy

• Decision Date: 15 April 1947
• Docket Number: 8685.
• Citation: 179 P.2d 745,120 Mont. 35
• Parties: IVINS v. HARDY.
• Court: Montana Supreme Court

179 P.2d 745

120 Mont. 35

IVINS v. HARDY.

No. 8685.

Supreme Court of Montana

April 15, 1947

Appeal from District Court, Sixteenth District, Custer County; S.D McKinnon, Judge.

Action by R. L. Ivins against Robert F. Hardy for purpose of dissolving an alleged copartnership and for an accounting and for sale of alleged partnership property. From decree entered, the defendant appeals, and the plaintiff assigns cross-error.

Cause remanded with directions.

Farr & Colgrove and George W. Farr, all of Miles City, and F. F. Haynes, of Forsyth, for appellant.

W. B Leavitt and D. L. O'Hern, both of Miles City, Chester E Onstad, of Broadus, and Porter & Porter, of Crawford, Neb for respondent.

ANGSTMAN Justice.

Plaintiff brought this action for the purpose of dissolving an alleged co-partnership and for an accounting, and sought the sale of alleged partnership property.

The complaint alleged that the partnership agreement was formed on the 20th day of September, 1939, that being the date of the inception of their relationship and the date when they, as vendees, entered into a written contract for the purchase of land situated in Custer and Powder River counties. The answer denied the existence of a partnership between plaintiff and defendant. The court, after making findings of fact, made conclusions of law to the effect that the agreement between the parties was a joint adventure and the relationship of the parties was that of joint adventurers. It ordered a dissolution of the joint adventure and that plaintiff was entitled to an accounting of all the business done by the parties in connection with the joint adventure, and ordered the sale of all of the property both real and personal. The defendant has appealed from the decree.

The principal question presented by the appeal is whether the court was right in finding and holding that the relationship between the parties was that of joint adventures. Defendant contends that their relationship was that of tenants in common. Plaintiff, on the other hand, assigned cross-error and asserts that the relationship of the parties constituted them as partners. He likewise contends that if their relationship was not that of partners then the evidence was such that the court was justified in finding that they were joint adventurers and that in either case the decree should be affirmed.

In order to determine the relationship of the parties it becomes necessary to make a somewhat detailed statement of the facts pertaining to their business transactions.

It appears that in the summer of 1939 Hardy was engaged in the livestock business in Wyoming. Because of a shortage of grazing there through drought, he was forced to move elsewhere. He heard of a certain ranch, known as the LO Ranch, situated in Montana which was for sale and he came to Montana to look it over. The ranch suited his needs. Being unable financially to buy the property alone, he sought financial aid elsewhere. He heard of plaintiff, a practicing physician at Crawford, Nebraska, and went to see him and sought his aid in undertaking the venture. His proposition to Ivins, according to the latter's testimony, was: 'That we form a partnership and go up and buy the LO Ranch and stock it and get rich quick and run the thing and lease lands and pay expenses and make the payments and so on.' The defendant pointed out to plaintiff that the way to finance the deal would be by the running of livestock on the land which they might individually own, together with livestock belonging to others, and lease such lands as were not required for their own use and, if they were able to borrow money, they could buy livestock and thereby stock the ranch.

The proposition appealed to plaintiff sufficiency so that he took a trip with the defendant to look over the ranch. After looking over the place plaintiff stated to the defendant that he was enthusiastic about it. They then discussed means of meeting expenses of running the ranch and meeting the purchase price. They discussed the matter of taking in and feeding livestock for others in addition to running their own individual cattle and sheep. They discussed the matter of receiving AAA benefits, of raising feed and hay and leasing out the land not required for their use. Defendant assured plaintiff that he was able to take charge of the actual operation of the ranch.

They finally agreed to purchase the ranch and the plaintiff testified that it was then agreed that each should put up half of the expenses and that each would be 'equal partners in every way.' Shortly thereafter and on the 20th day of September, the parties entered into a written contract for the purchase of the ranch in question from Arthur T. McIntosh, trustee, for the agreed price of $117,094.91 payable in installments of $15,000 on the date of the agreement and the sum of $13,322.77 on November 15, 1940, and an equal sum on the 15th day of November of each year thereafter for nine additional years with interest at 7%. The purchasers agreed to pay the taxes for the year 1940 and thereafter. In the agreement R. L. Ivins and Robert F. Hardy were named as the purchasers and the agreement contains no suggestion that they were purchasing as a partnership. Besides land the contract included livestock brands, hay, feed and some machinery and equipment. It is conceded that both parties were to contribute equally to the purchase price, taxes and expense of operation and were to equally share the profits. The defendant was to live on the ranch and have charge of its operations.

There is evidence and the the court found that the parties agreed to lease and purchase additional lands necessary to block up their holdings into compact units; that they would take in livestock belonging to others to run and graze; lease land not required for their needs; that they would individually place on the land such livestock as each might have and each be livestock grazing fees accordingly; and that, when they were able to get money, they would purchase jointly as partnership livestock, whatever stock was necessaary to complete the carrying capacity of the ranch. Upon the execution of the contract each of the parties paid his share of the initial payment. Defendant moved onto and took charge of the ranch operations. Both plaintiff and defendant placed livestock on the ranch which were run and cared for by defendant. Defendant also took in livestock for grazing belonging to other persons. Plaintiff and defendant both attempted to raise money with which to buy partnership livestock but their attempts were unsuccessful.

Defendant has failed to account to the plaintiff for income received by him in the operation of the ranch and it may fairly be said that there has arisen such irreconcilable discord and dissension between the two that the reasonable and successful joint prosecution of the undertaking is no longer possible, and this, in effect, is what the court found.

As further bearing upon the relationship of the parties, reference should be made to the fact that defendant prepared the income tax returns for the enterprise in the name of 'Ivins and Hardy' on a form designated 'Partnership Return of Income.' This was done for the income of the year 1940, 1941, 1942 and 1943, but for the year 1944, which was after this action was commenced, while the return was made on the same form the nature of the organization was typewritten in as 'Joint Venture.'

The record shows and the court found that the parties never obtained finances with which to purchase livestock jointly and hence have never engaged in the livestock business. It is conceded that the individual livestock run on the ranch by each of the parties to this action remained the property of the individual and did not become partnership property. There was, however, one band of sheep which was designated as a partnership band, which consisted of culls from the sheep owned by plaintiff and defendant individually.

The money for the purchase price of the land and the payment of taxes was furnished by each the plaintiff and defendant in equal shares.

The livestock brands were assigned by the LO Cattle Company to 'R. L. Ivins and Robert F. Hardy, co-partners doing business as Ivins & Hardy.' Defendant recorded these assignments. On cross-examination defendant admitted: 'It is a joint venture.' Also, since the institution of this action, plaintiff and defendant, each acting separately, have executed oil leases, each on his half interest in the real estate.

The record contains innumerable letters between the parties but they shed little light upon the relationship between them. In other words, the letters can be reconciled equally with the idea that they were tenants in common in the ownership of the real estate as claimed by defendant as with the...