Lane v. Wood

• Decision Date: 06 June 1932
• Docket Number: No. 119.,119.
• Citation: 259 Mich. 266,242 N.W. 909
• Parties: LANE et al. v. WOOD et al.
• Court: Michigan Supreme Court

259 Mich. 266

242 N.W. 909

LANE et al.

v.WOOD et al.

No. 119.

Supreme Court of Michigan.

June 6, 1932.

Appeal from Circuit Court, Livingston County, in Chancery; Joseph H. Collins, Judge.

Suit by Cornelius J. Lane and others against Arthur G. Wood and others. From a decree for plaintiffs, defendants appeal.

Affirmed.

Argued before the Entire Bench.Wiley, Streeter, Smith & Ford, of Detroit, for appellants.

Henry B. Graves and Charles H. Hatch, both of Detroit, for appellees.

WIEST, J.

Our independent judgment upon review of this case coincides with the following opinion of the circuit judge:

‘In the early part of 1926, one of said defendants, Arthur G. Wood, became interested in the purchase of certain farm lands located in Green Oak township, Livingston county, securing options thereon. Afterwards in the latter part of February, 1926, Walter F. Haass became associated with him in the purchase of the land, and still later in March, 1926, Paul A. Sorge (now deceased, the administrator of whose estate is made a defendant here) also became associated with Arthur G. Wood and Walter F. Haass in the purchase of said lands. These lands were purchased for resale, and it was agreed by the parties heretofore named that the profit on the sale should be divided equally among them, and the defendant the Kirby-Sorge-Felske Company, a corporation, of which Paul A. Sorge was president, was selected by Arthur G. Wood and his associates, as their agent to sell the land so purchased by them.

‘The Kirby-Sorge-Felske Company, as such agent, organized a syndicate to purchase the land and said plaintiff, Fred A. Lehmann, became trustee of the syndicate. Among the syndicate members were the Kirby-Sorge-Felske Company, Paul A. Sorge, and Arthur G. Wood. It was represented to the members of the syndicate by the Kirby-Sorge- Felske Company that the syndicate was purchasing the land for the same price that was paid for the lands to their owners by Messrs. Wood, Haass, and Sorge, such sum being $56,750, but the land was sold to the syndicate by the Kirby-Sorge-Felske Company for the sum of $87,500, and thus $29,000 of this was profit on the sale of the land. As part of the purchase price of the land, on July 1, 1926, Fred A. Lehmann, as trustee for the syndicate, executed to Arthur G. Wood a note and mortgage for $29,000. Afterwards, on September 13, 1926, Arthur G. Wood assigned this mortgage and note to Dr. Robert T. Tapert and received therefor $26,000, the net proceeds of the sale, and afterwards, after deducting certain expenses, this amount was equally divided among Wood, Haass, and Sorge. The Kirby-Sorge-Felske Company, for selling this land to syndicate of which they were a member, received a commission of $4,375.00. * * *

‘* * * The court is of the opinion that the Kirby-Sorge-Felske Company was the agent of Wood, Haass, and Sorge in the sale of the land to the syndicate and as such represented to the syndicate members that they were buying the land at the same price paid the original owners. It is now evident that such was not the fact. The principal is responsible for the misrepresentation of the agent where the principal receives the fruit of such representation, even though the principal has no knowledge of the misrepresentation of the agent.

‘It is also true that the syndicate was in the nature of a joint adventure entered into by its members, among whom were Paul A. Sorge, the Kirby-Sorge-Felske Company, and Arthur G. Wood. Therefore, it was the duty of the last named to disclose in a fair and honest manner the true of the land to their fellow members and not by a suppression of fact, within the right of the other members to know, procure thereby secret profit or commission.

‘It therefore follows that a decree may be entered against Arthur G. Wood, the Kirby-Sorge-Felske Company, and the estate of Paul A. Sorge, and in favor of Fred A. Lehmann as trustee, for $29,000, with interest at the same rate that the note is drawing from July 1, 1926, until the date of the decree.’

It is claimed that the properties were purchased by Wood, Haass, and Sorge before organization or intention of forming the syndicate, of which plaintiffs became members and of which Mr. Haass never was a member.

Was the so-called syndicate, with Lehmann, trustee, so far of the nature of a joint adventure as to make applicable rules of law relative to a fiduciary relation between promotors, members, and beneficiaries?

The term ‘joint adventurers' is one of variable meanings. Lehmann was trustee but had no greater rights in the property by reason of that fact than his coadventurers. Here was a special association of several persons in a single venture, seeking profit without any actual...