Leslie v. Midgate Center, Inc.

• Decision Date: 28 December 1967
• Docket Number: No. 38979,38979
• Court: Washington Supreme Court
• Parties: Robert D. LESLIE and Katherine Leslie, his wife, Appellants, v. MIDGATE CENTER, INC., a corporation, the Bank of California, a National Association, Marvel S. Morgan and Sandra M. Morgan, his wife, James F. Harper and Josephine Harper, his wife, and Kenneth J. Seiander and Carol Selander, his wife, Respondents.

Page 977

72 Wn.2d 977

436 P.2d 201

Robert D. LESLIE and Katherine Leslie, his wife, Appellants, v. MIDGATE CENTER, INC., a corporation, the Bank of California,

a National Association, Marvel S. Morgan and Sandra M.

Morgan, his wife, James F. Harper and Josephine Harper, his

wife, and Kenneth J. Seiander and Carol Selander, his wife,

Respondents.

No. 38979.

Supreme Court of Washington, Department 2.

Dec. 28, 1967.

Lycette, Diamond & Sylvester, David C. Lycette, Seattle, for appellants.

Robert A. Yothers, Seattle, for respondents.

NEILL, Judge.

This is an action by Robert D. Leslie, a licensed realtor, and his wife to establish a 25 per cent community interest in certain parcels of real property purchased and then subsequently reconveyed by him pursuant to a joint venture agreement. Defendants are plaintiff-husband's three coadventurers and the corporation formed pursuant to the joint venture agreement. The joint venture agreement of January 25, 1964, recited (omitted portions are not relevant to the issues before us):

WHEREAS, the parties hereto desire to form a joint venture under the name of 'Midgate Associates' for the purpose of acquiring options, or purchases or leases, upon certain property located at Midway, Washington, which property shall be joined together for the purpose of constructing an apartment house thereon, a medical clinic building and a shopping center, together with such additional structures as the parties hereto may so decide, and

WHEREAS, the parties hereto are respectively performing particular services to insure the successful undertaking of this joint venture as hereinafter set forth, now, therefore, the parties agree as follows:

1. That this joint venture is an interim status by the parties hereto for the acquisition of options or earnest monies or properties located in the Midway, Washington area, and that any dealings by the parties hereto in such land, options, leases or purchases shall be for the benefit of the joint venture, regardless in whose name said options, earnest monies or purchase agreements may be undertaken.

2. That each of the parties hereto shall share equally in the profits and losses of this joint venture.

4. That none of the parties hereto shall sell, dispose of, transfer or encumber his interest in this property during the period of this joint venture.

5. That the parties hereto acknowledge that Robert D. Leslie shall spend his time as the real estate representative of the joint venture to secure options, earnest monies or purchase agreements upon the properties in Midway which have been verbally disclosed to all parties. * * *

6. That the parties hereto acknowledge that Midgate Associates shall remain in existence for a limited period of time and that it shall be superceded by a corporation to be known as 'Midgate Company', which shall be owned in equal shares by the parties hereto except that other parties may have an interest in said corporation, but which shall be as determined by the stockholders and/or directors of Midgate Company.

7. That in the event any of the parties hereto should become deceased prior to the formation of the corporation, the interest of said deceased person shall be purchased by the remaining three parties equally in such sum as may be determined by the representative of the estate of the deceased and said parties.

Pursuant to the agreement, plaintiff-husband purchased certain real property in his own name. His signature on all documents was accompanied by the word 'trustee.' The property was subsequently conveyed by 'Robert D. Leslie, Trustee' to Midgate Center, Inc., the corporation formed pursuant to the joint venture agreement. Plaintiff-wife did not sign any conveyance or join in any transfer of properties to Midgate Center, Inc.

At the conclusion of the plaintiffs' case, the trial court entered an order dismissing their claim, from which order the plaintiffs appeal. The appeal is on an agreed statement of facts. Plaintiffs assign error to the trial court's ruling, as a matter of law, that the plaintiff marital community acquired no interest in the property acquired by plaintiff-husband as trustee and that, therefore, the wife need not have joined in any conveyance of such property.

The parties are in accord that (1) the agreement herein constituted a joint venture, Keisel v. Bredick, 192 Wash. 665, 74 P.2d 473 (1937); and (2) the interest of plaintiffs in the joint venture is a community asset. The disagreement arises as to the character of such community interest. Plaintiffs contend that the marital community acquired an interest in the real property because the plaintiff-husband, As a member of the joint venture, had an interest in each parcel of land and this interest was of a kind which necessitated, under RCW 26.16.040, his wife's joinder to effect a valid transfer to Midgate Center, Inc. The importance of emphasizing plaintiff-husband's status 'as a member of the joint venture' becomes clear since he occupied the dual role of trustee and coadventurer.

The terms of the joint venture agreement clearly indicate that the parties intended that (1) the joint venture was to be merely a temporary relationship; (2) one of the purposes of the joint venture was to form a corporation which was to own all property acquired by the coadventurers prior to that corporation's formation; (3) plaintiff-husband was to act as a trustee to hold legal title to the property acquired by him as the coadventurers' real-estate representative; (4) plaintiff-husband did not need the approval of the other coadventurers when he transferred title to the successor corporation in accordance with the very terms of the agreement; (5) the beneficiary of the trust for which plaintiff-husband was trustee, and therefore the holder of the equitable interest in the property, was to be the joint venture and ultimately the successor corporation; (6) the only interest to be acquired by the coadventurers in the real property of the joint venture was to be the bare legal interest of a trustee and that, therefore, no individual coadventurer was to acquire specific or absolute ownership of the various parcels of land; and (7) the interest of the parties, as individual members of this business venture, was to consist of an equal right of control, an equal share of the profits, and an equal share in the stock of the corporation which was to succeed the joint venture. Under this view of the parties' intent, the plaintiff-husband, as a member of the joint venture, did not acquire an interest in the specific parcels of property of a kind necessitating the consent of his wife in order for plaintiff-husband, as trustee, to transfer the property to the successor corporation pursuant to the agreement. A joint venture is not a status created or imposed by law, but is a relationship voluntarily assumed and arising wholly out of the parties' express or implied contract. Paulson v. McMillan, 8 Wash.2d 295, 111 P.2d 983 (1941). In the case at...