Lightsey v. Marshall
| Decision Date | 05 October 1999 |
| Docket Number | No. 19537.,19537. |
| Citation | 128 N.M. 353,992 P.2d 904 |
| Parties | Dorothy LIGHTSEY, Plaintiff-Appellant, v. Jimmy MARSHALL, Defendant-Appellee. |
| Court | Court of Appeals of New Mexico |
Adam D. Rafkin, Adam D. Rafkin, P.C., Ruidoso, for Appellant.
Glen L. Houston, Robert J. Laughlin, Williams & Houston, Ltd., Hobbs, for Appellee.
Certiorari Denied, No. 26,019, November 15, 1999.
{1} Plaintiff Dorothy Lightsey appeals from the judgment of the district court partitioning two separate properties, which the district court held to be the subject of a joint venture between Lightsey and Defendant Jimmy Marshall and ordering Lightsey to pay Marshall $5000 to equalize the parties' joint venture agreement. Lightsey contends on appeal that the district court erred in entering its judgment because (1) Marshall did not properly plead and substantial evidence did not support the existence of a joint venture, (2) the joint venture agreement failed to satisfy the requirements of the statute of frauds, and (3) Marshall was barred from relief because he was an unlicensed contractor who failed to meet the mandates of the Construction Industries Licensing Act, NMSA 1978, §§ 60-13-1 to -59 (1989, as amended through 1999) (Act). We affirm.
{2} After Lightsey and Marshall had been close friends for several years, they set out to purchase investment property together. Lightsey had some funds, and Marshall, who formerly had an electrical contractor's license, possessed the know-how to improve and maintain small properties. In December 1994, after they had investigated several properties in the Lincoln County real estate market, Lightsey and Marshall decided to purchase the property at 254 West Circle in Ruidoso Downs. Marshall testified that he arranged the terms of the deal. The property cost $35,000. Lightsey paid a $20,000 down payment and took title to the property in her name.
{3} Marshall testified that he owned a 50% interest in the West Circle property from the very beginning and that he and Lightsey agreed to share the profits equally after she received the return of her contributed funds. Lightsey, on the other hand, said that Marshall was entitled to one-half of the profits from the sale of the property above the selling price of $39,000 for the work that he performed on the property. On August 9, 1995, Lightsey executed a written document to that effect which read in its entirety:
I am the owner of the house at 254 W. Circle Drive in Ruidoso Downs, New Mexico. In the event this house is sold, Jimmie Marshall, of 813 East Midwest is to receive one/half of the profit made from the sale of this house over and above $39,000.00.
{4} Marshall also testified about his work with respect to the property. He stated that he cleaned and landscaped the yard, repaired the bathroom, painted the entire house, remodeled the kitchen, and patched the roof. According to Marshall, after he made the property liveable, he managed the rental of the property through three separate tenants. He understood the agreement from the very beginning to be that Lightsey and he would either split the rental proceeds or use them to buy another property.
{5} Following this understanding, Marshall negotiated the purchase of Unit 123, Building 5, of the Carrizo Lodge Condominiums also in Lincoln County. Marshall performed some work on the condominium and tried to rent it. Because he was unable to rent it, he moved into it himself rather than let it remain vacant.
{6} Although Lightsey testified that she and Marshall were never more than friends, Marshall stated that everything was fine with the properties until he refused to leave his girlfriend and move in with Lightsey. Ultimately, Lightsey determined that she intended to continue living in the West Circle house rather than sell it. Marshall testified that Lightsey instructed him to stay away from the West Circle property and to move into the condominium.
{7} Lightsey brought this action requesting the district court to quiet title to the West Circle property in her name and to partition the condominium by sale, granting her $7500 for the down payment check she paid from her bank account. Marshall counterclaimed for partition by sale of both properties, for the court to declare the rights, titles, and interests of the parties, and for reimbursement of $17,277 as his investment in the properties.
{8} Following a hearing on the merits, the district court found (1) that the parties entered into a joint venture in which both were to be "joint venturers/owners" in the properties, (2) that subsequent to their original agreement, the parties agreed that Marshall would receive one-half of the profits of any sale of the West Circle property over $39,000, (3) that as part of the joint venture, Marshall was to work on and secure renters for the West Circle property, which Marshall did, (4) that the goal of the joint venture was to rent the West Circle property for investment purposes and that Lightsey later changed her mind and decided to live in the property herself rather than use it for investment only, (5) and that the joint venture paid for $5000 of the $7500 down payment on the condominium.
{9} The district court partitioned the properties to divide and allocate the respective interests of the parties in the joint venture. It awarded Lightsey the West Circle property and Marshall the condominium, both subject to the accompanying mortgages. To equalize the parties' interests regarding the joint venture, the court ordered Lightsey to pay Marshall the sum of $5000, which the court calculated to be the balance of Marshall's share of the profits from the West Circle property after deductions to equalize the parties' investment and share of profits in the condominium.
{10} The district court entered a finding of fact and a conclusion of law that Lightsey and Marshall entered into a joint venture form of enterprise. Lightsey contends that the district court abused its discretion in making this finding and conclusion. Lightsey argues that Marshall did not plead the existence of a joint venture and that the evidence does not support the existence of a joint venture. We cannot agree with Lightsey's arguments.
{11} Even though Marshall did not specifically mention that he and Lightsey were joint venturers in his counterclaim, the district court could properly reach that conclusion. Marshall alleged that the parties owned the properties as tenants in common and that both invested in the properties. He asked the court for partition and for the court to "ascertain and declare the rights, titles, and interests of the parties to the property." At trial, both parties testified without objection about the nature of their business relationship. Although the words may not have been used, testimony at trial described the essential terms of a joint venture. Marshall submitted requested findings of fact and conclusions of law that included the court's ultimate finding and conclusion that the parties entered into a joint venture.
{12} Parties may try an issue not raised in the pleadings by express or implied consent. See Rule 1-015(B) NMRA 1999; White v. Wayne A. Lowdermilk, Inc., 85 N.M. 100, 101, 509 P.2d 575, 576 (Ct.App.1973). By the evidence presented at trial, the issue of the business relationship of the parties included an issue of whether a joint venture existed. Thus, the latter issue was impliedly tried as part of the former. Furthermore, the district court granted relief, which Marshall had requested in his counterclaim. See Farmers, Inc. v. Dal Mach. & Fabricating, Inc., 111 N.M. 6, 9, 800 P.2d 1063, 1066 (1990)
. Marshall based his request for relief on the business relationship of the parties. We fail to see any prejudice to Lightsey merely because the legal terminology of "joint venture" was not used earlier in the proceedings.
{13} Nor do we agree with Lightsey that substantial evidence does not support the existence of a joint venture. A joint venture exists when two or more parties (1) enter into an agreement, (2) to "combine their money, property or time in the conduct of some particular business deal," (3) agree to share in the profits and losses of the venture jointly, and (4) have the "right of mutual control over the subject matter of the enterprise or over the property." Fullerton v. Kaune, 72 N.M. 201, 204, 382 P.2d 529, 532 (1963).
{14} In this case, Marshall testified that he and Lightsey agreed to acquire property together for investment; Lightsey would pay the initial down payment, and he would work on the property to prepare it for rental. The parties agreed that Marshall would share in the profits of the West Circle property. Thereafter, as Marshall testified, they agreed to use rental profits to acquire the condominium property. Marshall undertook to find the properties, to work on them, and to rent them. He testified that he negotiated the terms of the acquisitions and managed the rental of the West Circle property. Lightsey and Marshall acquired the condominium in both of their names. It does not matter whether the calculation of cost for determining the break-even point was Lightsey's contribution or funds, or Lightsey's funds plus Marshall's in-kind contribution. Because Marshall, according to his testimony, contributed significant time, effort, and materials toward the West Circle property, he would have shared in the losses if the property were not sold at a profit.
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